Casinos are a fickle business.
Back when the Seneca Gaming Corp. still filed earnings reports, it explained away a drop in quarterly gambling revenue at its Niagara Falls casino in early 2005 with a variety of reasons.
Two new casinos – its own Seneca Allegany Casino and the Niagara Fallsview Casino Resort in Ontario – had siphoned off customers. One patron had walked away with an unusually large win. The winter weather had been bad.
And finally: It wasn't a leap year.
When your business is raking in millions of dollars a day, every one counts. And one fewer day means one fewer opportunity to collect a dollar from a customer.
But it's not just calendar quirks that can turn the luck of casinos. There are reports of gambling halls across the country that have seen business erode as the number of casinos has mushroomed.
Now, Gov. Andrew Cuomo is chasing those same gambling dollars as he pushes the state toward a vote later this year to expand the number of casinos in New York. He's positioned the proposal as an economic development plan for tired upstate towns. “We need jobs in upstate New York and economic activity in upstate New York like we need oxygen,” he told reporters last week.
But the plan is just as much about the dollars those casinos would bring to a state budget already reliant on gambling revenue. And New York is just the latest state craving more cash.
Pennsylvania and Ohio have drawn dollars from Indiana and New Jersey. Massachusetts is moving forward with casino plans, and Maryland and Rhode Island have approved more gambling as they try to keep bettors in state.
Once states get a taste, it's hard to let go as gambling revenue drops. In New Jersey, where the number of visitors to Atlantic City has steadily declined since 2005 as Pennsylvania drew customers away and the recession hit, the state has now legalized online gambling in an attempt to make up the lost dollars.
Moody's Investors Service in December painted a dreary picture of the increased competition in the industry, noting it would “only further deluge regional and local gaming markets.”
“As a result, U.S. gaming operators will have to rely even more heavily on coaxing existing customers to visit more frequently and to spend more during each visit in order to grow earnings by a meaningful amount,” analysts wrote.
Niagara Falls, Ont., Mayor Jim Diodati sees the competition coming. Talk is under way of a mega casino in the Toronto area, one that could draw customers away from the two casinos that have made their mark in his city.
“Before, it was 'build it and they would come,' and that was enough,” Diodati said. “That's not enough today.”
He's already looking to the future with hopes of repositioning casinos in Niagara Falls, Ont., with high-end entertainment acts that would draw new customers and lure back those who have left. To do that, he wants to see a 7,000-seat venue built in his city.
“You have to reinvent yourself,” Diodati said of today's casinos. “You have to be creative with your marketing, and you have to be creative with your competition.”
There might be a short-term windfall for New York if it builds new casinos; but as in other states, it won't take long for that winner's high to rub off. Then what will be the state's next get-rich-quick scheme?