Low bet limit, high gas prices challenge casinos

Q: What are the biggest challenges facing Colorado’s casino industry today?

A: The USD 5 bet limit and USD 4 per gallon gas. Our industry has not changed the pricing of its product in 18 years. The framework of limiting it to the three towns has worked very well; just look at over USD 2 billion in private capital invested, 42-plus casinos in competition with one another and probably somewhere on the order of USD 1 billion in new revenue for the state. However, in real terms, USD 5 just isn’t USD 5 anymore.
It’s certainly not the attraction it once was. The costs of running our properties in the form of offering competitive wages, health benefits and retirement plans for our employees, utility costs, insurance, property taxes, etc. have risen considerably during that time. Until recently, we have been very fortunate in that we have been able to grow the business, reinvest into the towns in terms of significant infrastructure improvements and grow Colorado gaming into a significant industry in the state. However, over the past few years, our revenues have been flat to declining. Our economics will only become more challenging due to the current economic conditions and $ 4 gas prices for a 50-minute drive into the mountains.

Q: What kind of impact has the smoking ban had on the industry?

A: Adjusted gross proceeds (casino winnings) were down approximately 15 percent in March. No doubt the smoking ban has had an impact on the industry. Given current economic conditions, it’s difficult to quantify the precise cumulative impact of the smoking ban, but it’s clear that it’s taking a toll. Wall Street lenders for private capital investment tell us that we should be prepared for a two-year decline.

Q: How has it impacted Jacobs Entertainment’s Colorado casinos, The Lodge and Gilpin?

A: So the market goes, we go, which is to say we’ve certainly been impacted. We’ve also had to invest additional capital to make it possible for smokers to leave our building without leaving our property altogether.

Q: Has Colorado’s USD 5 bet limit hampered local operators‘ ability to attract out-of-state gamblers?

A: Yes, no question about it. The current limited- stakes framework in Colorado really doesn’t cater to the out-of-state gambler, unless your aunt and uncle come to visit and you run up to the casino towns for the afternoon. Our market consists of approximately 90 percent from the Front Range who give us probably three to four visits per year as well as a large group of the semi-retired or retired community, and they probably come up routinely one day a week.
Nobody’s going to fly into Denver, rent a car and come up to Black Hawk for a week. That’s not who we are. We’ve always felt that if we can extend some of the hours, move bet limits and perhaps change some of the games, we may be able to get people to visit us. But not like Las Vegas; we will never be that.

Q: How much has the poker boom from a half-decade ago helped the industry?

A: I think the poker boom has raised awareness of our product. The poker games are called „player-banked games“ in that the players play against each other and not against the house. We don’t make a lot of money off our poker rooms; however, it is an additional amenity that we can offer. We’ve invested capital in the Lodge and Gilpin poker rooms to give our customers what they want. Many of our customers come to our poker rooms to work on their skills in order to do better in other gaming jurisdictions.
To that extent, the poker boom has helped our properties and increased awareness. Plus it provides a little ambiance. There are a lot of people that like to hang around the room and watch the strategy and the thinking that goes into a good game of poker. It’s fun.

Q: What is your favorite casino game?

A: I enjoy playing most of the table games. Especially when you can sit at a table and interact with the other players, you can really have a good time.

Q: What do you like to do in your free time?

A: I enjoy working out, running and fly-fishing, which I don’t get to do nearly enough. Oh, yeah, and then there’s golf, which is quickly becoming a hopeless case.