2017 Net Gaming Revenues for the Southeastern States

Year-Over-Year Net Revenues for Commercial Casinos and Racinos Reported to State Gaming Agencies in the southeastern states

2016 2017 y-o-y +/(-) $  y-o-y +/(-) % Arkansas  $322,766,635 $349,639,881 $26,873,246 8.32% Florida $545,954,766 $546,586,992 $632,226 0.12% Louisiana $2,538,530,264 $2,561,399,716 $22,869,052 0.90% Mississippi $2,122,287,544 $2,080,088,835 ($42,198,709) -2.00% Totals $5,529,539,209 $5,537,715,424 $8,176,217 0.15%

This report is produced by the Southern Economist, llc, a Florida based firm providing consulting services to the casino and racino industries in the nine southeastern United States. Data provided in this report is gathered from the four state agencies listed below. These four states have commercial, non-American Indian casinos within their boundaries. Florida, Louisiana and Mississippi have American Indian casinos within their boundaries, however, American Indian entities are not required to report their revenues to their respective state agencies. The states of Alabama and North Carolina each have American Indian casinos which, likewise, are not required to report revenues to state agencies. The states of Georgia and Tennessee do not have casinos or racinos operating within their boundaries.

Florida, Louisiana and Mississippi gaming revenues were negatively affected by two of the most devastating hurricanes in the history of the United States. Hurricane Harvey made landfall August 25^th and drenched Texas and Louisiana for five days. The storm was responsible for 103 deaths and an estimated $125 Billion in damages. Hurricane Irma made landfall September 9^th at the southwestern tip of Florida with 130 mile-an-hour winds along with massive rains and storm surges. At one point during the storm it covered the entire state of Florida. Irma traveled along the Gulf Coast of Florida then made landfall again on the Gulf Coast of Mississippi on

On September 12^th, Hurricane Irma was responsible for 100 deaths in United States and over $66 Billion in damages. We have not quantified the losses in damages and/or revenues to the three states affected, however we are impressed that the year-over-year gaming revenues for Florida, Louisiana and Mississippi casinos and racinos were good in spite of the storms.

Southern Economist, llc members personally, physically visit each of the 79 commercial and American Indian casinos and racinos in the southeastern states. We provide quarterly and annual revenue reports for each of the four state agency reporting states and provide customized reports on request. For further detail of gaming revenues and/or facilities reviews, contact us at jamesmcgregorsr@gmail.com or call 904.859.7344.

Sources:  Alabama, Electronic Games of Skill Summary Reports; Florida Racinos Monthly Slot Revenues, UNLV Center for Gaming Research; Louisiana Gaming Control Board Revenue Reports; and Mississippi Gaming Commission Monthly Adjusted Gross Gaming Revenue Reports.

Louisiana Gaming Revenues - First Half 2017

Year-Over-Year First Six Months Net Gaming Revenues for the years 2014 through 2017

The first six months revenues had a rebound for the first six months of 2017 in three of the four regions and in the statewide totals. The 7.4 percent increase in the Baton Region led by L’Auberge of Baton Rouge, exceeded the others by a significant percentage. In addition, only one, the Baton Rouge Region, saw 2017 exceeding their 2015 revenues.    

Source: Louisiana Gaming Control Board Revenue Reports.

Revenue reports include those from the twenty licensed gaming facilities reporting to the Louisiana Gaming Control Board.  They do not include the four Native American Tribal casinos since the Tribal groups do not report to the Louisiana state gaming agency.

Mississippi Gaming Revenues – First Six Months 2017

Year-Over-Year First Six Months Net Gaming Revenues for the years 2014 through 2017

Overall, Mississippi Gaming Revenues were down 2.88% for the first six months 2017 compared to 2016. Mississippi ‘River Counties’ continue to see a decline in their first six months Gaming Revenues, over $81,511,933 or 15.13% from 2014 to 2017. ‘Coastal Counties’ saw a slight decline their first six months Gaming Revenues for the first time in four years. However the Net Revenues in the ‘Coastal’ Region have risen by $58,684,669 or 10.81% during that same 2014 – 2017 period.  

Table 1 – Net Gaming Revenues for the two Regions first Six Months each year (000’s)        

Arkansas Racino Revenues – First Half 2017

Year-Over-Year Net Revenues (Net Wins) increase significantly again

Arkansas has two licensed gaming facilities, Oaklawn Racetrack and Casino in Hot Springs, and Southland Park Racetrack and Casino in West Memphis. Each one continues to appreciate significant increases in Net Revenues as a result of their 2015 – 2016 expansions.  

