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Nyia Williams was training to operate a virtual blackjack table on Thursday. The 35-year-old North Philly native said she thinks the casino will be hopping when pandemic restrictions lift, but they are currently putting a damper on her excitement.
“You have to walk around with a mask, you have this plexiglass, which makes it very hard to hear,” she said. “And when you’re with your fellow employees you want to get together and experience it together — you can’t really do that [right now].”
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Well before the pandemic, Live! faced some opposition from the surrounding neighborhoods. Some South Philly residents started speaking out against the development when it was first publicized in 2014, arguing it would create parking shortages and hurt their property values.
A saturated market
Unsurprisingly, the pandemic has been brutal to Pennsylvania’s casinos: revenue from table games and slot machines declined 30% statewide in November 2020 compared to November 2019.
Live! Casino and Hotel is also opening into a market that is already fairly saturated. Four of Pennsylvania’s 12 brick-and-mortar casinos are located within 25 miles. And Atlantic City is less than two hours away.
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So what makes management confident that this is an investment worth making? Its neighbors.
“There are four professional sports teams in our parking lot,” Joyce said. “If you want to play in the action where they are playing, this is where you’re playing.
Joyce also noted that the casino was located conveniently near the I-76 and I-95 highways.
Live! Casino and Hotel expects to generate $2 billion dollars in economic stimulus for Philadelphia, including $100 million in direct tax revenues to the city in its first five years of operation.
The opening of the South Philly casino was delayed in part by objections lodged by the operators of Rivers Casino Philadelphia (formerly SugarHouse), located in Fishtown. A 2019 study by Rutgers University found a new Philadelphia casino would further erode Atlantic City’s dwindling position.
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Those tensions are part of what has critics doubting the long-term viability of Live!’s economic impact projections.
“The entire northeastern gaming market is pretty much saturated at this point,” said Clyde Barrow, a gaming industry consultant and political science professor at the University of Texas, Rio Grande Valley. “All you are doing is moving jobs and revenue from one place to another. You are not really generating net new growth.”
Barrow added that virtually every casino constructed in the Northeast over the last decade has underperformed initial expectations: “There’s no reason to expect this casino would be any different.”
The decline of in-person gaming may be accelerated by a trend that increased during the pandemic: a move toward online or mobile gaming. Internet gaming revenue in Pennsylvania increased by more than six-fold between November 2019 and November 2020.
But although opening a casino now may not make a lot of sense from a health perspective, it shows a lot of business savvy, Barrow said.
“You know you are at the [bottom] of the economic cycle,” Barrow said. “We now are distributing vaccines — things will start to open up again … it may be another full year before we see that realized, but you are opening into the growth phase of the business cycle.”
“People are looking for opportunities to escape what is happening around us,” she said. “Coming to a casino is entertainment, and people still want to be entertained.”
Grace said one of the biggest challenges the industry is facing is “the continued uncertainty.”
“You have to ensure compliance, whether it’s your team members or your customers,” she said. “That’s a new aspect of the job.”
In a recent conference call to discuss third-quarter earnings, Bill Hornbuckle, president and CEO of MGM Resorts International, said the industry continues to deal with the pandemic, and has been forced to abide by restrictions.
But he also said September “was an exceptional booking month for the future. It’s the best booking months we’ve had in seven. And so I think the tell is is that people are still booking into the future.”
The report said more than 100 casinos reopened between July and September with 902 commercial and tribal casinos operational by the end of the third quarter.
Five states actually won more in the third quarter this year than they did in the same period last year: Arkansas, up 3%; Mississippi, up 2.8%; Ohio, up 7.5%; Pennsylvania, up 3.8%; and South Dakota, up 6.1%.
Revenue from slot machines was $5.87 billion for the quarter, down 19.3%, and table games revenue was $1.57 billion, down 31.2%.