First Pennsylvania slots parlors top revenue estimates

After six months, Pennsylvania’s casino industry has generated more money than anyone expected. Slots at Mohegan Sun at Pocono Downs, the first slots parlor when it opened near Wilkes-Barre in November, average more than double the money predicted by either the state or the operator during licensing process.

And the temporary casino – with little more than half the games – is on pace to make more than the fifth-year projections for Pocono Downs’ permanent slots parlor set to open next summer with 2,000 machines. „Everyone in the state is doing very well,“ Pocono Downs CEO Robert Soper said.

Since November, gamblers have wagered nearly USD 3.3 billion at the state’s first four casinos: Pocono Downs; Philadelphia Park Casino & Racetrack and Harrah’s Chester Casino & Racetrack, both near Philadelphia; and Presque Isle Downs, outside Erie.

The state has awarded 11 casino licenses. The Meadows Racetrack & Casino in Washington County is expected to open in early June, a setback from previous plans to open by Memorial Day.

Majestic Star Casino plans to open on Pittsburgh’s North Shore within 14 months of getting the license, which is stalled by appeals filed by two losing bidders. The state Supreme Court plans to hear arguments in the case Tuesday and is expected to issue a ruling next month. Players have won back almost USD 3 billion, for a payback rate of 90.65 percent.

Casinos have generated USD 303 million in revenue, with us$ 166 million going to the state for property tax relief, development and a horse racing fund for breeders and bigger purses at tracks. „This thing is designed to generate significant amounts of revenue,“ said gambling board member Sanford Rivers, of Churchill. „When you look at what’s gone on thus far, ’Gee, this is beyond anyone’s wildest guess or expectations.“

Slots still haven’t brought in enough to cut property taxes, state Budget Secretary Mike Masch has said. The state’s Property Tax Relief Fund is expected to have USD 445 million by October – but that’s short of the USD 570 million needed to offer tax breaks. The first cuts will come for the 2008-09 school year.

Revenues at each slots parlor should level off as more casinos open and expand, said state Gaming Control Board spokesman Doug Harbach. Still, the agency expects the „strong showing“ to continue, he said. „The high interest (in gambling) is not totally unexpected,“ He said. „There will be some cannibalization as more slots facilities come on line and real competition takes root.“

The Meadows operators have said they expect to see a windfall by being the first casino to open in the Pittsburgh region. „The casino at The Meadows will knock everybody out, in terms of how much money they’re going to do,“ said Ed Meena, a Point Park University history professor who tracks the industry. „For Washington, it’s going to be an incredible windfall.“

The early revenue numbers show how much money was being lost when residents traveled to other states for gambling, said gaming board member Kenneth McCabe, of Cranberry. „I’m hoping it’s going to last,“ McCabe said. „It shows the thirst for Pennsylvanians to want to gamble.“

And that’s not going to change, said Denis Rudd, tourism and hospitality professor at Robert Morris University. „It’s pent-up desire,“ Rudd said. „People want (casino gambling) but they don’t want to have to travel to Vegas or an Indian casino.“

Pocono Downs plans to add 80 more slots in June – including 40 that mimic table games. The revenue per-machine should drop as the casino expands, but the operator still expects to come out ahead, Soper said. „Overall, our revenue will grow as we grow,“ he said.