Table 1 : 2017, 2016, 2015 Comparison – Arkansas Racino EGS Net Revenues     

JAN-JUN		Net Revenue*		Y-o-Y		%Win**
2017	$180,563,640		8.5%		6.82%
2016	166,441,566		35.9%		N/A
2015	122,455,761		27.9%		N/A

*Net Revenue is designated as ‘Net Win’ by the Arkansas Racing Commission.  It is the dollars wagered minus the payouts.

  **  “% Win” is defined as Net Win as a percentage  of dollars wagered.

         

  Table 2:  2014 - 2017 EGS Net Revenues for the two facilities first six months of each year

	2014	2015	2016	2017
Oaklawn	$33,792,897	$47,094,323	$62,180,146	$68,164,609
Southland	$61,914,065	$75,361,438	$104,261,420	$112,385,031
Total	$95,706,962	$122,455,761	$166,441,566	$180,549,640

Source:  February through July 2017 Electronic Games of Skill Revenue Reports, Arkansas Racing Commission

2016 Louisiana Casino/Racino Gaming Revenues: Q4 Up but Overall Decline Continues

2016 Louisiana Casino/Racino Gaming Revenues

Fourth Quarter improvement, but the decline continues

Fourth Quarter 2016 year-over-year gaming revenues for Louisiana casinos and racinos were an improvement over the first three quarters, but overall they were below the same 2015 fourth quarter.  Our charts below display both 4^th quarter and the full year revenue comparisons for the years 2015 and 2016.

These declines are now in excess of our projections detailed in our September 1, 2016 blog note and our blog notes from 2014.  Further, we continue with our assertion that the likely cause of declines is in gaming revenues is the continuing low oil and natural gas prices thereby depressing Louisiana and Texas oil and gas industries. 

Our second assertion is that within each market there is the beginning of stagnation of revenues due to an excess of casino and racino facilities and significant separation between large, new, effectively operated facilities and others.

Our on-site visits to each of the Louisiana casinos and racinos in 2014, 2015 and 2016 have provided additional evidence of this decline, separation and stagnation. 

With a continuation of troubles in the Louisiana and Texas energy sector, future declines would add to the likelihood of one or more casino and racino facilities being shuttered, sold or having a reorganization of ownership some time during the next three to six months.

Chart 1 – What happened in Q4 2016 ?

	Oct-Dec 2015	Oct-Dec 2016	$ Change	% Change
Shreveport/ Bossier City	$172,063,872	$162,924,445	($9,139,427)	-5.31%
Baton Rouge	93,787,445	99,128,389	$5,340,944	5.69%
New Orleans	147,840,863	142,072,503	($5,768,360)	-3.90%
Lake Charles	216,375,032	224,498,189	$8,123,157	3.75%
Total Louisiana	$630,067,212	$628,623,526	($1,443,686)	-0.23%

  

Chart 2 – And what happened in the calendar year 2016 ?

	Jan-Dec 2015	Jan-Dec 2016	$ Change	% Change
Shreveport/ Bossier City	$729,505,081	$688,750,938	($40,754,143)	-5.59%
Baton Rouge	379,520,470	379,176,289	($344,181)	-0.09%
New Orleans	626,185,220	582,788,969	($43,396,251)	-6.93%
Lake Charles	907,446,804	887,814,468	($19,632,336)	-2.16%
Total Louisiana	$2,642,657,575	$2,538,530,664	($104,126,911)	-3.94%

Year-over- comparisons show continued declines in each of the four market areas with an overall slower decline in fourth quarter revenues.  We will continue to publish quarterly revenue reports along with results of our visits to facilities in each region.

Specific facility studies and requests are available by request to jamesmcgregorsr@gmail.com or calling 904-859-7344. 

Stay tuned.       

Louisiana Casino/Racino Gaming Revenues Continue Their Decline

Third Quarter 2016 year-over-year gaming revenues for Louisiana casinos and racinos continued their decline.  Our charts below display both 3^rd quarter and the first three quarter’s revenue comparisons for the years 2015 and 2016.

These declines are now in excess of our projections detailed this September and in our 2015 focus on how oil and gas prices impact casino revenues.  Further, they emphasize the likely cause of declines being in large part our contention that the cause is the continuing low oil and natural gas prices. 

Our on-site visits to each of the Louisiana casinos and racinos in 2014, 2015 and 2016 have provided additional evidence of this decline.

With a continuation of troubles in the Louisiana and Texas energy sector, future declines will add further likelihood of one or more casino and racino facilities being shut some time during the next six months.

Chart 1 – What happened in the most recent 2016 quarter?

