For the past several months, PA has been busy raking in enormous licensing fees from state casino operators hoping to cash in on new gambling verticals authorized by a landmark gaming bill passed last year. In all, Keystone State casinos have already spent upwards of $258 million in preparation for the potential windfall.
But for all the money being shoveled into state coffers, few casinos have seen any return on their investment so far – nor will they for many more months, or perhaps even years. For Valley Forge, however, the changes brought on by the bill have already proved a boon to its operation, and are a major contributing factor to the impressive eight-figure year-on-year gains the casino has enjoyed over the last 10 months.
Come one, come all
The expanded gambling package passed by lawmakers last October gave casinos the right to bid on 10 satellite casino licenses, while also offering the possibility of opening up online casino sites and sportsbooks. While those opportunities grabbed the majority of the headlines, the bill also offered a concession to the state’s two Category 3 casinos (Valley Forge and Lady Luck Nemacolin).
For the price of $1 million, the resort casinos would finally be able to open up their casino floors to the general public, not just guests of the facility. The purchase also gives them the opportunity to add an additional 250 slot machines and 15 more table games, for $2.5 million and $1 million, respectively.
Before the bill was passed, only membership holders, patrons spending over $10 on resort amenities, or those staying at the hotel were allowed to gamble at the properties’ casinos. By throwing up roadblocks, the revenue potential of the two facilities was severely stunted.
So when the chance to open its doors to non-patrons arose, Valley Forge jumped at the chance, almost immediately paying the seven-figure fee to the state.
“Since opening five years ago, we have been constrained by the amenities requirements and membership fees which have confused and frustrated our guests,” said Valley Forge Pres. and CEO Eric Pearson in a release. “We are thrilled to be able to welcome our guests to our casino in the same manner as the other Pennsylvania casinos.”
An easy bet
The bet turned out to be a fantastic investment. While Valley Forge normally sits at the lower and of the casino revenue spectrum, the opening up of its facility to outsiders has had a major positive effect on its bottom line.
The new policy went into effect on October 31, and since that time, the casino has seen immediate and continuous positive returns. From November 2017 to August of this year, the facility has raked in $74,115,952 on slot machines, $6,025,344 more than it did during the same timeframe the previous year. The increase constitutes a nearly 9% Y/Y increase.
The percentage gain at table games was even more dramatic. From that same November up to this July, the property banked $29,539,031, $5,024,643 more than it did last year, a 21% Y/Y gain.
With slots and table games combined, the casino has increased its year-on-year take by around 12%, for $11,049,986 total. Not bad for a one million-dollar investment.
Y/Y Slot revenue change
| Slots 2017-2018 | Slots 2016-2017 | Y/Y | Profit Increase | |
|---|---|---|---|---|
| November | $6,246,268.31 | $6,000,843.07 | 4.09% | $245,425.24 |
| December | $7,098,272.52 | $6,533,471.73 | 8.64% | $564,800.79 |
| January | $6,730,652.34 | $6,617,406.11 | 1.71% | $113,246.23 |
| February | $6,967,734.19 | $6,803,626.81 | 2.41% | $164,107.38 |
| March | $8,253,299.18 | $7,262,955.15 | 13.64% | $990,344.03 |
| April | $8,071,088.58 | $7,400,081.97 | 9.07% | $671,006.61 |
| May | $7,947,054.14 | $7,121,096.23 | 11.60% | $825,957.91 |
| June | $7,559,802.00 | $6,398,589.58 | 18.15% | $1,161,212.42 |
| July | $7,616,719.86 | $7,260,514.75 | 4.91% | $356,205.11 |
| August | $7,625,061.86 | $6,692,023.23 | 13.94% | $933,038.63 |
| Total | $74,115,952.98 | $68,090,608.63 | 8.85% | $6,025,344.35 |
Y/Y Table game revenue change
| Tables 2017-2018 | Tables 2016-2017 | Y/Y | Profit Increase | |
|---|---|---|---|---|
| November | $3,303,695 | $2,495,262 | 32.40% | $808,433 |
| December | $3,201,217 | $2,745,041 | 16.62% | $456,176 |
| January | $3,689,303 | $2,530,463 | 45.80% | $1,158,840 |
| February | $3,464,497 | $2,233,741 | 55.10% | $1,230,756 |
| March | $3,322,307 | $3,208,833 | 3.54% | $113,474 |
| April | $2,075,656 | $3,353,102 | -38.10% | ($1,277,446) |
| May | $3,797,974 | $2,261,238 | 67.96% | $1,536,736 |
| June | $3,675,806 | $3,057,518 | 20.22% | $618,288 |
| July | $3,008,576 | $2,629,191 | 14.43% | $379,385 |
| Total | $29,539,031 | $24,514,389 | 20.50% | $5,024,643 |
Why not Lady Luck?
The recent success of Valley Forge is dramatic evidence that opening up resort casinos to outside patrons is a clear win, even at the cost of $1 million. So it begs the question, “why doesn’t Lady Luck Casino Nemacolin, the state’s other resort facility, do the same?”
Lady Luck Casino is located in Farmington, near the West Virginia/Maryland border. The posh property’s casino is equipped similarly as its resorts-casino rival, boasting the same number of slot machines, but offering 20 less table games.
That said, the venue holds the unwelcome distinction of being the lowest earning casino in the state. This year, Nemacolin has taken in $21,828,301, while Valley Forge has banked $83,805,531. In contrast, the Commonwealth’s top grossing casino, Parx, has already posted a win of $388,664,266 for 2018.
But things are changing at Lady Luck, and new management might soon change its mind and pony up the seven-figure fee. Earlier this year, Churchill Downs Inc. agreed to buy Presque Isle Downs, while also entering into an agreement to take over operations of Lady Luck from an affiliate of current manager Eldorado.
Perhaps the more experienced Churchill Downs team will recognize Valley Forge’s recent success, and realize the opportunity in bringing as many bodies to the casino as possible.
