Slowing Revenue Growth in Florida Racino Slots

2016 Florida Revenues from Slots at Racino: Net Revenues Increase while Growth Slows

The charts and listings below tell the story of slowing growth and more expensive revenues in calendar year 2016 for the 8 Florida Racinos.

2017 proposed legislation for the Florida Racino Industry should require a significant review of what is happening with the eight existing Florida Racinos. The statistics are not indicative of a growth industry. 

Chart 1: Calendar Year Numbers for the 8 Florida Racinos

Chart 1 shows five of the eight Racinos with a decrease in Net Revenues, two with increases and one re-opening with new revenues in 2016.

Casino	Net Revenues	Y/Y % change	Hold %	Promo %	Market Share %
Gulfstream	$47,241,009	-3.49%	6.01%	24.52%	8.65%
Mardi Gras	45,767,506	-5.51%	6.75%	23.12%	8.38%
Pompano	142,287,479	-3.41%	8.17%	17.68%	26.06%
Flagler	81,069,957	-2.92%	6.11%	3.57%	14.85%
Calder	74,370,902	-0.15%	7.18%	25.69%	13.62%
Miami Jai Alai	61,782,543	0.80%	5.40%	16.70%	11.32%
Hialeah Park	70,813,899	6.18%	5.81%	11.80%	12.97%
Dania Jai Alai *	20,046,515	*	6.57%	17.12%	3.67%
Statewide	$543,379,810	2.88%	6.53%	16.75%

*Note – Dania Jai Alai re-opened in January 2016.  It was closed for remodeling during calendar year 2015.

 

Chart 2: Rate of Growth in Net Revenues

Statewide Net Revenues increased 2.88%, a dramatic slowdown from the previous two years. Further, this increase included the re-opening of Dania Jai Alai which added over $20 million to the statewide total in 2016 with zero in 2015. Statewide Net Revenues for 2015 were $530,661,905, an increase of $15,292,861 over 2014. Absent the Dania Net Revenues, statewide Net Revenues would have decreased $4,753,654 or 0.89%.

• Years 2015 to 2016  =  2.88% (with the addition of Dania Jai Alai)
• Years 2014 to 2015  =  4.97%
• Years 2013 to 2014  =  8.11%

Chart 3: Net Revenue Growth per Additional Promotion Credit Invested for the 8 Florida Racinos combined

(ie,how much new net revenue was produced by each additional Promotional Credit?)

Charts 3 and 4 show that the effect of Net Revenue growth per additional promotional credits decreased significantly from 2014 and 2015.

	Additional Promo	New $ Net Rev	New Net/Promo
2015 – 2016	$         10,341,990	$     15,292,861	$                1.47
2014 – 2015	$           4,841,127	$     25,133,659	$                5.19
2013 – 2014	$             -849,240	$     37,941,445	***

***In 2014 Florida Racinos provided $849,240 fewer Promotional Credits than they did in 2013, yet they produced an additional $37,941,445 in additional Net Revenues.

In 2015 Florida Racinos provided $4,841,127 more Promotional Credits than they provided in 2014, and they produced an additional $25,133,659 additional Net Revenues, or + $5.19 per Promotional Credit provided.

In 2016 Florida Racinos provided $10,341,990 more Promotional Credits than they provided in 2015, and they produced an additional $15,292,861 additional Net Revenues, or $1.47 per promotional Credit provided. Promotional Credits in 2016 were only 28.3 % as effective in producing Net Revenues as they were in 2015 and significantly less than in 2014.

Chart 4: Promotional Credits as a Percent of Net Revenue

• 2016 = 16.75%  y/y + 9.55%
• 2015 = 15.29%  y/y + 1.32%
• 2014 = 15.09%

Chart 5: Hold % = Net Revenues as a percent of total Credits In

Chart 5 shows a slight decrease in the Hold % for the overall Florida Racino facilities.

• 2016 = 6.53% (-)
• 2015 = 6.60%  +
• 2014 = 6.35%

Source:  University Libraries, University of Nevada Las Vegas

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.

The Tunica Biloxi Tribe of Louisiana: Part 2

The Tunica Biloxi Tribe of Louisiana has a deep and rich history in Louisiana. The Tunica were known to be skilled traders and entrepreneurs, especially in the mining and distribution of salt. Salt was extremely important in the trade between the French and the various Caddoan groups in northwestern Louisiana and southwestern Arkansas. By the early 18^th century, the tribes along the lower Mississippi River were a target of Chickasaw raids for the English slave trade in South Carolina.  By the 1770s the Tunica decided to move. In the 1770s, the Tunica moved to the present-day Marksville area on the Red River. The Tribe remains today on the land granted to them by Spain. Bureau of Indian Affairs records show that the current tribe is a result of the gradual fusion of the Tunica, Ofo, Avoyel and Biloxi Tribes, which probably culminated in about 1810. Each of these Tribes has continually documented interactions with the French and Spanish authorities throughout the 1700s.

The Tunica’s trading acumen throughout their history is evidenced through the collection of artifacts that make up the “Tunica Treasure,” one of the present-day Tribes’ greatest assets. The Tribe was able to recover and preserve the artifacts that were taken from their ancestors’ graves. Though the tribe’s members were aware their ancestors had occupied the area of Trudeau, Louisiana near the present-day site of Angola State Penitentiary, they had no idea that a guard from the prison had located their burial ground and had been ransacking the graves. They learned about it from the State of Louisiana which had asked the tribe to intervene in the case of Charrier v. Bell to try to keep the artifacts from being sold. Chairman Barbry readily agreed, on the condition that the artifacts be returned to the tribe. 

