Pa Slot Revenue
[toc]As was the case in March, strong gains in table game revenue spared the Pennsylvania casino industry from a down April.
Slot revenue continues along a negativetrajectory, with April marking the seventh consecutive month that reel games suffered a setback. Although compared to past months, April’s year-on-year decline was more subdued.
Pennsylvania’s casinos pocketed a record $2.27 billion in winnings from slot machines in 2010 and should overtake Atlantic City this year if they continue to post red-hot revenue growth. January 2017 gross revenue from slot machines at Pennsylvania's 12 casinos was $180.3 million, a 2.4 percent decrease from last January. Tax revenue this past January was more than $95.8 million. Pennsylvania’s run of consecutive months with declining slot revenue has reached double digits. And there is still no end in sight. October 2016 slot machine revenue: $191,850,596.41 (-3.04 percent).
Regardless, it appears that Pennsylvania’s 12 land-based casinos are happilyinvesting more and more stock in their table games. This is likely a reflection of emergent table game technology and the sizeable tax differential between table games (16 percent tax) and slots (54 percent tax).
A tale of two gaming verticals
In April, Pennsylvania generated $79.55 million in table game revenue, representing an uptick of 10.16 percent over the year prior, and 3.34 percent normalized gains over March.
Seven out of 12 casinos posted table game revenue gains, with five registering double digit percentage upticks.
On the flip side, slot revenue slipped a bit, down -1.58 percent year-on-year to $205.7 million. For the month, slot revenue was down a shade (-2.04 percent), but up 1.23 percent when accounting for March’s slightly longer length.
In total, the industry reaped $285,25 million in April, representing a 1.44 percent uptick over last year, and a 1.81 percent normalized gain over March. Losing casinos outpaced winners, with five casinos showing revenue increases, versus seven losing ground.
Pennsylvania casino winners and losers
Pa Slot Revenue Refund
One of the biggest mover last month was SandsBethlehem, which registered a 10.06 percent annual uptick ($48.29 million). Sands, which is in the running to be acquired by MGM Resorts International, is hot on the heels of industry leader Parx Casino. Meanwhile, Parx only posted a 0.97 percent year-on-year gain ($49 million).
However, there’s reason to suspect Parx Casino will soon reclaim a larger advantage. It recently announced a $50 million expansion project. Although the casino doesn’t plan to add new casino games, it does intend on moving its poker room. Parx will also add a swatch of non-gaming amenities — which could attract more overall foot traffic to the venue.
By contrast, Sands put the skids on its planned $90 million expansion project, presumably due to the sales talks between MGM and Sands.
But it was PA’s smaller casinos that inked the biggest increases:
- Mt. Airy notched 11.05 percent annual gains, and increased its table game revenue by a whopping 52.85 percent.
- Category III casino Valley Forge Casino Resort saw its revenue spike by 10.92 percent to $10.75 million. Like Mt. Airy, Valley Forge saw its table game revenue skyrocket, up 17.61 percent.
The state’s only other winner was The Meadows: +7.29 percent overall, +52.85 percent in table game revenue.
On the losing side, the struggles continued for both Harrah’s Philadelphia (-4.07 percent), and Mohegan Sun Pocono (-7.59 percent). Rivers Casino was the state’s second-biggest loser (-5.56 percent), while SugarHouse Casino and Hollywood Park posted very modest declines of under 0.5 percent.
Table game expansion on the mind
In April, table game revenue comprised 27.9 percent of the state’s total gaming revenue. That represents a serious increase over last April’s split, when table games accounted for just 25.7 percent.
Still, it doesn’t surprise. In the past year, the state’s land-based casinos have devoted significantrealestate to table games and other amenities. Since April 2016, the number of table games present in the state has swelled modestly. At the same time, the amount of slot terminals dipped by 435 to 26,155.
This trend suggests a slow yet steady departure from the industry’s overreliance on slot terminals for gaming revenue.
Why focus on table games over slots?
