When Two Casinos Go To War

 
The Maryland Live has been open for two years and shows healthy revenues but the arrival of the Horseshoe casino only 12 miles away might change all that.

The northeastern United States has been seeing the effects of multiple casino and gambling interests operating within a region that for a long time had but a single monopoly player in the market, Atlantic City. The economic adjustment that has been a long time coming but only just arrived has seen four major casino closures already this year and another has filed for bankruptcy in what has been a body blow to the city and its most notable supporter Chris Christie. However whilst the number of casinos in New Jersey has been falling, not too far away a state is opening more.

Maryland is undergoing a casino construction boom, of sorts, with various entities vying for the trade from other nearby states as well as local residents and two new concerns opening to raise the number of casinos in the state to six. The first is the Horseshoe near Baltimore and the second is the as yet unfinished MGM casino and resort at National Harbor which is reputed to be costing as close to a billion dollars as makes no real odds. Whilst the latter is likely to have huge knock on effects when it opens its doors in 2016, the former is already making waves.

 
The Horseshoe’s location is but 12 miles from the already established Maryland Live! Casino which means industry watchers are hugely interested in how competition between them will play out, as no one is entirely sure if the local region can support two such entities quite so close together. Maryland Live! Might have a two year head start, having opened in 2012, but when the Horseshoe, a $442 million investment, opened on August 26th this year a 15,000 strong crowd waited three hours in the summer heat to get inside.

Competition between the two is going to be fierce and the nature of that competition, or perhaps I should say the tone of that competition, has already made itself abundantly clear. Apparently these multi-million dollar enterprises are going to behave like a couple of frat houses at war with each other using what appears to be the sort of prank stunts that seem smart strategies after an all night kegger, but in the cold light of day just seem a bit immature and silly. Trouble is, of course, than in such a tight market as they’ve created, every little might be the difference so the inclination to hit those base notes is almost overwhelming.

Sign Of The Times

It began with the Horseshoe and an advertisement both for the casino itself, at that time not yet even open, and for employment prospects (jobs) at the new complex. This advertisement was not your average static billboard, with which the cityscape is these days littered, no, this advertisement was on the back of a large flatbed truck, a large flatbed truck they decided should pull up and stop in the car park of, you guessed it, the Maryland Live! Casino. Obviously a large flatbed truck with a massive advertising hoarding on the back of it hanging around in your parking lot is precisely the sort of thing casino security staff are trained to spot.

 
“We have thousands of cameras,” laughed Robert Norton, President and general manager of Maryland Live! “So we were aware pretty quickly of the truck and, being private property, we asked them to leave.” Which is entirely as it should be. Of course just because your opponents decide to use ridiculously childish tactics to both poke a little at you and up their own profile amongst possible future clientele, doesn’t mean you too have to sink to this level. However the temptation to do so is almost irresistible which might explain why at a Horseshoe jobfair in Baltimore the local traffic was increased by one truck with a massive Maryland Live advert on the back that kept going around and round the block.

“We sent a truck down,” admits Norton easily, “to circle their job event just to let them know if they were doing those things, we will play.” which means the competition twixt the two will either go down in history as yet another friendly rivalry, or end up in lawsuits, arrests and possible felony charges. Chad Barnhill, general manager of the Horseshoe, is a little more restrained in what he’ll admit to merely saying that there had been “a little competition already before we opened up” in quite dismissive tones. This means both are willing to go that little bit further to promote their casino gambling news coverage of their silliness, perhaps, won’t detract from the real business at hand.

The real business being making money and to do that, as the jobs fair indicates, both have been squabbling to recruit staff that have recently been made redundant as the notable closures in Atlantic City supply a pool of trained, experienced casino staff just up the road. Maryland Live has approximately 3,000 staff, some recruited in Atlantic City itself, whilst the Horseshoe has around 2,200, and gaining those former Atlantic City employees is being seen as perhaps the first point to Maryland Live. Of course getting the best staff is one battle, getting the customers, another.

Bring On The Gambling Masses

The economic fallout for Maryland Live of the Horseshoe’s arrival in the vicinity has, of course, already been projected. A study by the well respected Cummings Associates was at pains to point out the older of the two could lose out on revenues to the tune of 16% in terms of slots and a worrying 25% at their table games. This would be a massive blow to the casino that in July alone pulled in $58 million and saw revenues rise by 11% on the same period the year before, but Maryland Live won’t go down without a fight. Whilst the Horseshoe represents immediate competition on the doorstep and the MGM resort an even larger draw less than 50 miles away, Maryland Live faces some tough times.

“I wouldn’t cry for Maryland Live yet.” said Alan Woinski, president of Gaming USA, “They’re going to be more hurt by the National Harbour property, which will kind of take Washington and Virginia.” That 2016 opening by MGM will lessen the regional catchment area for both Maryland Live and the Horseshoe, and leave some industry watchers like Mr. Woinski wondering if the state isn’t overreaching itself in terms of the number of casinos. Some even point to the Atlantic City situation as an example of what happens in an over-saturated marketplace.

“My three sons are the fourth generation at the Cordish Companies and, as strong an asset as Maryland Live is, I would expect their kids to own the casino and hotel that will be added.” dismissed David Cordish chairman of the company that owns Maryland Live, adding that “generally suburban sites do extremely well versus urban locations” Sentiments that were immediately rebuffed by Barnhill who said “You can throw up billboards, but it’s going to be very hard to replicate what we have. From our prespective, we feel like we have a great product.” The problem being, of course, that they both do.

The state’s multiple casino strategy was always likely to see stiff competition between the entities that entered the market but as that super resort from MGM opens up in two years time and the number of casinos rises to six (in what is not the largest state of the union to begin with) it is only likely to get tougher. Whilst some gambling hubs have seen small recoveries from the slumps of the 2009 fiscal crisis, Las Vegas for example, others, Atlantic City the obvious example, have not and some say it is only a matter of time before the weaker of the players in the state are squeezed out, especially if the economy throws a spanner in the works.