Hollywood Casino GM: Cincinnati gaming market is 'evolving' and 'finite'

Indiana casinos took a big revenue hit in January

LAWRENCEBURG, Ind. - The rough winter continued for Hollywood Casino in Lawrenceburg last month, as revenue dipped below $15 million for the first time in its history and Horseshoe Casino Cincinnati widened its market share lead on its once-dominant Indiana rival.

“There’s a lot of noise in these numbers,” said Hollywood General Manager Todd George, reacting to revenue figures released by the Indiana Gaming Commission Monday. “The winter weather can’t be ignored here. It did in fact have an impact on all of us, especially on the Indiana side. That’s what all of us are looking at. How much was weather? How much was increased competition?”

The five gaming competitors now active in the Tri-State had combined revenue of $49.5 million in January, according to numbers released by their Ohio and Indiana gaming regulators. That’s 4 percent less than the five rivals generated in December. But it’s 9 percent more than three Indiana casinos generated a year ago while competing for Cincinnati customers.

Downtown’s Horseshoe property remained first in the market with $16.2 million in January revenue, up 14 percent from December. Hollywood’s $14.4 million January was down 19 percent from December and 49 percent less than a year ago. Miami Valley Gaming revenue was $7.8 million, up 37 percent from December. Belterra generated $7.6 million, down 31 percent from a year ago. Rising Star Casino and Resort was down 43 percent year over year to $3.6 million.

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January was the first time that Ohio casinos generated more revenue than Indiana properties in the Cincinnati region. It was a month in which revenue dipped statewide to levels not seen since 2001. Several casino properties were closed by bad weather. Snow emergencies kept motorists – gamblers included – off the roads, said Edward Feigenbaum, publisher of Indiana Gaming Insight.

“The numbers throughout the state were affected in an epic way,” Feigenbaum said. “Its the first time ever there were seven casinos under $10 million in revenue.”

Feigenbaum said heavy promotional play by Ohio casinos and the recession are adding to Indiana’s performance problems. He expects the industry to push for regulatory changes to better compete against Ohio rivals, including reduced admission taxes and more flexibility to build larger land-based casinos.

Also on the industry’s wish list: A rule change that would allow Indiana casinos to more liberally deduct promotional spending from taxable revenue. Horseshoe properties in Cincinnati and Cleveland spent heavily on “free play” promotions in 2013. Horseshoe Cincinnati led the state with $43 million in “slot promotional spend,” according to state records.

“In Ohio, they can deduct 100 percent of what they spend on free play, which is a pretty intense marketing tool,” said Mike Smith, president of the Casino Association of Indiana. “We can deduct $5 million in free play (per casino per year). That’s a competitive disadvantage.”

George said Cincinnati is “one of the most evolving markets” that he has witnessed. Gone are the days when his property could draw customers from five or six states. Columbus, Dayton and Cincinnati, all strong feeder markets in the past for Hollywood, will have more than half-dozen new casinos of their own to support by October.

“The competitive zones are a little bit smaller,” George said. “People are now looking at where are they close to home? What kind of offers are they getting?”

Loyalty programs and customer service will be the new standards on which casino rivals will attract customers. George expects market share leadership “will go back and forth” for several months before the Cincinnati market stabilizes.

Hollywood will improve its prospects in a few months, when the city of Lawrenceburg opens a $50 million convention center and hotel that could make it more of regional draw.

Horseshoe Cincinnati will face a new competitive threat in May when Belterra Park opens at the former River Downs horse track in Anderson Township.

While the competitive balance may shift, George doubts whether the Cincinnati market will ever get back to the halcyon days of 2007, when monthly average revenue at Southeast Indiana’s three casinos peaked at a combined $66 million.

“This market is fairly finite,” George said. “Every time a month like this comes out it’s going to be an opportunity to reflect and say ‘What is real now? What is real from a job-creation standpoint? What is real from the tax base standpoint versus what were some theories based on prior numbers?”

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