The Kansas City casino market showed some fatigue in the first half of 2013 and the effects of two big snowstorms, but the Hollywood Casino gained traction in its second year of operation.
By GREG HACK
The Kansas City Star
The areas five big casinos four in Missouri and the Hollywood near Kansas Speedway rang up just under $375 million in revenue through June, down 2.9 percent from the $386 million they took in during the first half of 2012.
That drop occurred even with a full six months of revenue this year from the Hollywood, which didnt open till February 2012. Comparing just February through June results, revenue was down 4.1 percent from a year ago and up just 4.9 percent from two years ago, before the Hollywood joined the market.
Its been a tough go really competitive, said Tom Cook, general manager of Harrahs North Kansas City. I think everyone would like to see a bit more robust market.
Weather also played a part in this years first-half decline because a mild winter boosted results in January 2012 and big snowfalls kept more gamblers and everyone else home in February 2013.
Looking at results just for March through June, a more stable picture emerges. Overall revenues were actually up half a percent from those same months in 2012, and the Hollywood Casino had big year-over-year gains all four months.
Bob Sheldon, general manager at Hollywood, said the casino definitely increased our repeat customers as time went on. The casino has improved its promotion of big racing weekends at the speedway, he said, so regular customers dont stay away to avoid the racing crowds, and the casino picks up some NASCAR fans business.
Our regulars now know they can get in and out fairly easily as long as they dont come right when the race lets out, he said.
Sheldon also said he thought the success of Sporting Kansas City, the soccer team whose stadium is nearby, had brought some added business to his casino. And it doesnt hurt being near Nebraska Furniture Mart, Cabelas and the Legends Outlets Kansas City shopping and restaurant area.
The Hollywood, partly owned by Penn National Gaming, also uses the same player rewards program as the Argosy Riverside, another Penn National property. Sheldon said cross-promotions with the Argosy also had been effective in boosting business, perhaps for both casinos.
Although gamblers are creatures of habit, some have a second favorite casino, he said, so its good for Penn National if Hollywood and the Argosy share such customers.
The Argosy took the biggest hit in 2012 among the Missouri casinos when the Hollywood opened, and that was expected because its the closest geographically to the Kansas casino. It also felt the effects of winter in January and February 2013, when its revenues dropped 19 percent.
But perhaps because of its shared rewards program and promotions and that proximity to Hollywood, its the one Missouri casino whose revenues were back up in the March-June period, rising 2.4 percent.
And the Argosy still pulls in more revenue than the Hollywood, as do Harrahs and the Ameristar. The Hollywood does bring in more than the other Missouri casino, Isle of Capri, which is the areas smallest in terms of slots and table games.
Isles revenue slipped 7.3 percent in the first half, the biggest percentage decline among area casinos, but still topped $40 million. Isle also had a harder 2012 act to follow: It was the only Missouri casino whose first-half revenue had been up in 2012.
So Isle isnt planning any big changes to its formula, which emphasizes value, fun promotions and higher slot machine payouts that let more people win.
General manager Todd Steffen said: For years now we have had the loosest penny slot machines in the Kansas City, Mo., market.
A sixth area player, the 7th Street Casino in downtown Kansas City, Kan., is run by the Wyandotte Nation of Oklahoma. Its even smaller, more a slots parlor than a full-blown casino with table games. And its impact is much harder to gauge because its officials rarely comment and, as a tribal casino, it does not have to report results.
At Harrahs, first-half revenue slipped 4.5 percent after a relatively small drop of 3.3 percent a year ago, absorbing the competition from the Hollywood.
Cook said Harrahs outlook was good, despite the tough economy and competition, in part because its customer service scores continued to improve.
Ameristar saw a 6.3 percent drop in first-half revenue in 2012, and it slipped an additional 6.5 percent in the first half of 2013. But it still brings in the most revenue of any area casino, by an average of more than a million dollars a month.
Were always pleased to be the market leader, said general manager Sean Barnard. Its been 10 years now that weve been No. 1.
Barnard said the casino continued to have success with its practice of regularly bringing in and promoting new slot machines.
One thing is likely to change in the next few months at Ameristar its ownership. Pinnacle Entertainment, like Ameristar based in Las Vegas, is buying Ameristar for $2.8 billion. The Missouri Gaming Commission approved the deal last week after Pinnacle agreed to sell some of its properties in the St. Louis area, where it will be acquiring the Ameristar in St. Charles.
The sale still needs Federal Trade Commission approval, but thats expected now that all the state gaming commissions involved are on board. Pinnacle hopes to close the deal in August.
So what does Barnard expect?
Business as usual, he said. Pinnacle also is committed to teamwork and providing a good product. Were just excited.
Although business as usual is an often-heard merger mantra, two casino business analysts who rate Pinnacle a buy say its likely to be true in this case.
Ameristars Kansas City property is very good, said John Kempf of RBC Capital Markets in New York. And although he said the merged companies rewards programs could change eventually, Theyll probably leave management there not change anything materially.
Brian McGill of Janney Montgomery Scott in Philadelphia also called the Kansas City Ameristar one of the better regional properties and said he didnt expect much change.
Pinnacle even has said it is looking at how Ameristar operates, McGill said, with an eye toward using some of those practices at current Pinnacle properties.
Ameristar has strong margins, great customer satisfaction ratings, he said. Id expect nothing dramatic.
To reach Greg Hack, call 816-234-4439 or send email to firstname.lastname@example.org.