Making the News

Allentown Morning Call

Originally Published:Sunday, January 13, 2008

"Pennsylvania has been very strong right out of the box,'' said Joe Weinert, vice president for Spectrum Gaming, an international gaming consulting group that regularly publishes reports ranking machine usage. The rankings in Spectrum's latest report, due out Monday, indicate Pennsylvania has ''high demand and limited slot machines," Weinert said.

Pennsylvania's slot machines the richest of the East
Strong revenue raises hope for tax relief. Demand indicates gaming could expand.

By Christina Gostomski
Allentown Morning Call

Slots in Pennsylvania make more money per machine than in any other East Coast casinos.

But usage can be so heavy that gamblers must wait for the most popular versions. At the busiest casinos, such as Mohegan Sun near Wilkes-Barre, some patrons avoid gambling during peak hours -- after 3 p.m. Fridays and Saturdays.

Analysts say the demand is good -- and understandable -- given the state's young and rapidly growing gambling industry. In just over a year of operations, slots income has exceeded expectations, and this year will yield lower property tax rates statewide.

''Pennsylvania has been very strong right out of the box,'' said Joe Weinert, vice president for Spectrum Gaming, an international gaming consulting group that regularly publishes reports ranking machine usage.

The rankings in Spectrum's latest report, due out Monday, indicate Pennsylvania has ''high demand and limited slot machines,'' Weinert said.

Pocono Downs spokesman Jim Wise said waits for popular games can occur. Perhaps irritating to individual gamblers, such demand is good for the industry as casinos statewide continue coming on line and expanding.

''We have strong play,'' said Wise, describing that as ''a major positive.''

The report ranks East Coast casinos according to how much money they grossed per slot machine in the fall of 2007. Four of the five top rankings are in Pennsylvania.

That's of particular note here, where a 34 percent tax on casino revenues will be used to cut property taxes, because it suggests that, if casinos operated more slot machines, the tax would bring in more cash.

According to the report, the Mohegan Sun at Pocono Downs generated $403 per slot machine per day between Sept. 1 and Nov. 30, 2007, more than any other East Coast casino.

The Mohegan Sun in Connecticut came in second at $390 per slot machine, followed by three Pennsylvania casinos: Philadelphia Park at $369 per machine, the Meadows at $347 per machine and Harrah's Chester at $322 per machine.

The industry ''sweet spot'' for profits, according to Weinert, is where the slot machines generate an average $250-to-$300 apiece.

At that level, he said, the casino has enough machines to accommodate demand, without having too many and adding to overhead costs. ''It's a balancing act and something casino managers are focusing on every day,'' Weinert said.

A number of Atlantic City casinos struck that sweet spot in the fall -- Harrah's came in at $308 per machine, followed by Caesars at $299 and the Borgata at $291.

For Pennsylvania casinos to reach that mark, they would have to add more slot machines, and that is happening at most casinos. More casinos are coming, too. Half of 14 planned casinos have opened, several with smaller, temporary structures.

The Mohegan Sun at Pocono Downs opened in November 2006 with 1,110 machines, expanded to 1,203 machines and now plans to grow to 2,500 machines with the opening of its permanent facility late this summer.

Pennsylvania's slots parlors are licensed for up to 5,000 machines, but may never hit that number to avoid saturating the market.

It's unclear how much additional money would be generated for property tax relief if the state's casinos operated at full capacity. Gov. Ed Rendell has predicted that once all 14 casinos are operating, they will generate $1 billion for property tax relief.

In 2007, Pennsylvania's six operating slots parlors generated about $353.3 million for property tax relief.

Although Pennsylvania casinos are making more per machine, Pennsylvania gamblers are not seeing smaller wins.

An analysis by Spectrum shows that Pennsylvania casinos average a 91.48 percent payout, about standard for the industry, Weinert said. Payouts elsewhere came in at 91.53 percent for New Jersey, 91.68 percent for Florida and 92.54 percent for Delaware.

Pennsylvania's higher tax rate -- about 55 percent (including the 34 percent for property tax relief) -- contributes to its payout rate, Weinert said. Casinos here have less cash available for payouts and ''comp'' payments to customers.

The difference is so small, Weinert said, players don't notice.

A player would have to have ''millions of handle pulls or millions of spins,'' he said, ''to realize a difference between 91 and 93 percent.''

christina.gostomski@mcall.com

717-787-2067

Spectrum OSO Asia SPECTRUMETRIX  Spectrum-i 
© Copyright 2007-2017 - Spectrum Gaming Group. All Rights Reserved.

Spectrum Gaming Group • 1201 New Road, Suite 308 • Linwood, NJ 08221 • USA
Phone: 609.926.5100 • Fax: 609.926.5121 • info@spectrumgaming.com


Site Development and Hosting provided by
MasseyMedia