Plainville Slots Parlor Expected to Raise $250M Revenue in 2 Years
Saturday, March 01, 2014
Rhode Island meanwhile is forecasting a $422.1 million drop in state revenue over a coming five-year period as Massachusetts looks to embrace gaming.
In Plainville, licensee Penn National Gaming received the Massachusetts Gaming Commission's nod for its location, national expertise, and for complementing an existing harness track.
“It will serve as an economic driver for the region,” said commission Chairman Stephen Crosby on Friday, as Penn National accepted the terms of the license agreement.
Timothy Wilmott, president of Penn National, said his company couldn't be more pleased. “We're going to be on the ground Monday with the construction team,” he said.
Plainville expected to be popular
“I think they made the right decision for a lot of reasons,” said Clyde Barrow, director of the Center for Policy Analysis at University of Massachusetts Dartmouth, where the Northeastern Gaming Research Project has followed trends in gambling since 2004.
Timing was one important factor in choosing a winner. “They've already invested $20 million,” Barrow said, in infrastructure improvements. “It's basically ready to go,” with just the slot machines needed to be purchased.
Operations could begin on a partial basis as early as August, with Wilmott saying he expected the $225 million, 1,250-machine slot parlor to begin full operations in the second quarter of 2015. The license is for a five-year term.
Currently, over half of all combined visitors to Rhode Island's two gaming facilities, Twin River Casino and Newport Grand Slots, hail from Massachusetts according to surveys by Barrow's gaming research group. Bay Staters outnumber Rhode Islanders two to one in those facilities.
In 2012, Massachusetts gamblers spent a combined $512 million in Rhode Island on gaming, food and beverage service, and other entertainment.
“The original intent (of the slots parlor) was to compete with Twin River,” Barrow said. The Plainville location “is perfect,” he continued, positioned midway between the major metropolitan areas of Boston and Providence and a scant 14-mile drive north of Twin River in Lincoln.
“I think you'll see a very successful slots operation,” predicted Barrow.
The size of the slots parlor meets less than half of current demand, leaving room for Rhode Island's facilities — and future full-scale casinos in Massachusetts proposed for the area. (The commission is expected to award those licenses later this year.)
Acknowledging future competition from full-scale casinos, “we do think the market's big enough that we will prosper,” Wilmott said Friday.
So who goes where? “It's entirely a question of proximity,” according to Barrow. Whether gamblers hail from Massachusetts or Rhode Island, “they're going to go to whatever facility is closer.”
What's the financial impact?
In the final 3-2 vote by the commission Thursday, Leominster's proposed parlor received the minority two votes. That location would have lessened the immediate blow in Rhode Island.
Evidenced in the latest biennial New England Gaming Market report released last year, Bay Staters are hungry for gaming: 58 percent surveyed had legally gambled in the previous 12 months, the highest rate in all of New England. More than one in five had traveled outside the state to visit a casino.
Massachusetts' single slots parlor is taxed particularly high, at 40 percent of gross gaming revenue. Forthcoming resort casinos will be hit with a 25 percent gross gaming revenue tax.
Creating 1,000 construction jobs, the slots parlor is expected to employ 500 on a permanent basis and generate $60 million in tax revenue after the three casinos come online.
Twin River readies for some competition
“We knew this day was coming,” says Twin River spokesperson Patti Doyle, who said the hope and expectation was that guests continued to flock to the casino for its gaming, entertainment, and, most importantly, customer service.
“We do define ourselves as a convenience casino, and there's no beating our location,” Doyle said. “That will always be a draw.”
While Twin River now offers table games, trumping the slots-only Plainville parlor, there are casino proposals in the neighborhood in Fall River, Mass. “We just decided we had to focus on those things we can control,” Doyle said. “What we can control is a positive guest experience at Twin River.”
Gary Sasse, director of Bryant University's Hassenfeld Institute for Public Leadership, put Twin River's revenue loss from the forthcoming slots parlor at between 8 to 12 percent. “But this is only the tip of the financial storm that could hit Rhode Island,” added the GoLocal MINDSETTER. “Once a slot parlor and casinos are operating in Massachusetts they are projected to reduce the $300-plus million the state gets from Twin River by about one-third, and could well drive Newport Grand out of business.”
The casino expert at Dartmouth, Barrow put the impact in Rhode Island of Massachusetts gaming at about 15 percent of Twin River's net terminal income — an annual loss of $60 to $70 million. Newport Grand faces the same percentage loss.
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