Studies: Mass. Casinos Will Cut Into Conn. Sites' Revenues
With the approval of casinos in Massachusetts now resting with Gov. Deval Patrick, the potential economic impacts are already being gauged in Connecticut, the state that brought casinos to New England.
The Bay State's pending approval of four commercial gambling properties will slice revenues at Connecticut's tribal casinos by 15 percent, according to a research analyst for UBS, based in Stamford, Conn. That will erode the original mission of the now billion-dollar properties in the southeastern corner of the state: Improving the lives of the Native American tribal members.
"As tribal leaders, we have to come together," said Hiawatha Brown, tribal council member of the Narrangansett Indian Tribe, based in Rhode Island. "We need to realize that people (establishing commercial casinos) are working against our greater purpose, providing a better lifestyle for our people."
Foxwoods and Mohegan Sun will suffer 15 percent losses to their revenues in two or three years when Massachusetts opens the three commercial resort casinos and one slot parlor approved by the legislature Nov. 16, said David Katz, gaming, lodging and leisure research analyst for Stamford-based UBS.
"We are talking about creating three weekend destinations and a weekday day trip in a slot parlor," Katz said.
The Massachusetts casinos have the potential for $1.4 billion to $1.5 billion in annual gaming revenues, some of which will come at the expense of the region's other casinos, said Chad Beynon, securities gaming analyst for New York-based Macquarie Research Equities.
Market Saturation?
The New England gaming market isn't saturated yet, but it's getting closer, Beynon said. In most of New England, there are 300 adults per gaming position at the various gambling facilities, but that number will drops to 200 when more casinos open.
"Once you start getting down to that, you stop seeing growth, and we get concerned about saturation in the market," Beynon said.
When Foxwoods and Mohegan opened in the 1990s, the properties held a duopoly over gaming in the Northeast. That stranglehold has loosened over the past decades as the many states in the region saw gaming as a source of government revenues and started approving gambling sites, including in Rhode Island, Pennsylvania, New York, Maine and New Hampshire.
"The Northeast is the worst region in terms of the competitive environment," said Dennis Farrell, managing director of high yield gaming, lodging and leisure research for New York-based Wells Fargo Securities, LLC.
Even before this week's vote on Beacon Hill, Foxwoods and Mohegan Sun were losing patrons to the Empire City Casino in Yonkers, N.Y., and the new slot machines at Aqueduct Racetrack in New York City.
Targeting Palmer Site
The Mohegan tribe, which controls the Mohegan Sun casino, wants to expand its empire. It's considered a frontrunner for one of the three Massachusetts resort casino licenses, in Palmer, which it has lobbied for since 2009. The Mohegans have already opened a commercial casino in Pennsylvania - Mohegan Sun at Pocono Downs - and formed a gaming development advisory company to help and partner with other tribal and commercial ventures.
"When Massachusetts is ready, we'll be ready; and we think they are almost ready," said Mitchell Grossinger Etess, CEO of the Mohegan Tribal Gaming Authority. "The entire gaming landscape has changed as gaming has proliferated in the Northeast."
(Kane is a staff writer with the Hartford Business Journal.)
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