Detroit Casinos Post Record Annual Win Despite Continued High Unemployment

Posted on: January 9, 2019, 08:16h. 

Last updated on: January 9, 2019, 08:16h.

Detroit casinos won a record $1.44 billion in annual gross gambling revenue (GGR) in 2018, a $20 million premium on the previous top mark set in 2011.

Detroit casinos revenue 2018
MotorCity and two other Detroit casinos won record wins in 2018. (Image: MotorCity Casino Hotel)

MGM Grand, MotorCity, and Greektown capped off December with a nearly 10 percent year-over-year jump. For the fourth quarter, the three casinos won $361.1 million, a 5.6 percent increase to break the $1.42 billion ceiling.

Gaming analyst Alex Calderone told The Detroit News, “This is a business that is entirely dependent on the health of the consumer. Gas prices were cheap, the local and national economy were relatively healthy.”

We had a stock market that was performing well. There was kind of a perfect storm of factors to favorably influence the casino business,” Calderone concluded.

MGM was again the top dog, with the casino accounting for $619.2 million, or a 43 percent market share. MotorCity was next with $489.7 million, and Greektown third at $335.2 million. Billionaire Dan Gilbert announced in November that he was selling Greektown to Penn National and Caesars’ real estate investment trust for $1 billion.

Detroit Prospering?

The national unemployment rate dipped just 0.2 percent from 4.1 percent to 3.9 percent between December 2017 and last month. Detroit fared a bit better in terms of getting people back to work, but the Motor City still has an unemployment rate more than double the national average at eight percent.

However, for Wayne County, in which Detroit sits, and the surrounding counties of Livingston, Oakland, Macomb, St. Clair, and Lapeer, the unemployment rate is just 4.4 percent. Unemployment in those counties was stable in 2018.

Michigan’s statewide unemployment is at 3.9 percent as of November. Outgoing Michigan Governor Rick Snyder (R) hailed his performance last month by pointing to a jobless rate of 11.3 percent when he took office in 2011.

Snyder was replaced January 1 by Governor Gretchen Whitmer (D).

Oh (and) Canada!

Another reason for the Detroit casinos’ success in 2018 was the nearby Caesars Windsor strike in Ontario, Canada. The resort just across the Detroit River in the neighboring country closed in April after workers walked off the job.

The union representing Caesars workers were demanding a $1.75 per hour wage increase over three years for both full and part-time workers. That accounted for a 9.4 percent increase on the average rate.

The protest lasted two months. The union agreed to end the strike after saying their demands were “75 percent met.”

During that time, Detroit’s three casinos posted higher gaming revenues. They won some $4 million more in April 2018 than the same month in the prior year, $800,000 more in June, and recorded a $300,000 increase in July.

The more important impact, however, could be in the long term. Calderone believes the two-month strike could change behavior patterns. “Management (Caesars) should be concerned about some measure of erosion or loss of patron loyalty,” Calderone stated.

Caesars Windsor was completely closed during the two-month period. Along with gaming operations, concerts were canceled, and those with hotel bookings had to take their business elsewhere.