Something Old, Something New, Something Broken, Something Blue: Part 2

Some Things Are Broken

2015 was a bad year for a few places.  We’ll do our best to be kind:

• Isle of Capri closed its Natchez, Mississippi casino in November. 
• Harrah’s Louisiana Downs is broken. After a few years of significant drops in gaming revenues, 2015 took another dive with a whopping 25.9% drop. Our visits to the racetrack and casino found the main restaurant operating limited hours, the facility looking shabby and poor crowds at the races and casino. This place needs a new owner.
• The Tunica Roadhouse was even more disappointing. Our room had dresser drawers that wouldn’t close or couldn’t close, the window curtain was falling down, the floor had a three-foot round stain (hopefully not bullet wound related). That’s for starters. We arrived at about 9:00 pm, no food service. Had a discussion with the hotel registration person who said she would contact the manager. No call. 
• I think greyhound racing is broken. Each visit to a greyhound racino leaves me feeing worse than the last. The dogs just look sad, perhaps even mistreated, although I believe the dog owners and race track owners and operators do care and do their best to care for the animals. Most greyhound racino owners and operators want to de-couple, allow the casino to stay, get rid of the dogs.

Some Things Blue

These things are not yet or not quite broken, we'll call them blue.

• Tunica, Mississippi casinos are blue. Nearly every month in the past two years the gaming revenue numbers for the Mississippi River Counties are down, nearly every month the Gulf Coast Counties revenues are up. Tunica area has 9 of the 16R River Counties Casinos and carries the bulk of the downside. Billions of dollars have been spent on the Mississippi Gulf Coast Counties plus the Louisiana Gulf Coast. None has been invested in new facilities in Tunica. In addition, the Southland Park Racetrack and Casino in West Memphis Arkansas 40 miles north of Tunica has expanded its casino facility and has grown revenues tremendously over the past two years. Tunica is not broken, but it is blue.
• Harrah’s New Orleans is blue with 2015 gaming revenues down $33.8 million, 9.88% for the year due largely, we believe, to the smoking ban in New Orleans. It’s still a great facility and still generated over $300,000,000 in gaming revenues in 2015, but it is unfortunately blue.
• A major source of Louisiana casino and racino revenues comes from persons working in the oil sector. The Texas and Louisiana oil sector is blue.  Low oil prices have caused a number of problems for this area and it likely will affect gaming revenues more in 2016 than 2015.  We will provide a detailed note on this later this quarter, but suffice to say, thousands of jobs have been lost plus hundreds of companies have closed their doors.  Hundreds of loans to these companies are in default. A major source of gaming revenues from oil sector employees has likely been lost. These potential gaming revenues from oil sector employees could seriously damage casinos and racinos in the Louisiana markets.