Charrier, the prison guard, had stocked his home with the artifacts before filing suit against the owner of the land to claim half of what he had unearthed. Charrier’s luck turned when the courts ruled that he never owned the artifacts because the items were never given up for ownership. The attorney for the Tribe explained: It was buried with these people and never intended to be dug up and sold. The judge brought the case to what it was, a case of abandonment, and these goods were never abandoned.

The tribe built an underground museum in anticipation of the artifacts’ arrival, attempting to create a symbolic site for the items. However, when the items arrived they were in a seriously deteriorated condition. The resourceful tribe created a conservation lab by transforming a refrigerated eighteen-wheeler trailer into controlled environments suitable for artifacts storage and restoration processes. Since the time of original restoration, they have a beautiful museum to continue to restore and display these treasures. 

Because of what the tribe was able to do and the stand they took in preserving those artifacts, federal legislation was enacted – the Native American Graves Protection and Repatriation Act. The Act established that ancestors’ remains and any other grave items that can be identified as belonging to a particular tribe and are held by museums and federal and state agencies must be returned to the tribe from which they came.

The Tribe has a second historical museum a short distance from the new one housing the Tunica Treasure. The historical museum is located at the site of the Marksville Mounds.

Today, the Tribe boasts a membership of more than 1,200 who reside primarily in Louisiana, Texas and Illinois. Many live on 1,717 acre Tunica-Biloxi Indian Reservation located just south of Marksville in east-central Louisiana. The 2010 US Census lists 951 persons self-identified as at least partly Tunica-Biloxi with 669 of those identifying as solely Tunica-Biloxi ancestry. Others are descendants of the Ofo, Avoyel and Choctaw.

The Tribe owns and operates the Paragon Casino and Resort, the largest employer in Central Louisiana. The Casino opened for business in 1994 and has expanded ever since. The full-service Class III casino offers one of the largest slot machine floors in Louisiana, a poker room, numerous table games and an off-track betting parlor. The resort offers more than 500 hotel rooms and suites with an indoor pool with a swim-up bar, a 200 site R.V. park, a full-service spa, three screen cinema, retail shops nine food service areas and restaurants, a championship golf course and live entertainment in their Main Showroom concert stage. In April, 2016 Tunica-Biloxi Gaming Authority, owner and operator of the Paragon Resort, retained Mohegan Tribal Gaming Authority to provide gaming, hospitality and entertainment consulting services to the Marksville complex.

Through its compact negotiated with the State of Louisiana, the Tribe has been able to assist local governments with distributions of more than $40 Million since the opening of their gaming business.

Sources:  The Historic Indian Tribes of Louisiana From 1542 to Present by Fred Kniffen, Hiram F. Gregory, and George A. Stokes; Nations Within, The Four Sovereign Tribes of Louisiana by Sarah Sue Goldsmith, Risa Mueller and Tim Mueller; The Southeastern Indians by Charles Hudson; The Tunica-Biloxi web site; Wikipedia; and other web sources.

Our Nation, Not a Trash Dump

Part 1: Earl Barbry, Sr. and the Tunica Biloxi Tribe of Louisiana 

The Tunica Biloxi Tribe of Louisiana was federally recognized in 1981 by the United States Bureau of Indian Affairs, Department of the Interior. They were one of only two federally recognized in the southeast during the 1980s out of more than 30 who had petitioned via the Bureau of Indian Affairs. The Tunica-Biloxi effort for recognition lasted 47 years even though it had retained part of its command land base, many religious practices, their cultural identity, and tribal government. The Tribe had been led by a Chief and Sub-Chief well into the 1970s. Tribal members also kept craft practices, their cemeteries and autonomy throughout their history. The Bureau of Indian Affairs had simply neglected its obligation to the tribe to provide a review of their petition for federal recognition.

The federal recognition endeavor began in the 1930s with Eli Barbry, who made his way to Washington DC with a handful of tribal members in a model T-Ford in the 1930s. The effort for federal recognition continued for four decades through efforts of Chief Eli Barbry. Eli’s grandson, Earl Barbry, Sr. came from a long line a line of Indian chiefs but never intended to go into politics himself. He became one of the great leaders of the Native American movement in the southeast.

In the 1970s Earl Barbry, Sr. learned that the tribe had crafted a deal with the city of Marksville to rent the Indian reservation land as a garbage dump. In exchange, the tribe would receive fifty dollars a month and a road would be built into the reservation land. Barbry attended a tribal meeting where the deal was to be approved. “I guess because so many of our people were raised in poverty, fifty dollars seemed like a lot. This was discussed, how it would be a good deal for the tribe,” he recalled. Then it was his turn to speak: “I just reminded them of how the city had treated them like trash all their lives, and now they wanted to allow them to dump their trash on our land,” he said. Barbry said his love for the land is more than just property ownership. “This is the only thing that keeps us apart from everybody else. This is our nation.” By the end of the meeting, the decision to reject the dump proposal was made, and Barbry’s entry into the tribe’s politics was a foregone conclusion. Shortly after, he was appointed to fill an unexpired tribal council term as vice chairman. In 1978 he became chairman and remained chairman through reelection until his death in 2013.