	July-Sept 2015	July-Sept 2016	Change	% Change
Shreveport/Bossier City	$183,842,352	$173,149,436	($10,692,916)	-5.82%
Baton Rouge	91,752,848	90,271,144	($1,481,704)	-1.61%
New Orleans	161,748,069	142,816,084	($18,931,985)	-11.70%
Lake Charles	231,325,746	229,587,307	($1,738,439)	-0.75%
TOTAL LA	$668,669,015	$635,823,971	($32,845,044)	-4.91%

Chart 2 – And what happened in the first nine months of 2016 ?

	Jan-Sept 2015	Jan-Sept 2016	Change	% Change
Shreveport/Bossier City	$557,441,209	$         525,826,493	($31,614,716)	-5.67%
Baton Rouge	285,733,025	280,047,900	($5,685,125)	-1.99%
New Orleans	478,344,357	440,716,466	($37,627,891)	-7.87%
Lake Charles	691,070,772	663,316,279	($27,754,493)	-4.02%
TOTAL LA	$2,012,589,363	$     1,909,907,138	($102,682,225)	-5.10%

Year-over- comparisons show continued declines in each of the four market areas with third quarter improvements in Lake Charles and a slight improvement in Baton Rouge.  The comparisons show the continued significant declines in New Orleans. 

Stay tuned.       

Louisiana Casino/Racino Revenue Declines As Predicted

Last year, we predicted this would happen: Louisiana Gaming Control Board revenue figures for the first half of 2016 show a 4.4% decline from the same months of 2015. 

The cause as we see it is the ongoing economic devastation of the oil and gas sector. In our February 2015 post we stated: “Louisiana has the largest concentration of crude oil refineries, natural gas processing plants and petrochemical facilities in the Western Hemisphere. It is America’s 3^rd largest producer of petroleum and 3^rd leading state in petroleum refining.  Louisiana is the 2^nd largest producer of natural gas. It supplies over 25% of total US production.  While Texas leads the US in most of the categories of oil and gas production, Texas does not have casinos or racinos – so in the parking lots of casinos and racinos across the Shreveport/Bossier City and Lake Charles regions, you’ll see as many Texas license plates as Louisiana plates.”

“The halting of projects, firing of workers and deferring of investments will certainly change the economies of Texas and Louisiana and negatively affect the casino and racino business in all four Louisiana regions.” We further predicted declines in each region as:

·         Lake Charles: down 2% to 3%

·         Shreveport/Bossier City: down 4% to 6%

·         New Orleans and Baton Rouge regions: down 2% to 4% each

Actual 2015 results: 

·         Shreveport/Bossier City:  down .52%

·         Baton Rouge: up 3.9%

·         New Orleans: down 3.2%

·         Lake Charles:* up 26.25%

*Lake Charles numbers include the Golden Nugget which opened in December 2014. 

So what happened in the first half of 2016?

	Jan-Jun 2015	Jan-Jun 2016	$ Change	% Change
Shreveport/Bossier City	$373,598,857	$352,677,057	($20,921,800)	-5.6%
Baton Rouge	$196,980,177	$189,776,756	($7,203,421)	-3.7%
New Orleans	$316,596,288	$297,900,382	($18,695,906)	-5.9%
Lake Charles	$459,745,006	$433,728,972	($26,016,034)	-5.7%
Total Louisiana	$1,346,920,328	$1,274,083,167	($72,837,161)	-5.4%

Further declines are most likely. According to Zacks Investment Management (May 7, 2016): “Does the Energy Collapse Resemble Tech’s 2000 Bubble Bursting? At last count there were 59 chapter 11 bankruptcy filings from companies in the oil and gas business. The energy sector, as a whole, has felt the hit profoundly with earnings falling (-) 56.4% in Q3 2015 and (-) 78.6% in Q4 2015. For Q1 2016, the damage is estimated to be even worse, with the current Zach’s estimate being a (-) 114.5% drop in Q1. Additionally, with a handful of other small players likely in line at bankruptcy court, it may not be long before 69 filings seen by telecom during the dot-com burst in 2000.”

Further, a recent Forbes article reads, “All told, 69 oil and gas producers with $34.3 Billion in cumulative secured and unsecured debt have gone under. Since share prices peaked in 2014, the oil bust has wiped out about $1 Trillion in equity, with the Dow Jones U.S. Oil & Gas Index off 40%.”

There’s more to come: “Despite the modest recovery in energy prices (in 2016), all indications suggest many more producer bankruptcy filings will occur during 2016” writes Haynes & Boone.  According to Deloitte: “About a third of global oil and gas companies, or about 175 of them, are at risk of insolvency.”  Bernstein Research estimates that by 2019 we’ll see more than $70 Billion in defaults amid more than $400 Billion in high-yield debt.”  -- That would indicate we’re only halfway through the bankruptcies.

We will continue to monitor and report the oil and gas sector and its effect on the Louisiana casino and racino revenues. We predict that there is more to come and that our previous projections are likely modest.