Ohio Casinos Fall $1 Billion Short of Year One Projections

Posted on: March 13, 2014, 05:30h. 

Last updated on: March 13, 2014, 08:30h.

Ohio’s casinos – including the Horseshoe Cleveland – fell far short of revenue predictions in their first year of operations (Image: onlinepoker.net)

There could be some cause for alarm in the Buckeye State: Ohio casinos have generated far less revenue than initially estimated during their first full year of operation, according to the Ohio Casino Control Commission, and experts say it could be down to a failure to market themselves effectively.

Huge Shortfall for Year One

Regulatory officials for the state admit that, for the 12 months to March 4, 2014, their four casinos generated over $1 billion less than the figure projected during the controversial 2009 campaign to legalize gambling in Ohio.

While the Horseshoe Cleveland first opened in May 2012 and Hollywood Toledo several weeks later, the Horseshoe Cincinnati finally opened its doors almost exactly a year ago, and, in the past 12 months, all casino revenue totalled just $839 million for the state, significantly lower than the $1.9 billion promised by the pro-gambling lobbies during the initial push to legalize gaming there.

The Horseshoe Cleveland – operated as a joint venture by Caesars Entertainment and Rock Gaming – proved to be the most successful of the four properties, with an adjusted gross revenue of $242.6 million; while Hollywood Toledo posted the worst results for 2013 with just $183.4 million, even though they were open for two months before competitor Horseshoe Cincinnati. Slots were the biggest revenue generator, bringing in $569.4 million across all properties, while table games generated just $251.9 million from all the casinos involved.

Anti-Casino Factions Say “I Told You So”

While the figures may disappoint state legislators hoping to plug budget deficits with healthy casino revenues, they will almost certainly anger anti-gambling groups who are still fiercely opposed to the casinos’ existence at all. Legislation to legalize gambling in Ohio was passed by a very small margin, and the issue still polarizes the population.

“It’s always been laughable to read what they predicted they would do for this state in terms of jobs, in terms of economic development and in terms of revenue,” Rob Walgate – vice president of the Strongsville-based American Policy Roundtable, perhaps the noisiest of the anti-gambling groups – said recently.

However, Bob Tenenbaum, an Ohio spokesperson for regional casino operator Penn National Gaming, Inc. which owns Hollywood Columbus and Hollywood Toledo, is one of several industry leaders to urge both parties to treat the results with a modicum of balance and restraint. Casinos, he cautions, need time to tweak their operations and develop their database of customers, and then build their marketing campaigns around that database.

“It takes a minimum of a year, two years before you have a sense of what long-term revenue is,” Tenenbaum said. “We continue to be pleased with the progress our casinos are making.”

It’s not all doom and gloom, though. While Ohio’s eight gambling venues – casinos and racinos – reported alarmingly poor figures in January of this year, takings were up significantly in February, despite the shorter month and severe winter storms. The casinos saw an 11.9 percent jump from January, to $66.76 million, while the state’s four racinos jumped 11.2 percent to $43.60 million.

While it’s difficult to make generalizations based on one month, assistant professor of Restaurant, Hotel and Tourism at Ohio University Alan Silver – himself a former casino executive – said he hopes it’s a sign that casino revenues are beginning to stabilize and that the properties are finally doing a better job of marketing themselves through promotional campaigns, such as loyalty cards and free play.

“Scioto Downs is still going strong with their promotional credits, and I see Hollywood has bumped it up as well,” he said. “What drives the casino business is loyal customers and, once you get them, repeat visits.”

It looks like Ohio’s gaming venues stepped up their promotional activities as a reaction to January’s disappointing figures, and while it’s too early tell whether this made all the difference in 2014, it’s clearly a vital strategy for operators if they are to succeed in a state where the populace has yet to fully embrace the new Vegas-style gambling venues in its midst.