CINCINNATI - Cincinnati will have six casinos duking it out by next summer. But casino rivals are already uncomfortable with an intense battle for market share that began when Horseshoe Casino Cincinnati became the region's fourth gaming attraction in March.
Executives from the parent company of Lawrenceburg’s Hollywood Casino used words like “suicidal” and “insanity” to describe promotional spending at Horseshoe Casino Cincinnati, during a recent Penn National Gaming Inc. conference call with Wall Street analysts.
The president of Churchill Downs Inc. told investors Aug. 1 that his company will install fewer slot machines than originally planned at the Miami Valley Gaming facility now under construction at exit 29 off I-75 near Monroe, in part because of concerns about “the level of free play we’re seeing” in the Cincinnati market.
Cincinnati's gaming industry produced $58.8 million revenue at four casinos in July.
- Horseshoe rebounded from a weak revenue month in June to claim a 33 percent market share and $19.3 million in revenue.
- Hollywood remained the region’s top-grossing casino with $21.7 million in revenue and a 37 percent market share.
- Belterra Casino Resort in Switzerland County, Ind. had a $12.5 million month.
- Rising Star, in Rising Sun, Ind., pulled in $5.3 million.
Combined, the four casino rivals generated about 9 percent more revenue than three competitors were able to achieve in July 2012.
'Spend Is Suicidal'
But profitability is another matter.
“I've never seen an industry which is so desperate to give away its bottom line,” said Peter Carlino, president and CEO of Penn National Gaming, in a July 23 conference call to discuss second quarter earnings. Penn reported a second quarter loss and reduced its earnings outlook for the full year partly because of aggressive marketing tactics by Horseshoe Casinos in Ohio.
“Their spend is suicidal,” Carlino told analysts. “It makes no sense at all.”
Horseshoe properties in Cleveland and Cincinnati are each giving away $1 million a month this summer in a promotion aimed at pulling new customers from existing casino properties. In Cincinnati, the promotional award doubled to $2 million in July when a verification error resulted in two men named Kevin Lewis each claiming the $1 million prize.
Beyond that, data from the Ohio Casino Control Commission shows the Cincinnati property ramped up promotional spending on slot machines in June and July to the point where it accounted for 58 percent of total slots revenue in June and 48 percent in July.
“I can't think in my almost 30 years in this business, a new property opening that discounted their product, their brand new product to these levels to try to create trial at the expense of profitability,” said Tim Wilmott, Penn National president and chief operating officer.
To punctuate the point, Wilmott read aloud a letter from a Hollywood Casino customer who told the Lawrenceburg property: “Horseshoe Cincinnati has kept me so busy with promo play and giveaways that I don't get a day on my days off to get up to your place.”
Strategies To Compete
Wilmott said Hollywood is “not going to chase” Horseshoe’s promotional spending but is “reinvesting in the right zip codes” to retain its most profitable customers.
In an Aug. 10 conference call, the CEO of Churchill Downs Inc. told investors that its Miami Valley Gaming joint venture will start with a “downsized” casino when its Warren County facility debuts in December.
“We've had some concerns with what people are saying about the margins, some of the level of free play we're seeing, but in our case, we had already downsized our investment about 7 percent from our original plans and we'd reduced the number of machines that we were planning on – starting with to about 1,600,” said William Carstanjen, president and chief operating officer of Churchill Downs, a 50 percent partner in Miami Valley Gaming with Delaware North Companies Gaming.
Belterra owner Pinnacle Entertainment Inc. is building an $82 million racino at River Downs in Anderson Township. That facility is slated to open in the second quarter of 2014 and will jointly market with Belterra to atrract and retain Cincinnati customers. Pinnacle President Carlos Ruisanchez told investors July 25 that a renovated buffet and new Stadium Sports Bar has helped Belterra retain customers despite new competitive pressures in Cincinnati.
“We continue to see the impact of new competition in Ohio affecting visitation,” Ruisanchez said. “However … the impact of Horseshoe Cincinnati has been less than anticipated so far. We remain focused in differentiating Belterra with its unique destination resort amenities.”
Copyright 2013 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Tri-State's casino market has four rivals battling furiously for market share, with the new guy in town, Cincinnati's Horseshoe…
As Horseshoe Casino Cincinnati opens, WCPO Digital takes a look back at promises made since 2009, when Ohio voters legalized gambling.…
Cincinnati's new casino has awarded more than 75 percent of its contracts for goods and services to companies located in Cincinnati and Ohio.
A Cincinnati woman won $1 million at Horseshoe Casino Cincinnati on Saturday.
All four of Ohio's casinos saw dips in April revenues compared to their March numbers.
John Matarese reports on which casino games give you the best chance of winning.
Darius Rucker will perform at the Horseshoe Casino in September; the latest in top-notch musicians to be announced at the new Cincinnati attraction.
After raking in $21 million in adjusted gross revenue in its first month of operation, Cincinnati's Horseshoe Casino has yet to pay at least…
A group of big-name entertainers including Ke$ha, The Shins, Willie Nelson and Alice Cooper are set to headline concerts at "The Shoe" --…
While many people have been excited to explore Horseshoe Casino Cincinnati, one local woman was angered and disappointed after she was kicked…