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Casino battle royale

Will patrons wager on Horseshoe or hold with Maryland Live?

It’s hard to miss the Horseshoe Baltimore Casino building, now that the great white structure has risen along Russell Street.

It’s almost as difficult to miss a certain collection of billboards surrounding the building.

“Voted best casino,” one says. “Over 9 billion in payouts and counting,” says another.

But they’re not referring to Horseshoe Baltimore, which will open Aug. 26. They’re advertising Maryland Live — Horseshoe’s older brother to the south.

The billboard looming over Baltimore Horseshoe Casino forecasts the high-stakes competition ahead. (The Daily Record/Maximilian Franz)

The billboard looming over Baltimore Horseshoe Casino forecasts the high-stakes competition ahead. (The Daily Record/Maximilian Franz)

The Hanover gambling destination has dominated Maryland’s casino market for just over two years. But with a new kid in town, that just may change.

When Maryland Live opened in 2012, the state’s casino revenue shot up immediately, nearly tripling in less than a month. Since then, Live has been raking in the lion’s share of that revenue — up to 81 percent of it each month.

Live was the first casino in Maryland’s more populous central region. It took some business from Hollywood Casino Perryville to the north, but it got plenty of new business, too.

“Maryland Live has had the benefit of a virtual monopoly in the Baltimore-Washington area for more than two years,” said James Karmel, gaming analyst and principal at Gaming Atlantic. “It’s going to change.”

Chad Barnhill, Horseshoe Baltimore’s general manager, didn’t want to give exact volume expectations in June, as he updated the press on the casino’s plans.

He did take note of Maryland Live and that casino’s “phenomenal numbers.”

“I don’t think we can both expect to do $60 million a month, but I think there’s a certain amount of business that they have right now that we would obviously hope to have,” he said. “The market will grow some. It certainly won’t double.”

So how much will Maryland’s casino market grow? Karmel estimates it will be a few percentage points.

“It’s hard to say the percentage of revenue lost that Maryland Live is going to experience,” he said. “It could take a couple of months to shake out.”

Officials from Maryland Live could not be reached for comment. In an April exchange with The Daily Record, general manager Rob Norton was confident in the casino’s future even as other facilities open in the state.

Asked how Live’s position might change with the addition of Horseshoe and MGM National Harbor, scheduled to open in 2016, he said, “With our world-class facility, location, amenities and service, we will continue to be the market leader.”

But Karmel said Maryland Live will have to adapt.

“Is their revenue stream going to be impacted? Absolutely,” he said. “Are they doing everything they can to minimize that impact? Absolutely.”

“That story is mixed.”

Other cities and states have provided cautionary tales for casino saturation, Atlantic City’s gambling woes being the most prominent recent example.

“It’s a very interesting story. It starts with what happens when you open up more casinos in a state,” said Timothy Fong, co-director of the gambling studies program at UCLA. “That story is mixed.”

Detroit and Mississippi also banked on gambling as a way to revitalize their local economies, he said. Not all of their casinos have survived, let alone thrived.

But he doesn’t expect that to happen in Maryland, where he recently visited and got a better sense of the local casino scene. While they may compete, he expects the state’s casinos to continue to attract plenty of visitors.

“A lot of the questions are always as more casinos open up are they going to cannibalize each other or are they going to create their own culture?” he said. “I think it’s not that they take away from each other. They really just add more choices.”

Horseshoe will be the fifth of six casinos planned for Maryland. It’ll benefit from some big-city perks like proximity to public transportation, major highways, hotels and attractions like the Inner Harbor and Baltimore’s sports arenas.

It’s also touting restaurants with celebrity names, a 24-hour bar and the upcoming World Series of Poker event that will bring up to 3,000 players to the casino and which inspired one of its poker rooms.

But the other options in Maryland have their own upsides, said Karmel.

The Casino at Ocean Downs and Rocky Gap Casino Resort are both small but located near popular vacation spots. Perryville’s revenue did begin to decline when Live came to town, said Karmel, but it also has developed a loyal following of northern Maryland, southern Pennsylvania and Delaware residents.

For Maryland Live, he said, a more suburban location is no disadvantage — to many patrons that translates to a better experience with less traffic and less worry about public safety.

While it may not have the same big-city backdrop as Horseshoe, Maryland Live can offer is patrons a choice from several in-house dining options as well as plentiful food and shopping establishments at the adjacent Arundel Mills.

“Each company has their own identity and brand,” said Sara Rayme, senior vice president of public affairs for the American Gaming Association. “All the operators are always looking at ways to attract consumers and customers in their door.”

State versus state

From a state level, it’s important that the each of the individual casinos performs well, said Rayme. That’s why Maryland regulators took such a major role in planning the gambling landscape.

“As competition across the country has intensified, states are going to look at how they remain competitive with other states,” she said. “It’s not just competition between casinos anymore.”

Right now, Maryland’s casinos compete against gambling facilities in Pennsylvania, Delaware, New Jersey and West Virginia. The one neighboring state that has refrained from entering the casino fray is Virginia.

Karmel said he sees a greater opportunity for Maryland’s casino revenue to grow when the MGM National Harbor opens in about two years. The resort atmosphere, the national appeal of Washington as a weekend destination and the proximity to more southern customers will draw in greater revenue, he predicted.

That opening could also take some customers from Maryland Live — Virginians who have no casinos in their home state, but see Baltimore as too far a drive. But Fong doesn’t see Maryland’s casino market reaching a saturation point any time soon.

“You could put (a casino) right smack dab across the street from Maryland Live… and I don’t think it would make a difference,” he said.

He compared it to the ever-growing population of coffee shops, or the ever-increasing volume of traffic.

“You keep building new highways, but traffic doesn’t really die down,” he said. “There’s not a finite amount of money that people will spend on gambling.”