MGM National Harbor raked in nearly $42 million in gross revenue during its first three weeks of operation, helping to give the state’s casino industry a record-breaking December, according to data released by the Maryland Lottery and Gaming Control Agency.
The figures put the newly-opened casino on pace to meeting revenue projections, while elevating Maryland’s gambling scene as an attraction for not only local and regional gamblers but also visitors from along the East Coast and the continental United States.
But the Dec. 8 opening of the Prince George’s resort also took a toll on some its competitors, drawing business from nearby Maryland Live in Anne Arundel County, and as far away as Hollywood Casino at Charles Town Races in West Virginia.
Maryland Live, the state’s largest and most profitable casino, registered an 11 percent drop in revenue in December compared to the previous year. Still, gross gambling revenue for the casino was $48 million in December and it finished the year as the biggest generator of gambling revenue in the state. West Virginia officials reported loses of up to 20 percent at the Charles Town casino.
“When an MGM-level facility comes to a market, it attracts people,” said Richard Clinch, who tracks the gambling industry as director of economic development at the University of Baltimore’s Jacob France Institute. “Is it substituting? Yes, from Charles Town and Anne Arundel. Is it meeting expectations? Yes. Is it sustainable? Yes.”
Just a few miles from the U.S. Capitol, the $1.4 billion MGM casino drew 170,000 people opening week alone. It pulled in more than $24 million from its 3,237 slot machines and $17.6 million in gross revenue from its 165 table games in December.
By its third year in operations, MGM is projected to bring in more than $700 million annually in pretax gambling revenue, according to fiscal studies.
Experts say the casino resort has the potential to become one of the most successful casinos in the region, reaching not only the local market but also throngs of tourists visiting nation’s capital.
“It is in a premier location with relatively modest competition,” Clinch said. “They are already in line to do half a billion dollars or more. And this isn’t even the tourist season.”
Maryland gaming officials say the resort’s success “will fuel the continued growth of revenue” in the state, a good share of which goes to an education trust fund. With MGM’s opening, Maryland’s six casinos earned a combined $133.5 million in gross gambling revenue for December.
MGM’s arrival was expected to hurt Maryland Live’s business. The casino, about 35 miles north of MGM, attracts gamblers from MGM’s feeder markets in Virginia and the Washington suburbs.
The drop in revenue — 10 percent in slots and 13 percent in table games and poker — is “in line with our estimates with the new competitor entering the market,” Travis Lamb, Maryland Live’s chief financial officer, told the Maryland Lottery and Gaming Control Commission last week.
A 2013 report commissioned by the state projects Maryland Live could see its profits drop 16 percent in 2019 as a result of MGM’s opening. The casino’s owners, Maryland-based Cordish Cos., are on an aggressive campaign to maintain their footing as Maryland’s largest and most profitable gaming facility, investing $200 million in an expansion that includes a 17-story hotel tower expected to open in early 2018.
In addition to pushing its usual marketing programs, such as Super Bowl promotions, Maryland Live also has dropped its minimum bets during some hours of the day as an incentive to gamblers, Lamb said, acknowledging that “December wasn’t a great month.”
Still, the Arundel Mills casino continues to dominate its rivals in the state: Horseshoe Baltimore, which made $29.7 million in December, up 9 percent from December 2015; Hollywood Casino in Perryville, $6 million in December, down nearly 4 percent from December 2015; Casino at Ocean Downs in Berlin, $4.1 million, about 6 percent higher; and the Rocky Gap Casino Resort in Flintstone, which made $3.5 million in December, about the same as the previous December.
Casinos across the state also had to step up efforts to retain workers being lured by jobs at MGM National Harbor. Casino officials said last week the effects on staffing were not severe enough to disrupt operations.
Some experts say the West Virginia casino, which markets to Maryland gamblers, particularly those from Montgomery and Frederick counties, will probably experience even bigger losses. West Virginia Lottery officials reported losses of $670,000, or 19.5 percent, in video lottery and about $214,000, or 22 percent, in table game revenue at the Charles Town casino in the first two weeks since MGM opened, the Associated Press reported.
“We prepared well in advance by reinvesting in our business to remain competitive,” Eric Schippers, senior vice president of public affairs for Hollywood Casino, told AP. “Over the last few years we have built a new hotel, completely refreshed our slot machine offerings, added a new entertainment venue featuring top performers, and built new restaurants and added new amenities.”
MGM has captured some of the local gambling community in its first few weeks of operations, but experts also say the resort offers an alternative for the region’s gamblers who normally would fly to Las Vegas or drive to Atlantic City. And, unlike it’s competitors, its Las Vegas-style glamour will probably attract tourists and conventioneers, they said.
“You will have a seasonal drop in the winter, but once spring starts hitting, MGM is going to see a boost in business,” Clinch said.
The December revenue figures also are on pace with county projections, Prince George’s officials said.
“Obviously, those results were only for 23 days in December 2016,” said Thomas M. Himler, Prince George’s deputy chief administrative officer for budget, finance and economic development. “Another month or two are needed to fully assess MGM’s” full financial benefit to the county.
As of this month, the county had not received its portion of gambling taxes from the state. But the county’s budget for this fiscal year, which ends June 30, is counting on nearly $19 million in revenue from the resort. About half of those funds are expected to come from gambling activities and the rest from levies imposed on hotel, property, food and concert tickets.
The budget allocates the new revenue for schools and workforce training initiatives, as well as the hiring of police and emergency service staff members.
The county is also betting on more income taxes from jobs at MGM. About half of the resort’s nearly 4,000 workers are county residents.
Prince George’s officials expect the county to receive $40 million to $50 million in annually from MGM.
In the long run, MGM will “exceed expectations,” County Executive Rushern L. Baker III (D), said at a recent meeting with editors and reporters of The Washington Post. But, he said, its success would be based on not only the resort’s gambling offerings but also its wider entertainment options.
Since opening, MGM has hosted several big-name acts, including Bruno Mars and Duran Duran. Its theater featured a ball inauguration weekend. MGM general counsel Michael Pappas said a boxing match is in the works for the spring.
“We are up 100 percent,” Pappas jokingly told the state’s gambling commission last week as he reported the company’s first month of operations. “We did very well obviously in December. It was very strong. We had very positive response to our opening and continue to have very good customer response as we move through January and close to February.”