Hollywood Casino in Charles Town, W.V., feels the squeeze from Maryland


Craps table at Hollywood Casino at Charles Town Races. (Dominic Bracco II/For The Washington Post)

The Associated Press recently checked in on Hollywood Casino at Charles Town Races, the West Virginia casino that lost its regional monopoly when Maryland got into the casino business. Hollywood Charles Town has been particularly hard-hit by the presence of Maryland Live, which opened in June 2012 as an all-slots casino before adding table games last April and then poker in August.

According to the AP story:

The competition is taking its toll. Table-game revenue at Charles Town for the last six months of 2013, now that it faces competition, is down 34 percent from the same six-month period in 2012, from $80.7 million to $53.2 million. That alone results in a loss of nearly $10 million in tax revenue for West Virginia, from $28.2 million to $18.6 million, according to data from the West Virginia Lottery Commission, which regulates the casinos.

In October, the casino confirmed that it laid off nearly 50 dealers and other employees at the casino in response to the increased competition.

It’s only going to get worse, with MGM Resorts International licensed to open a gambling resort at National Harbor, on the Maryland side of the Potomac River, in mid-2016. Roughly half of MGM National Harbor’s gambling revenue — at least $350 million in fiscal 2019 alone — is expected to come from Virginia, most of it from Northern Virginia, a critical market for Hollywood Charles Town.

Or, as the AP says: “The death knell may be coming in 2016…”

Last year, Maryland Live generated about $586 million in gross gambling revenue — more than $150 million of it from blackjack, craps, baccarat and other live-action table games. Officials from the casino at Arundel Mills mall — about 70 miles east of Hollywood Charles Town — say Maryland Live draws between 10,000 and 20,000 visitors each day.

Hollywood Charles Town’s owner, Penn National Gaming, spent more than $40 million trying to persuade Maryland voters to defeat the 2012 gambling-expansion referendum that legalized table games and authorized a Prince George’s County casino. Analysts believed the company – which opened Maryland’s first casino in Perryville in 2010 – was trying to protect its profits at Hollywood Charles Town, its cash cow.

Penn National tried to win the Prince George’s license, but its proposal to build a $700 million Hollywood-branded casino and hotel at the historic Rosecroft Raceway was bypassed by the state’s site-selection commission.

At least the company needn’t worry about competition in Virginia anytime soon; a long-shot bill to bring casino gambling to the commonwealth was put on hold for the year by its own sponsor.

But there are other, more immediate, regional concerns.

On an earnings call Thursday, Penn National’s chief executive, Timothy J. Wilmott, noted that the opening of the Horseshoe Casino in Baltimore later this year will put another dent in Hollywood Charles Town’s revenues. It won’t be quite as deep as the one left by Maryland Live; but it’s coming, Wilmott said, according to a transcript of the call provided by Seeking Alpha:

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. … So we shouldn’t see those major hits to our top line like we saw with Maryland Live. … That said, however, they certainly are going to have depressing effects on business volumes. …

I wrote last March about the mid-Atlantic casino wars, in which Maryland was trying to win back its gamblers — and their money — from West Virginia and Delaware, which had spent years siphoning hundreds of millions of dollars in gambling revenue from Marylanders.

Delaware’s casino industry is having issues of its own, thanks to competition from Maryland and Pennsylvania.

Dover Downs, the state’s largest casino, reported minuscule net earnings of just $13,000 in 2013, according to a News Journal story. Revenue fell by about 12 percent in 2013, the paper reported, and the chief executive of the casino’s parent company said 2014 will be worse unless the state offers concessions to the struggling casinos. “It doesn’t take a rocket scientist to figure out what next year is going to look like,” Denis McGlynn said, according to the News Journal.

The picture is bleak statewide. More from the News Journal:

The state’s other casinos, which are private, told officials last year they expect losses too. Delaware Park forecast a 17-percent drop in gross revenues for 2013, while Harrington Raceway and Casino expected to lose about 4 percent.

Last year, lawmakers passed a $477 million capital budget that included an $8 million bailout for Delaware’s casinos as a short-term fix.

The biggest financial relief for casinos would be if the state decided to revert the video lottery tax structure to pre-recession rates. Video lottery games, which include slots, are easily the biggest revenue generator for casinos and the state, but several years ago legislators dramatically increased the tax rate.

The tax rate on games is entirely too high, especially for the rate of business and the competitive landscape, McGlynn said.

Prior to 2009, the state collected around 34 percent of that revenue, [state Finance Secretary Tom] Cook said. But lawmakers boosted the state’s share of the pot to 38 percent, and later to the current 43.5 percent, Cook said.

“If we were doing the business levels of what the casinos in Pennsylvania and Maryland were enjoying, we could sustain ourselves,” McGlynn said.

During last year’s legislative session, casinos failed to persuade lawmakers to lower the state’s share of slots revenue. Currently, casinos get 40.5 percent, and the state takes 43.5 percent, among the highest taxes on gambling anywhere in the nation, experts have said.

In Maryland, slots revenue at Maryland Live Casino and Hollywood Casino Perryville is taxed at 67 percent. Rocky Gap Casino Resort and the Casino at Ocean Downs pay lower rates (50 percent and 43 percent, respectively). Hollywood Perryville, Maryland Live and Rocky Gap send 20 percent of table-game revenue to the state; Ocean Downs hopes to add table games later this year.

J. Freedom du Lac is the editor of The Post's general assignment news desk. He was previously a Local enterprise reporter and, before that, the paper’s pop music critic.
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