Harrah’s rolls on despite some bumps
Nov 06, 2013 | 1214 views | 0 0 comments | 14 14 recommendations | email to a friend | print
Staff Report

It’s been nearly one year since Isle Casino rolled the dice and opened its doors in Cape Girardeau, Mo. Having another competing casino so close, is just one factor that has impacted Harrah’s revenue over the last couple of years, says Harrah’s Metropolis director of marketing Ryan Bierbaum.

The Riverboat Gambling Act was enacted in February 1990, making Illinois the second state in the nation to legalize riverboat gambling. On Sept. 11, 1991, the first riverboat casino began operation in Alton.

Metropolis got into the game on Feb. 23, 1993 with the opening of Player’s Riverboat Casino.

Twenty years later, the facility has seen various changes — new ownership, Caesars Entertainment; a new name, Harrah’s Metropolis Casino and Hotel; new floating facilities including a 258-room hotel and entertainment venue, which opened in June 2006; and some competition in the likes of regional casinos and video gaming terminals.

Harrah’s is one of 10 casinos operating in the state — Argosy Casino in Alton, Par-A-Dice in East Peoria, Jumers in Rock Island, Hollywood and Harrah’s in Joliet, Hollywood in Aurora, Casino Queen in East St. Louis Casino Queen, Grand Victoria in Elgin and Rivers Casino in Des Plaines. Each riverboat gaming operation is authorized to offer up to 1200 gaming positions, consisting of a mix of electronic gaming devices and table games.

According to the Illinois Gaming Board’s (IGB) 2012 year-end report, revenue from those facilities for the calendar year was $1.6 billion, up slightly from 2011 but down by around 38 percent from 2007. Admissions in 2012 were 16,157,869 — a 9 percent increase from the 14,801,944 admissions in 2011. Admissions in 2008, the year Illinois’ smoking ban took effect, were 14,637,054

According to Tom Swoik, director of the Illinois Casino Gaming Association, Illinois has lost about 20 percent in 2008 to bordering states that don’t have a smoking ban. In addition, another almost 20 percent has been lost annually since then due to the economy.

Harrah’s, which currently employs 580 people, collected $97.6 million in 2012, a 2.3 percent increase from $95.4 million in 2011. Its 2012 average daily admission was 1200 people, down from 2344 reported in 2011. So far in 2013, according to IGB reports posted from January through September, Harrah’s has had 526,752 admissions grossing almost $60 million. September’s admission of 52,097 was down 10,409 from 2012 numbers. Its $6,533,672 gross was down over $1.85 million from a year earlier.

“We have had a number of significant impacts to revenue in recent history,” Bierbaum said.

Among those he listed: the smoking ban in 2008; flooding in 2011 that closed the facility from March 16-21 and again April 25 through May 26; the installation of video gaming terminals across the state in September 2012; also in September 2012, Kentucky Downs in Paducah installed 200 instant racing terminals, which look like slot machines but bet on previous horse race outcomes; the opening of Isle of Capri in October 2012; and the rebranding of Casino Aztar to Tropicana Evansville in Indiana, which occurred in June 2013.

According to figures supplied by in Bierbaum, the state had 61 video gaming terminals in September 2012; 3379 in January 2013; and 10,250 units in September 2013. In September 2013, $14.5 million was played on the 430 video gaming terminals in southernmost Illinois, which is Mount Vernon south.

Some 95 minutes away, Isle of Capri opened in October 2012 welcoming 10,703 patrons, grossing $613,981. In September 2013, the latest numbers from the Missouri Gaming Commission, the Cape casino admitted almost 71,000 patrons and grossed just over $4,610,000.

Tropicana Casino in Evansville, Ind., just over two hours away, originally opened as Casino Aztar in 1995 as the state’s first casino. According to the Indiana Gaming Commission’s latest figures, in September 2013, 91,295 were admitted, grossing $8,390,590. A year earlier, the facility was still Casino Aztar, welcoming 95,737 patrons, grossing $9,625,023.

The monetary impact isn’t felt by Harrah’s alone.

The City of Metropolis’ coffers rely heavily on their share of the casino’s revenue. The city receives $1 of the admission tax and 5 percent of the adjusted gross revenues from gambling receipts; the balance goes to the state. According to the IGB 2012 annual report, Harrah’s distribution to local government was $5,652,802 — up 1.69 percent from 2011 but down over $1.7 million from 2008.

Until 2010, the utility funds were subsidized by gaming revenue.

“Fortunately, we don’t have to do that any more because we managed to get our fees where they need to be to covers all the costs plus all the projects of those funds,”said City Financial Officer Patricia Suttles during the Sept. 23 Metropolis City Council meeting when discussing the city’s 2013-14 Appropriations Ordinance. “Can you imagine what kind of shape we’d be in if we were still subsidizing water or sewer with gaming revenue? There would just not be enough pie to go around.”

For the 2013-14 fiscal year, the city projected its gaming revenue to be $5 million based on the funds generated in 2012-13. For the past fiscal year, the city projected gaming to be $6 million and saw a $1 million deficit. Suttles noted that the last time gaming revenue hit the $5 million mark was 1995, three years after the boat opened.

Numbers for the first two months of of the city’s current fiscal year show July and August are down 11 percent from last year.

“If things continue like they are with gaming revenue so low, we’re going to have to make decisions again on how we’re going to either cut costs or raise revenues,” Suttles said in September looking ahead to the 2014-15 Appropriations Ordinance. “We have several funds, including payroll, that are so dependent on gaming revenue. If gaming revenue was to go down 10 to 11 percent again another year, it’s going to get down in the $4 million range. We would definitely be looking at making some decisions again. Gaming revenue is still on the decline, as of right now, I think what we should do is continue to monitor gaming revenue at least through this first quarter and see what it does. We definitely want to be proactive, but we certainly do not want to cry wolf.”

Bierbaum said Harrah’s recently completed upgrading its gaming facility.

“Caesars just completed the largest gaming purchase any gaming company has made. As a company, we purchased 7000 video poker machines from International Game Technology. The move allowed the company to strengthen our position our video poker position in the market,” he said. “As a result of the deal, we have upgraded all of our video poker machines. The Metropolis property is in the final stages of installing the units. In a separate purchase, we also upgraded approximately 200 slot machines, which gives us a total of over 300 new games on the floor. Caesars also recently updated all of the property websites to be more intuitive and user friendly but for most recent updates with regards to entertainment,”

The Metropolis location is also getting an aesthetic makeover.

“We replaced the casino’s carpet and seating at the machines last fall, and we currently have a number of capital improvements in process that will improve the aesthetics in some of the customer facing areas,” Bierbaum said. “Further improvements for 2014 are currently being discussed. We are also negotiating with concert performers and entertainment acts for 2014.”
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