BANGOR, Maine — A recent report released by a gambling management and advisory firm about the potential for more Maine casinos has excited state legislators. But the state’s two existing casinos and local governments invested in their success or failure expect to push back, arguing further casino development could stifle or quash the fledgling industry.
Last month, New Jersey-based WhiteSand Gaming released a report recommending that Maine could sustain one or two more casinos, depending on the size and location. Members of the Legislature’s Veterans and Legal Affairs Committee, which oversees gaming in the state and commissioned the report, applauded the results.
The WhiteSand study suggests that the state’s economy easily could handle one more casino as long as it is in southern Maine, and potentially another smaller casino in either Washington or Aroostook county, close to the Canadian border.
Maine’s two existing casinos say the stakes are high and have serious reservations about more casino developments in the state taking away valuable, limited patronage. That’s especially true at Oxford Casino, where the WhiteSands study projects “a very prudent cannibalization factor of 20 percent.”
That “cannibalization” — a reduction in sales volume, revenue or market share for an existing “product” that happens after a new “product” is introduced — is exactly what casino officials feared when they went before legislators in 2013 to lobby against several proposed gaming expansion bills. None of those projects moved forward, but they did prompt the Legislature to pursue a study of what the state’s gaming expansion policies and process should look like.
The study reported that the state could expect its gaming revenues in the first year of a third casino’s operations to increase from $53.2 million to $67 million, an appealing opportunity for a state government that has been seeking out revenue services to help balance increasingly difficult budgets.
“Maine’s gambling revenues have flattened,” said Jane Hoyt, spokeswoman for Oxford Casino. “Our concern is that additional casinos in Maine, or in neighboring states such as Massachusetts or New Hampshire, will have a direct negative impact to jobs and economic development, not only at the casino property but also as it relates to rural Oxford County.”
In the seven months Oxford Casino was open in 2012, it brought in about $36.5 million net revenue. In 2013, its first and only full year of operations so far, the casino increased its number of table games and increased that net figure to $71.6 million. Through August 2014, the casino had drawn in about $49.8 million in net revenue, and much of that has been driven by takes at the tables, which have already surpassed last year’s totals. Slot machine revenues appear to be on pace to lag behind last year’s take.
A southern Maine casino likely would draw customers directly from the market Oxford Casino targets — southern Maine’s population centers and other New England states.
“Any casino expansion in the southern Maine market will not only result in job losses but deter further economic development in [Oxford County],” Hoyt said. “Continued gaming expansion in the state is directly counter to how the citizens of Maine have voted nine out of the past 11 times.”
Bangor likely would feel the effects of another casino development, but to a lesser scale.
In Bangor, Oxford Casino’s opening in the summer of 2012, had a noticeable effect on revenues, despite the fact that Hollywood Casino had its best year yet. After Oxford Casino opened 125 miles away, Hollywood Casino’s slot machine traffic suffered a decline that continued through 2013. During that period, Hollywood Casino’s take at the slots dropped by about $9 million. However, the casino also debuted its own table games in early 2012, which has softened the blow.
“The [Oxford] casino has certainly had an impact on our business,” said Jose Flores, general manager of Hollywood Casino in Bangor, “but we feel that our market has stabilized since the initial impact.”
Hollywood’s net revenue in its banner year 2012 was about $62.7 million. That fell to $54.6 million in 2013, and the take as of August 2014 was just $36.2 million with four months of operation remaining for the year.
Flores said most of his patrons come from less than an hour to an hour-and-a-half away to gamble in Bangor, so a casino in southern Maine shouldn’t have as dramatic an effect on his facility as it would Oxford Casino’s. However, a small border casino in eastern or northern Maine could dip into Hollywood Casino’s Canadian traffic.
Bangor city officials also have vested interest in the potential emergence of new competition. The city, home to the state’s first casino, hired lobbyist Dick Trahey to monitor legislative developments in the gaming industry on Bangor’s behalf.
The casino has become the city’s biggest taxpayer, by far, paying $2.35 million in total property taxes between its hotel, casino and racetrack properties in 2013, according to city records. Next on the list is General Electric, which pays about $1 million less in property taxes per year. Casino revenues also help the city cover most of its annual debt service on its $68 million Cross Insurance Center.
That sort of revenue has made the casino an integral piece of the city’s budget process.
WhiteSand’s findings follow a report released last year by Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts Dartmouth, who explored the cannibalization effects of further casino development in the region. That report was commissioned by Churchill Downs, which acquired the Oxford Casino earlier that year.
The Barrow study focused on how casinos proposed in Massachusetts and New Hampshire would affect Maine’s existing casinos — again, Oxford Casino would take the hardest hit, with Bangor’s casino seeing cannibalization to a lesser degree. Other states’ casinos threaten to “destabilize Maine’s gaming market,” Barrow wrote, and his study was completed with only two existing Maine casinos in mind.
WhiteSand’s study gives leverage to Maine tribes, veterans organizations, race tracks and other groups that recently have proposed casinos or slot machines to drive revenue. Each time, their efforts have either failed to pass through the Legislature or to gain voter approval.
“We also believe that any proposed new facilities should be subject to state and local voter approval, just as both existing operators were,” Flores said.
Flores said Hollywood Casino wouldn’t be commenting on expansion proposals until there is actual legislation to react to. His predecessor, John Osborne, went to the Legislature multiple times in recent years to oppose gaming expansion proposals, citing cannibalization. It’s likely Bangor municipal officials and Oxford County officials will bring their concerns forward as well, if a new casino proposal comes to the Legislature.
Hoyt said that Oxford and Churchill Downs officials would work with the Legislature to “ensure they are thoroughly educated regarding the stifling impact an additional southern Maine casino would have on economic development and job growth in rural Maine going forward.”
She said Churchill Downs has been considering plans to invest in and grow the Oxford property, but that further competition in the market might stymie those plans.
Follow Nick McCrea on Twitter @nmccrea213.