Making the News

The News Journal-Wilmington, DE

Originally Published:Friday, May 29, 2009
http://www.delawareonline.com/article/20090529/business/905290370/1003

Table games may mean 750 new jobs
Games could attract more men, younger crowd to racinos

By Aaron Nathans
The News Journal-Wilmington, DE

The soft clink of plastic chips on green felt tables will do more than ease the state's money crunch and fatten profits at Delaware's three casinos.

Establishing games such as poker, craps and roulette in Stanton, Dover and Harrington would create as many as 750 new jobs for dealers, money handlers and security.

The new jobs would be welcome with the state's unemployment rate at more than 7.5 percent a jobless rate the three local casinos contributed to with more than 300 job cuts in 2008. That amounted to a 10.7 percent cut in total racino employment here last year.

The new games also should swell crowds at the three local racetrack casinos, which suffered in the last year as similar venues opened in Pennsylvania and the economy cut into what patrons were willing to risk on slots.

In Delaware, consumer spending at racetrack casinos fell by 4.2 percent last year, according to the American Gaming Association's "State of the States" report. The only other state reporting a greater percentage decline was Rhode Island.

The association reported nationwide gross gambling revenues were about $32.5 billion in 2008, down 4.7 percent from 2007's record-setting year.

Gaming experts say new games will alter the "mix" of local racino crowds, which now are 60 percent female with an average age of 55. Nationally, table games and sports betting draw a much younger, more male-dominated crowd.

That means the table games will not just be drawing the same customers more often or recapturing business lost last year to Pennsylvania. They'll attract "new money" from people like Kevin McEnany of Wilmington.

McEnany said he has gone to casinos once a year, in Atlantic City, but might go to Delaware racinos four times a year once table games and sports betting are allowed.

McEnany, an engineer, said the odds are well against you in slots, and "to me, that's just no fun." But if you know what you're doing in craps, "you've got a chance."

Adding sports betting and table games has long been viewed as one way to meet competition from new venues in Pennsylvania, and slots parlors that have been authorized for locations close to Delaware in Maryland.

The impact of competition in neighboring states was clear in the American Gaming Association's report on the industry's 2008 performance a study dominated by an overall slump caused by the onset of the recession.

Frank J. Fahrenkopf Jr., the association's president and CEO, said cuts in consumer discretionary spending took a toll nationwide, with the heaviest hit landing in destination resort towns like Las Vegas, where spending fell by 9.7 percent, and Atlantic City, N.J., where it fell by 8.5 percent.

The airline industry's woes also contributed to the decline, as many cut the low-fare flights that fed the casino towns.

"Eighteen months ago, I don't care where you lived in the United States, within about an hour's drive, you could get a cheap flight to Las Vegas," Fahrenkopf said. "That's not the case anymore."

Racinos overall bucked the trend except in Delaware.

Overall spending at racetrack-casinos grew by 17.2 percent to a record total of $6.19 billion. That number was driven by new facilities in Indiana and Pennsylvania, which boosted racino spending by 48.3 percent last year, according to the report.

Spending increased year-over-year in almost every racino state, including Florida, Iowa, Louisiana and Maine. Delaware did not follow that trend, showing the impact of close competition.

"Racinos in other markets simply did not have the competitive threat that Delaware racetracks did," said Joe Weinert of the Spectrum Gaming Group, a consulting firm in the Atlantic City area.

Table games and sports betting can help restore Delaware's edge, experts say.

Delaware racino owners recently received the right to offer sports betting and table games, although the latter must wait for a commission to create rules.

Weinert said table games typically make up about 20 percent of a casino's revenue, with the other 80 percent coming from slot machines. Slots have a significantly higher profit margin because they're not labor-intensive, he said.

"Live table games are the true essence of a casino," he said. No automated table game can replace the allure of human interaction, the real roulette ball spinning around, the actual cards and dice, he said.

Ed Sutor, CEO of Dover Downs, estimated each Delaware racino will need about 250 new jobs to start table games and about 200 of those jobs will go to dealers. Compensation for a dealer would be about $50,000 in salary and benefits. The others will include the many new supervisory and security "eyeballs" necessary to make sure no one cheats or steals, he said. That includes people who carry the chips from the bank to the tables, and camera surveillance staff, he said.

James Karmel, a gaming analyst, economic historian and associate professor of history at Harford Community College in Maryland, said table games, though labor-intensive, can be profitable, namely because of a handful of "high rollers."

Some casinos in Atlantic City have been remade around table games, after being dominated by slot machines in the 1990s, he said. Now that the economic downturn has hit, that model is "under strict critical examination."

The association's annual report did contain a note of caution for those who see salvation somewhere in the river spread.

Interest in poker appears to be down from its high in 2005, when 18 percent of people surveyed said they played the card game in some way. Just 11 percent said the same in 2008.

Still, Weinert says, the new games will help Delaware steal some business from Atlantic City, even though the right to the new games came with a revision of the split, with a bigger percentage going to the state.

"I suspect that the Delaware casino owners had to swallow hard," he said. "I suspect it will be worth it, but it's not the home run that it otherwise would have been."

Even an extra-base hit will help the Delaware venues and Delawareans looking for work.

Delaware Park, the closest Delaware slots parlor to the new Pennsylvania competition, lost less business than the 15 percent to 20 percent that Delaware officials had anticipated when Harrah's opened in Chester in 2007, said Andrew Gentile, general manager of Delaware Park.

Still, the casino's revenues were down 7 percent before last summer, Gentile said. Revenue losses doubled once gas prices hit the roof and the economy tanked, he said. Customers visited in about the same numbers, but spent less.

Gentile said 55 Delaware Park employees accepted voluntary severance packages last year.

Sutor said Dover Downs has cut about 100 jobs through attrition over the last two years, including in the restaurant areas, where hours have been curtailed.

Harrington Raceway & Casino officials did not return repeated calls. Sutor noted Harrington officials have publicly stated they recently cut their payroll by more than 10 percent.

"Labor's always the first target" when revenues swoon, said Weinert, the Atlantic City analyst.

Competition and a recession weren't the only reasons behind the job cuts. Sutor said about half the job losses at Dover Downs came as coins were eliminated in the slot machines.

Coins fed into the machines used to fall into a bucket beneath the machine. Periodically, workers pulled the buckets out and fed the load onto a conveyor, where a machine sorted, counted and wrapped them. All three Delaware racinos went coinless about two years ago, Sutor said.

"Now it just registers as credit on the machine," Sutor said. The winner takes a ticket to a cashier or redemption machine, and cashes out, he said. "There's still the clink-clink-clink, except there's no money coming out."

Contact Aaron Nathans at 324-2786 or [email protected]

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