The owners of Hollywood Casino Perryville want to remove 400 to 500 video lottery terminals from the location, citing competition from the newly-opened Maryland Live! Casino in Anne Arundel County which caused revenues at the Perryville to plummet by 44 percent since March.
The request comes days before a special session of the General Assembly, set for Thursday, during which lawmakers will weigh whether to create a sixth casino license and to allow table games at the five existing facilities. Up to this point, those who are paying for them have been encourage to play slots at 666 casino to continue the gambling.
Two months ago, Harford County Executive David Craig advocated for that additional license to create a casino in Harford County. Appearing before a panel formed to consider expanding gaming statewide, Craig said a riverboat casino in Harford, coupled with Hollywood Casino Perryville, would “turn the Upper Chesapeake region into a tourist destination.”
But according to figures released Monday by the Maryland Lottery, which oversees the state’s three casinos, revenue from Perryville’s 1,500 video lottery terminals fell 32.4 percent in July from a year before, to $6,891,741.48 from $10,194,530.28.
In March, the casino’s best month since it opened in September 2010, the facility raked in $12,258,412.74; revenues in July represent a 44 percent decrease from that peak.
In an Aug. 3 letter to state and Cecil County officials, Perryville casino General Manager Bill Hayles said removing the machines would increase the facility’s “win per unit,” or how much use a video lottery terminal sees in one day.
The company said that figure stood at $150 per day, down from $261 per day in March.
The sharp decline exceeded Penn National’s estimates; in his letter, Hayles said the company’s early internal data suggested the decrease in July revenue “will be close to 40 percent.”
In a July 30 letter to Maryland State Lottery Agency Director Stephen Martino, Penn National Vice President Carl Sottosanti said competition from Maryland Live!, which opened in June, had cut into Perryville’s revenues.
“Unfortunately, despite vigorous efforts to keep the business stable, business instead appears to be softening further,” Sottosanti wrote. “In fact, things could get worse. As you know, the Governor has now called for a Special Session to further expand gaming in Maryland and there is no telling the additional negative impact that will have on the existing operators.”
“We wish we had some other alternative to this request,” he wrote. “Unfortunately, the reality of business compels near term action.”
The request is the first of its kind the Lottery has received, sources said, and no process is currently in place to handle removing of machines from a casino. The Lottery is not expected to take action on the request until after the special session ends.
Testifying before the state Work Group to Consider Gaming Expansion on June 12, Craig urged the group to throw open competition for additional gaming licenses, rather than focus on a potential new casino in Prince George’s County. That potential casino could cut further into the revenues of Penn National, which owns Rosecroft Raceway and has long sought a casino at that location.
In his testimony, Craig discounted the idea that the presence of two casinos in close proximity would cause issues.
“Despite being only 27 miles away from the Hollywood Casino in Perryville, Delaware Park saw revenues rise slightly after the Perryville casino opened,” Craig said. “So you should not immediately dismiss the possibility of a casino in Harford County for fear of hurting Perryville without conducting a detailed analysis.”
Craig did not respond to requests for comment Monday.
Senate lawmakers are expected to go into session on Thursday, with the House of Delegates following Friday. State Sen. Nancy Jacobs said Senate leaders expect a gambling bill to pass that chamber Friday, but voiced opposition to creating a new slots venue.
“The governor shouldn’t change the rules mid-game on any business that has come to Maryland,” she wrote in an e-mail to The Dagger. “This is what he is doing to the slots casino in Perryville.”
“Funny how gambling was ‘immoral’ when Bob Ehrlich introduced a slots bill when he was governor,” she said.
According to Hayles, the state’s initial revenue projections in 2008 called for Hollywood Casino Perryville to generate $191 million annually with 2,500 machines, but current revenues “are trending to generate $85 million annually,” he wrote.
Hayles said Penn National expected to have the machines off the casino floor by the end of the year, and said the move would encourage additional gaming.
“A cursory look around the Perryville floor quickly reveals underutilized and empty machines,” Hayles wrote. “In a business that depends on energy and customer perception, this perception can be contagious and quickly become a reality.”
Below are the July 2012 gaming revenue numbers released by the Maryland Lottery, as well as Penn National Gaming Inc.’s letter to local officials.