Detroit casinos ride strengthening economy
Detroit’s three casinos rolled to their second straight year of improved business in 2011 and are poised to benefit this year from a strengthening economy if they adapt to new gaming competition scheduled to open in neighboring Ohio, a national gaming expert said.
The trio’s revenues rose 3.4 percent to $1.42 billion for the year, lagging other states in the Midwest that opened new casinos last year but well ahead of other gaming areas, including the nation’s second largest market of Atlantic City, N.J., said Frank Fantini, editor and publisher of Delaware-based Fantini’s Gaming & Lodging Reports.
The growth rate accelerated ahead of the gaming halls’ 2.9 percent gain in 2010 and after their first-ever decline in 2009 of 1.5 percent.
“I think it’s really an indication of American consumers going out and spending again,” Fantini said.
MGM Grand Detroit, MotorCity Casino Hotel and Greektown Casino Hotel finished the year on a strong note, experiencing a 10 percent rise in revenue in December, the Michigan Gaming Control Board said Tuesday.
The month’s gains mirrored the performance of most U.S. gaming regions and is due in part to the 2011 calendar that gave the month an extra weekend day. But it’s not clear how much of the revenue increases in Detroit are fueled by promotional free-play credits that customers redeem at casino games.
The December performance capped a year that saw the three casinos negotiate a new four-year contract with workers that reins in costs by requiring workers to pay more for health care coverage and favors bonuses over pay raises.
The new labor agreements also will help prepare the gaming halls for increased competition from the south, as Ohio plans to open four casinos during the next two years. In addition, casino projects put on hold during the recession are being built all over the country, Fantini said.
MotorCity Casino Hotel was the big winner in Detroit in 2011. After squeezing out a meager 0.1 percent increase in revenue in 2010, the city’s second largest casino posted a 5.7 percent increase to $471.9 million in 2011. It had a solid December, when revenues rose 5.1 percent to $40.4 million.
Greektown Casino Hotel had the strongest December, with year-over-year revenues rising 24.5 percent to $31 million.
The late surge helped the smallest of Detroit’s casinos finish with $352.8 million in receipts. It generated the smallest annual increase at 0.9 percent after losing revenue during most of the year.
It was Greektown’s first full year with new management following its emergence from Chapter 11 bankruptcy protection in June 2010. Its revenue picked up after September, when it opened a refurbished and consolidated gaming floor known as the “superpit.”
MGM Grand Detroit, the largest of the city’s casinos, finished the year up 3.1 percent at nearly $600 million. The gaming hall reported a strong December, with revenue up 6.5 percent to $52.3 million.
“Starting the year, we weren’t quite sure what to expect,” said the property’s General Manager Steven Zanella. The automotive sector was still searching for footing, and unemployment in Michigan was in the double digits.
Even starting 2012, “the economy is not solid by any stretch of the imagination,” Zanella said. But people are loosening their purse strings for entertainment, he said. “They want to go out and have fun,” Zanella said.
The gaming industry is heating up in the Midwest. Metro Chicago’s December revenue rose 32 percent thanks to the opening of a new gaming hall, Rivers Casino, Fantini said.
Iowa saw a 16 percent jump, followed by Missouri’s 5.4 percent increase. “There’s definitely a recovery in the Midwest casino market,” Fantini said.
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