When there’s a big, bright new kid on the block to draw attention, his peer group has to take notice. How are they affected? How’s the pecking order change? What’s it cost them?
And there was certainly curiosity beforehand about the impact of the new Live! Casino & Hotel Philadelphia on the already well-developed southeastern Pennsylvania casino market.
The initial answer — for whatever value one month alone of information holds — is that it will help build the industry’s revenue overall, but also apparently eat into competing casinos’ customer volume to the extent that the net gain is modest.
That conclusion is suggested by the Pennsylvania Gaming Control Board’s slots and table games revenue numbers reported in the month of February for Live! — the new Cordish Gaming Group property in the Stadium District — as well as its four competitors in the Philadelphia metropolitan area: Rivers Philadelphia, Parx, Harrah’s Philadelphia, and Valley Forge Casino Resort.
Brick-and-mortar casinos nationally are all drawing less revenue than a year ago from the cumulative effects of the COVID-19 pandemic, and Pennsylvania is no exception. Slots and table revenue statewide was off 26.7% this February from a year ago. In the southeast market, however, the revenue decline was a less drastic 22.6%.
That distinction was explained primarily by the $15.4 million Live! netted from customers gambling during the month. The other four nearby casinos, meanwhile, earned 35.6% less in combined revenue — $76.2 million compared to $118.3 million — than they had in February 2020.
Live! places in second in local market
Live! opened Jan. 19 with a marketing campaign urging customers to make reservations in advance, so as to try to limit crowds while COVID restrictions were in effect and help its employees launch smoothly. In actuality, however, it did not turn away those without reservations from the outset. It simply made the opening official with advertised celebrations and promotions starting Feb. 5.
The table below shows how Live!, with its 1,506 slot machines and 162 tables, quickly slid into second place in the Philadelphia area behind Parx, which is the perennial statewide revenue leader among 14 casinos.
|Feb. revenue (annual change)||Statewide||Parx||Rivers||Harrah's||Valley Forge||Live!|
|Slots||$145.9 million (-27%)||$27 million (-26.9%)||$7.3 million (-51.4%)||$9.5 million (-43%)||$5.9 million (-36.8%)||$10.5 million|
|Table games||$57.4 million (-25.9%)||$14 million (-20.8%)||$6.3 million (-54.9%)||$3.8 million (-28.1%)||$2.5 million (-27.5%)||$4.9 million|
|Total||$203.2 million (-26.7%)||$40.9 million (-25%)||$13.7 million (-52.9%)||$13.2 million (-39.7%)||$8.4 million (-34.3%)||$15.4 million|
Many factors help determine the monthly rise and fall of casino revenue aside from a new competitor opening. Those can include the calendar, weather, promotions, economic climate, highway construction, casino remodeling, and more.
And in the COVID era, perception of health and safety by potential casino patrons is a huge factor. The Cordish officials have touted their ability to use all of the most advanced techniques for health precautions as a result of opening anew both in Philadelphia and at a Westmoreland County mini-casino.
For whatever reason, the revenue of eastern Pennsylvania casinos has generally suffered less than those on the western side of the state since reopenings in June after shutdowns a year ago. Taking as an example November (the last full month of operations before February, due to mandatory shutdowns in part of December and January), slots and tables revenue was down 31.1% statewide from November 2019, while the four Philadelphia area casinos operational at the time were off that month a lesser 29.2%.
That distinction between regional and statewide drops, while notable, was more modest than the one showing up in February after Live! opened.
Harrah’s saw the biggest difference
Interestingly, the biggest impact from the Live! arrival doesn’t seem to be on its closest competitor, Rivers Philadelphia, which is the only other within city limits. That is because Rivers was already hit harder than most during the pandemic by revenue decline, perhaps because city restrictions on operations have exceeded those set by the state.
Rivers’ gambling revenue declined in February by 52.9% compared to 2020, falling from $29.1 million to $14 million. But in November, before the new competitor six miles away arrived, it was also down 52%, from $24.8 million to $11.9 million.
The biggest difference in revenue after the Live! arrival came at Harrah’s in Delaware County. Its revenue was off 39.7% in February, from $21.9 million to $13.2 million. In November, it had declined a more typical 24.5% from $20.8 million to $15.7 million.
While affected to a lesser extent percentage-wise than Harrah’s, Parx — the Bucks County casino of larger size — saw a bigger change in actual dollars earned upon the arrival of Live! The 25% February revenue decline of $13.6 million at Parx from a year earlier compared to a 19.3% November revenue decline of $9.7 million.
For Valley Forge, the Live! arrival appears to have made less of a difference. While its February revenue of $8.4 million was off 34.3% year over year, it had also been down 32.2% in November.
Impact from stadium fans awaited
The big question isn’t how the additional casino impacts the region, its economic climate, and the tax revenue from gaming during one short month of February, but long term. The hope among local casino officials — supported by some analysts — is that the Live! presence will have a positive overall effect without doing serious harm to anyone nearby.
“There will definitely be net growth across the properties in the Philadelphia market,” Brian Wyman, an analyst with a consulting firm, The Innovation Group, told Penn Bets as Live! opened. “Obviously, if you put a competitor just down the road from any of these properties, there will be some cannibalization — all of these I think are expecting some impact — but in the aggregate there will be substantial growth.”
A better portrait of the Live! revenue potential — and the extent of regional cannibalization — will come into focus in the months ahead. Cordish chose its location with confidence in drawing many customers spilling out on game days from the venues of the 76ers, Flyers, Phillies, and Eagles that are all within walking distance.
No such fans as walk-ins existed in February, as it was only this month that COVID crowd restrictions were eased to allow the first fans into the Wells Fargo Center for events this season. So the casino’s revenue numbers in March should reflect some gains from that, but still, nothing near when the arena can be filled to capacity again for basketball and hockey and when Phillies games begin in April at Citizens Bank Park.
The question then becomes: Are those sports fans who visit Live! an additional set of casino customers, or are they simply substituting patronage there for visits they would have otherwise made to other casinos?
Area casino executives are undoubtedly hoping the first answer is correct — and if not, that the gaming venues that might be snubbed are the ones a short drive away in Atlantic City as opposed to those in Pennsylvania.