Thursday, August 28, 2008

Tribe's Pennsylvania Racetrack-Slot Parlor Reports Less Than 1 Percent Increase In Slot Revenues Last Week

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Last week's slot revenue at the Tribe's Pocono Downs racetrack-slot parlor in Pennsylvania was about the same as last year (increase of less than one percent), when the facility had half the number of slot machines that it has now.

A month and a half has gone by since the expansion at the Tribe's Pocono Downs racetrack-slot parlor in Pennsylvania opened and, although some slot figures have been reported, it is too early to tell if the facility will become profitable.

In fact, tribal members will not have hard numbers on the facility's performance until the middle of December when the Mohegan Tribal Gaming Authority files its annual audit report for the fiscal year that ends on September 30.

The Pennsylvania Gaming Control Board does, however, issue weekly slot revenue figures and last week's slot revenues increased less than 1 percent over the same week last year.

No expense figures are reported to the public by the Gaming Control Board.

The expansion at Pocono Downs more than doubled the number of slot machines in July, adding 1,276 slot machines to the existing 1,203 machines for a grand total of 2,479 machines that are now at the facility.

Six weeks have gone by since opening the expansion and the amount wagered (the handle) at the machines has increased by 19.1 percent over the same period last year, according to the Pennsylvania Gaming Control Board.

According to these numbers, the two best weeks were the first two weeks after the expansion opened. In each of the first two weeks after the expansion opened to the public, the total amount wagered at the machines was about $55 million. In the four subsequent weeks (all during August), the total amount wagered was $50 million, $51 million, $49 million and, last week, $44 million. All amounts referred to have been rounded to the nearest million.

These figures only reflect the total amount wagered at the machines and do not reflect the amount paid out to customers (about 91 percent) or any other expenses.

During the week before Labor Day last year, the amount wagered was $42 million. This year, after doubling the number of machines, the amount wagered was $44 million. The actual percentage increase for last week when compared to the year before was less than 1 percent even though the number of machines has since been doubled.

For the entire six week period since the expansion opened, slot machine wagers have gone up by about 19 percent (19.1%). But, as you can see from the above figures, the amounts wagered at Pocono Downs have trended downward since the July expansion opening culminating in last week's increase of less than one percent (0.55%).

The Mount Airy Casino, about 20 miles from Pocono Downs as the crow flies, opened in October 2007 and has since drawn customers from Pocono Downs. Mount Airy has 2,523 slot machines.

Although tribal members will not know the expense side of the Pocono Downs until the Mohegan Tribal Gaming Authority's audited financial statements are made public in December, the weekly slot numbers published over the coming weeks could give us a sense of whether Pocono Downs will continue to lose money.

The amounts wagered would need to increase dramatically for the facility to become profitable. The Mount Airy Casino has been the closest competition to Pocono Downs although it is still possible that one or two small hotel-slot parlors (with 500 slot machines each) in the Pocono Mountains could be approved. A large hotel-slot parlor, about 70 miles from Pocono Downs, is scheduled to open in the Spring of 2009 which could further drain customers from Pocono Downs.

Note: Included in the number of slot machines at Pocono Downs are virtual electronic table games, including blackjack and video poker.