MGM Springfield’s gaming revenues falling short, expert says
After three months, Massachusetts’ first and so far only full-scale casino is underperforming, according to a Northeast gaming expert who chairs the political science department at the University of Texas Rio Grande Valley.
“The ‘curiosity effect’ was small and didn’t last very long,” Clyde Barrow said Monday after reviewing the latest revenue numbers for MGM Springfield, the nearly 21.2 million in gross gaming revenue last month, including 7.9 million in table-games revenue.
For the second straight month, the totals were down over the previous month.
“At this point, total gross gaming revenue for MGM Springfield is coming in at about half of what was originally forecast,” Barrow wrote in an email. “This is double trouble, because usually casinos experience a ‘curiosity effect’ in their first two or three months of operation as people want to see the new game in town. MGM’s revenues are already falling month to month so it was a short curiosity effect. Some of this decline may be seasonal, but coming in so far below forecast bodes ill for the future.”
Nevertheless, MGM Springfield issued an upbeat statement Monday.
“As we move into the holiday season, we continue to be pleased with our overall performance at MGM Springfield,” Michael Mathis, the casinos’ president and chief operating officer, said. “November was another solid month for us as our restaurants, bars, lounges, casino and hotel experienced strong volumes of guests. Our festive programming and robust marketing strategy is generating new visitors and new traditions in downtown Springfield.”
In 2014, MGM executives told the Massachusetts commission that they expected their Springfield casino to generate about 500 million a year by its third year.
Barrow, who studied Northeast gaming for decades as director of the Center for Policy Analysis at UMass Dartmouth, said MGM Springfield’s early results indicate it probably will generate between 250 million in gaming revenue in its first year.
“The flip side of this coin is that the impact on Mohegan Sun and Foxwoods has been proportionately reduced as a consequence of MGM’s below forecast performance,” Barrow wrote, referring to the southeastern Connecticut casinos owned, respectively, by the Mohegan and Mashantucket Pequot tribes.
Both tribes have reported year-over-year declines in their casinos’ slots revenues in the months since MGM Springfield opened and have been planning for years to jointly develop a “satellite” casino in East Windsor to counter the Massachusetts casino’s effect.
East Windsor could deliver “a death blow” to MGM Springfield, said Barrow, who has provided consulting services to the tribes in the past.
Barrow wrote that MGM Springfield “is clearly trying to improve its position” by increasing the percentage of slots wagers it returns to customers, “but this has only brought it into line with Mohegan Sun and Foxwoods and does not constitute a competitive advantage.”
MGM Springfield’s slots “hold percentage” fell from 9.6 percent in September to 8.8 percent in October and to 7.9 percent in November. In that time, Mohegan Sun and Foxwoods have reported hold percentages of around 8 percent.
Barrow wrote that the ratio by which MGM Springfield has missed its original revenue forecast is in line with has happened in New York state, where four resort casinos have opened over the last 18 months. Revenues at all of them have come in well below their original forecasts, Barrow wrote, suggesting “that the Northeast casino gaming market is mature and may have reached saturation.”