As we have documented in past Policy Briefs, the Rivers Casino has gotten off to a rocky start-first with ownership problems and then with weak gross terminal revenues from slots operations. At the completion of its first full year (August 2009-2010) we noted that the $222.3 million earned in gross terminal revenues fell woefully short of its own projections of $428 million as well as the $362 million projected from the Pennsylvania Gaming Control Board (PGCB). It did not even compare favorably to its southern competitor, the Meadows Casino in nearby Washington County, which had earned $252 million during the same time frame-above both its’ own projections and that of the PGCB.
Pennsylvania’s slots parlors are now deep into gambling’s fall slow season. This coupled with the impacts of a national recession has caused one area casino to announce that up to 100 employees will be laid off. Instead of the beleaguered Rivers Casino laying off workers as might have been expected, it was its southern neighbor, the Meadows.
That the Meadows Casino made the announcement came as a bit of a surprise. Their Gross Terminal Revenues (GTR) to date had been well above expectations-they are averaging $5.9 million per week since the beginning of June which gives them a pace of more than $307 million. Even though wagering and GTR at the Meadows had declined slightly with the opening of Pittsburgh’s casino, they should easily beat their initial forecast of $236 million in annual revenues.
Compare these results with those of the Rivers Casino. Since opening to much fanfare in August, the Rivers is averaging just more than $4 million for annual pace of $210 million-well below their projections of $427 million. Their performance to date has been so worrisome that they renegotiated their annual payment for the new hockey arena when it was clear they would be unable to pay the full $7.5 million by the end of October. Instead they made a partial payment of $2.35 million with the balance due in April. (It’s worth noting that the Meadows’ has no such community benefits obligation.) Standard and Poor’s also lowered the Rivers’ credit rating from a B to a B-. It’s fair to say that things are not working as the owners (and politicians) had imagined through the first few months.
However, true to their all-is-well mentality, management at the Rivers insists everything is fine. In fact they claim to be in hiring mode to staff their newest restaurant with several more open positions at the facility. Is this whistling past the graveyard or do they expect activity to pick up? As we noted in a recent Policy Brief (Vol. 9, No. 52), the fall season has typically been low for Pennsylvania’s casinos and activity remains low through early spring.