Pennsylvania's Gaming Market Proven Strong at Annual Gaming Congress

On Feb. 23 and 24, some of the very best and most respected professionals in the gaming and racing industries gathered at the 5th Annual Pennsylvania Gaming Congress & Mid-Atlantic Racing Forum (PGC) to address current and hot-button issues. Held in Harrisburg, Pa., the event was organized and produced by the Spectrum Gaming Group and presented by Fox Rothschild. It was held in the Whitaker Center and Harrisburg Hilton and drew 280-plus attendees. The conference brought together industry leaders, elected officials, regulators and vendors to analyze critical issues such as Pennsylvania's rapid casino industry expansion and its impact on nearby markets, how to cope with a tough economy, and the movement to allow table games in the state.

Timothy Wilmott, president and COO of Penn National Gaming, said: "I think the congress certainly brings all interested parties together that have various different interests in the gaming industry. Given how new gaming is to the state of Pennsylvania, it really is the only forum that the state offers to have everyone get together and speak about what makes the industry work, what concerns the industry has in trying to continue to grow, and how both the public sector and the private sector need to work together to make our industry a success."

The Pennsylvania legislature did not legalize slots until 2004, making the state's gaming industry relatively young. But that doesn't mean it's not thriving. The state currently has seven casinos open and operating. There are about seven more slated to open within the coming months and years. This makes the need for an event such as the PGC even more vital. Michael Pollock, managing director for Spectrum Gaming Group, and publisher of the Gaming Industry Observer, explained, "The conference started before casinos, and it has evolved significantly over time as far as the issues that are grappled with." He said it started by talking theoretically and moved into how things were working, looking at timetables and what could be done to advance the industry, which is where he believes they are now.

Mary D. Colins, chair of the Pennsylvania Gaming Control Board, called the PGC the event and refers to Pennsylvania as a story of success, one of constant upward movement. Reflective of this is the hype surrounding several upcoming casino openings, which was definitely among the hot topics buzzing around the conference sessions. The new Sands Casino Resort in Bethlehem, Pa., is expected to open as early as Memorial Day this year. "That's going to be a tremendous casino force," Colins said. "The Las Vegas Sands people are predicting it's going to be a very lucrative market, drawing from New York and North [New] Jersey. It's a great facility, and we think it will provide a lot of stimulus to that part of Pennsylvania." Pollock agreed, saying he thinks the project will be an enormous success.

At the PGC, Marie J. Jones, a partner with Fox Rothschild, moderated a panel session that addressed the Western Pennsylvania market. She said the session talked mostly about two new casinos in that area: the Meadows Casino, which is opening its permanent facility in April; and the Rivers Casino, which will open in August in Pittsburgh.

Although Pennsylvania's gaming market is booming, nearby Atlantic City has not been faring so well. "It's not unexpected that Pennsylvania gaming has proven to be a significant competitive challenge to Atlantic City, and Atlantic City is feeling that," Pollock said. "It's not been good for Atlantic City, and it's going to get worse before it gets better."

Wilmott said that revenues are down 19.2 percent, Atlantic Citys biggest ever drop. It seems to come down to convenience. He said the facilities that have opened up in areas such as Pennsylvania have lured away the "day-trip" market from Atlantic City.

However, it may not be all bad news for Atlantic City. Pollock used Nevada and California as examples for how neighboring gaming industries, by changing their business model, can coexist and thrive. "It sounds counterintuitive, but Atlantic City's future looks positive, not despite the fact that it's lost its monopoly status but because it lost its monopoly status. It forces a new business model, and it's the only way Atlantic City can effectively respond," he said.

In any business forum today, it's impossible to not talk about the state of our economy, and it was certainly on the minds of attendees at the PGC. "No one anticipated this economic downtown," Pollock noted. "It's the 800-pound gorilla in almost every discussion that involves where gaming is now in the state and where it could have been." He said states are learning that they must work with the private sector, looking at themselves as partners and anticipating their common interests to move forward.

Wilmott reminded us that "People are still enjoying casino entertainment. They're just enjoying it with a more modest budget."

Probably the most talked about issue at the conference was the debate over allowing table games in the state. Many see it as the way to increase casino revenue and attract more customers. Bobby Soper, president and CEO of the Mohegan Sun at Pocono Downs, is optimistic about the prospect. "We're hopeful that, in light of the substantial positive economic benefits table games could bring to the Commonwealth, especially in this economic environment, that it will be sooner rather than later," he said.

Wilmott said that Penn National Gaming is very much in favor of table games for Pennsylvania, and he believes it would be a "natural evolution," similar to what happened in West Virginia.

Colins simply stated: "I know that the operators would like them and it would give Pennsylvania even more of a competitive edge, but it's a matter for the legislature to determine. As the chair of the gaming board, I can say emphatically that if the legislature determines that we will have table games, the gaming board will be ready and able to regulate it."

Another issue of concern at the PGC was Pennsylvania Gov. Ed Rendell's proposal to allow video lottery terminals at taverns and bars. Pollock said there is concern from Wall Street as well as operators on this front. Additionally, Soper, who was a speaker at a session on the "Eastern Front" said, "There was a good discussion about the tax rate and how it impacts Pennsylvania operators and our ability to reinvest and our ability to compete with markets such as Atlantic City, who have a substantially lesser tax rate."

What everyone could unanimously agree on at the PGC was that Pennsylvania is young but growing quickly and successfully. "We are going to find that in the next 12 months, growth will continue at a very significant rate in Pennsylvania as we tap into all these new markets," Colins said. "I think that everyone in the industry, and especially those working here in Pennsylvania, can attest to success that exceeds projections. That's important for people to know about."

"There is still a novelty factor with respect to Pennsylvania gaming. There is still a newness, and a lot of people want to come out and kick the tires," Pollock added.

So be sure that you mark next year's Pennsylvania Gaming Congress on your calendars--Feb. 22 and 23--so you get a chance to kick those tires for yourself.

All articles are subject to the terms in our copyright statement.