But why the change in focus? There’s a few possible reasons:
- Tax rate: Put simply, PA casinos get charged through the nose on slot revenue (54 percent). This isn’t the case for table games, which are taxed at a much more reasonable 16 percent.
- Player frustration: This is pure speculation, but it’s plausible that players are redirecting their gambling dollars away from the state’s slots (which return just approximately 90 percent) to its significantly lower house edge table games.
- Emerging technologies: The rise of stadium gaming enables one or two dealers to service dozens, if not hundreds, of players simultaneously. Stadium games are taxed at the table game rate in Pennsylvania.
On a side note, should Pennsylvania pass online gambling legislation where the online tax rate mimics the land-based one — a real possibility — then online operators may also place the crux of their focus on table games.
Although even then, operators will be extremelyhard–pressed to turn a profit. Online sites are even more reliant on slot revenue than live venues. One reason being, they’re unable to offer high margin, non-gaming amenities, such as food & drink, retail outlets, and hotel rooms.
Judging by the trajectory of Pennsylvania’s land-based industry, a 54 percent tax rate on online slots would eventually result in lower online gambling revenue, and grosslynegative margins.
Contents
August marked the eleventh straight month of year-over-year slot machine revenue declines in Pennsylvania.
However, the news was not all doom and gloom for the 12 Pennsylvania casino properties. In fact, while the Pennsylvania Gaming Control Board reported August 2017 slot machine revenues were down from the same month one year ago, the drop was just 0.4 percent.
Plus, in terms of real dollars, August 2017 slot machine revenues reached $193,190,478, down from $193,949,367 in August 2016. This represented a dip of just $758,889.
Big slot players see gains
Additionally, the state’s three biggest players in terms of slot machine revenue saw increases in August 2017.
Long-time Pennsylvania slot revenue leader Parx Casino saw its August 2017 slot machine revenue reach over $32 million. This was up 0.17 percent from the $31.98 million posted in August 2016.
Pa Slot Revenue
Plus, perennial Pennsylvania slot machine revenue runner up Sands Casino Resort Bethlehem saw August 2017 slot machine revenue numbers hit over $25 million. This represented a 1.38 percent increase over the $24.78 million in slot machine revenue Sands Bethlehem reported in August 2016.
Additionally, the Rivers Casino in Pittsburgh posted $22.1 million in slot machine revenue in August 2017. This was up 1.36 percent from the same month last year.
PA nets $95 million in tax revenue from slots
Pennsylvania charges a 54 percent tax rate on slot machine revenues, the largest in the country. Thanks to that, the state itself continued to be the largest beneficiary of slot machine play last month. In fact, the Pennsylvania Gaming Control Board reported the state pulled in $95,047,981 in tax revenue from slot machines in August 2017.
The slight dip in overall slot machine revenues can be at least partly attributed to the fact there were fewer machines in operation compared to a year ago. In fact, the Pennsylvania Gaming Control Board reported the average number of slot machines operating in the state was 25,814 in August 2017. This compared to 26,676 in August 2016.
For the most part, monthly increases in table game revenues have been offsetting declines in slot revenues over the past year. However, in July 2017, Pennsylvania gaming revenues did dip 0.51 percent compared to a year earlier. Table game and overall revenue numbers for August 2017 have yet to be released.
Pa Gambling Revenue
The biggest winners and largest losers
The biggest gains in slot machine revenue for August 2017 were reported by the Mount Airy Casino Resort. The Mount Pocono, PA property boasts a 62,000-square foot casino with 1,800 slot machines and table games. It posted more than $13.2 million in slot machine revenues in August 2017. This represented a 6.6 percent increase from the $12.3 million posted in August 2016.
Pa Slot Revenue Office
Lady Luck Casino Nemacolin reported the largest drop in August slot machine revenues. The state’s smallest casino property saw slot machine revenues drop 6.12 percent. They went from $2.6 million in August 2016 to $2.49 million this year.