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NOV 27 - DEC 03, 2015

Casino Revenues Plummet Here as
Gaming Market Becomes Saturated

By Mike Hudson

DEC 03, 2015

With three and possibly four private, big money casinos set to be licensed in New York State by the end of the year, and a plethora of new glitzy casinos set to open or already open in Ohio, Pennsylvania, Maryland, Massachussets and Rhode Island, the modest offerings on the gaming floor of the Seneca Niagara Casino here may be starting to seem a little shopworn.

Chicago-based Rush Street Gaming plans to build the $300 million Rivers Casino & Resort at Mohawk Harbor in Schenectady. The casino, hotel, and banquet facility would be next to a $150 million mixed use development being built along the river by the property owner, Galesi Group of Rotterdam.

Two other upstate casinos could also be licensed. The Montreign Resort Casino is slated for Thompson, in Sullivan County, and the Lago Resort and Casino in Tyre, Seneca County.

Separately, the developers of a fourth potential casino, Tioga Downs Racetrack in the Nichols, Tioga County, are seeking a recommendation from the state's Gaming Facility Location Board for a license.

State Gaming Commission spokesman Lee Park said this week regulators are working "as expeditiously as possible" to issue licenses but offered no timetable for completing the complicated process, saying only that it's possible they could be issued before the end of the year.

The four private casinos would vie with five Indian casinos in the state.

At least eight new casinos are expected to open by the end of 2018 in Maryland, Massachusetts, New York and Pennsylvania. Besides Atlantic City casinos, the new businesses will hurt existing gambling halls in Maryland, New York, Pennsylvania and Rhode Island, according to a top investor advisory firm.

Moody's Investors Service said in a report Monday it expects the eight new casinos, altogether worth $5 billion, that will be opening in the region over the next three years will further stress business in Atlantic City, where four of the 12 gambling halls went out of business in 2014. The closings were due in large part to ever-increasing competition in the region.

Moody's did not predict how many will go belly-up, but said the Trump Taj Mahal, Caesars and Bally's "are already on the brink." Each is in Chapter 11 bankruptcy.

Thus far, the city of Niagara Falls has received nearly $200 million as the local share of slot machine revenues generated by the Seneca Niagara Casino since its opening in 2003.

But the revenue has been declining steeply in recent years, and increased competitions has been a big part of it. The city’s share of the casino revenue has fallen steadily, from $21.6 million in 2012 to $20.2 million in 2013 and $19 million last year. Projections show that, this year, just $18 million will be realized and things look even worse for 2016.

When the Seneca Niagara Casino first opened its doors in 2003, buses arrived on an hourly basis from nearby cities such as Cleveland, OH, and Erie, PA

But since then, Niagara, Presque Island Downs and Casino has opened in Erie, PA., providing a gambling venue for thousand who, in the early days, were bused every morning and afternoon from that Lake Erie city. With a full race track, 2,000 slot machines and green table games, it is located around 100 miles from Niagara Falls.

And in Northeastern Ohio, Cleveland now has three casinos close by. The Horseshoe Casino Cleveland opened in 2012, the Thistledown Racino, and the Hard Rock Casino, both of which opened in 2013, make the 200 mile drive to Niagara Falls a worrisome bother.

The long bus rides along the bleak, snow covered Lake Erie shoreline are largely a thing of the past as the Cleveland locals enjoy fun and games in their own back yard.

Elsewhere, three casinos are set to open in tiny Massachusetts, Mohegan Sun is talking about opening a second and of course there’s the competition directly across the mighty Niagara River, in Niagara Falls, Ont., where the Fallsview Casino Resort and Casino Niagara remain popular attractions on the glitzier side of the Rainbow Bridge.

"The fact regional gaming revenues excluding Nevada remained flat, despite further improvement in the economy and additional regional casinos throughout the U.S., is a strong indication that U.S. consumers will continue to limit their spending to items more essential than gaming, even as the U.S. economy continues to improve," wrote Moody's Senior Vice President Keith Foley in the report "Outlook Update US Gaming Industry: Moving to Negative Outlook on Weaker-than-Expected Gaming Revenue."

In addition to the head to head competition for what must be considered as static number of gamblers, there is the perception by some that Indian casinos just don’t measure up in terms of service and amenities to privately run casinos operated by gaming companies with years of experience in the field.

All of this adds up to bad news for the Seneca Niagara Casino and bad news for the city of Niagara Falls, which uses a huge chunk of casino money every year just to keep the lights turned on and the water running at City Hall.






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