CHARLES TOWN – Jefferson County elected leaders can’t count on turning anytime soon to Hollywood Casino to right the county’s $3.9 million budget shortfall.
On Friday, officials with Penn National Gaming told investors that they expect the opening of the Horseshoe Casino in Baltimore will hurt business at the Charles Town casino, though they do not expect it to be as large as the impact of Maryland Live.[cleeng_content id="238356152" description="Read it now!" price="0.49" t="article"]
And it could only get worse in 2016 with the opening of MGM National Harbor in the Washington suburb of Prince George’s County.
Chief Operating Officer Jay Snowden told analysts from major investment firms that all gaming firms are currently struggling with “a relatively soft and cautious consumer environment,” according to transcripts from seekingalpha.com. But, it’s not just consumer cautions — competition was also hurting revenue at a number of establishments, including at Charles Town.
“Several of our core markets, which has resulted in some cannibalization of [two] of our properties, most notably Charles Town and Lawrenceburg,” Snowden said.
“Cannibalization” is what the gaming industry calls the loss of customers to new competition.
Penn National, which operates some 26 casinos, said it accounted for the negative impact opening of the Horseshoe Baltimore, which is slated for September, when making estimates of the company’s future revenue. Nonetheless, officials said the impacts would not be as severe as those associated with the opening of Maryland Live, currently the largest casino in the state.
“Starting in Charles Town, clearly, the opening of Horseshoe Baltimore in the August-September time period will have far less effect from what we saw with Maryland Live! opening up in 2012 and then adding table games in 2013,” said CEO Timothy Wilmott.
The bigger threat waiting in the wings, however, is the opening of MGM National Harbor in Prince George’s County in 2016. Penn spent more than $40 million in a 2012 advertising war to try to prevent the casino from gaining approval in a voter referendum.
In all, more than $90 million was spent in the battle over Question 7 which, as the Las Vegas Review-Journal noted, was more than had been spent in the four prior gubernatorial elections.
MGM plans to invest $925 million in the new facility, installing 3,600 slot machines and 140 gaming tables. It also plans a 4.5 star luxury hotel and other high-end accommodations.
Taxes deriving from casino revenue — an important portion of county and municipal tax revenue — have already fallen sharply since the opening of Maryland Live – one of the major drivers of the Jefferson County Commission’s budget crisis.