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Md. casino revenue tanks — as will money for state — official says

The head of the state’s lottery and gaming agency warned lawmakers Tuesday that the coronavirus pandemic is cutting casino revenues by hundreds of millions of dollars.

Maryland contributes about $500 million annually to the state’s Education Trust Fund as part of its casino program. Those contributions are likely to be less, maybe 50% less, than last year, according to Gordon Medenica, director of the state Lottery and Gaming Control Agency.

“To be probably brutally frank, I think we have to accept a long-term lowering of our expected casino contributions,” said Medenica. “To the extent that there’s a silver lining there, even though we’re running at 50% capacity limits, we do think that revenue will go down by 50%, but we really don’t have a good handle on that.”

Medenica said he remains cautiously optimistic.

“If we’re lucky, maybe we’ll get 60-70-80% of the revenues, but that’s somewhat of an unknown, and I’d be reluctant to try to make any forecast at this point,” he said. “I am optimistic it will be at least 50% and probably more than that.”

Currently, casinos in Maryland are operating at 50% capacity. There is no indication that an easing of those capacity limits are in the immediate future.

Currently most casinos, while reporting lower than expected revenues, say they are at 60% to 80% of their initial projections.

Jorge Perez, president of MGM National Harbor, said casinos in Maryland are all benefiting from an initial burst of pent-up demand following more than 100 days of being closed.

“We are doing better than expected,” he said, adding that MGM, as are most Maryland facilities is “benefiting from a lack of entertainment options in our market.”

July marks first full month of operations for the state’s six casinos. Revenue figures are expected late next week.

Joseph Weinberg, CEO of Cordish Gaming Group, whose parent, The Cordish Companies, owns Live Casino in Hanover, said his facility was “seeing pretty healthy increases” in revenue prior to the pandemic and the closing of casinos on March 16.

In 2019, the facility grossed over $600 million, a figure Weinberg said Live Casino was on track to repeat or exceed this year. 

“We’ve seen a pretty healthy return to business, but it’s still below last year, but we are cautious in projecting anything based on that, because, as others have explained, there has been tremendous pent-up demand in the marketplace,” said Weinberg. “I think we’re experiencing the fact that people have not had much, there’s really limited opportunities to get out of the house and go anywhere for entertainment these days.”

Weinberg said Live was projected to pull in about $620 million in gross gaming revenues. Now, after being closed for three months, the company is projecting $400 million in gross revenues if everything remains as it is.

Four casinos reopened on June 19 with two more reopening later. In all, those casinos contributed about $15 million to state revenues for June — 75% less than a typical month of about $60 million.

All have opened with enhanced cleaning requirements as well as closing or limiting table games as well as a reduced number of slot machines. None are able to hold events such as concerts and tournaments that help drive up attendance on weekends.

Some casinos reported a decline in customers 56 and older — an age group at the highest risk for illness including death. 

Five of the state’s six casinos said they have had at least one employee who tested positive after reopening; many reported more than one. Only Ocean Downs, in Worcester County, reported zero employee infections. That county has the highest transmission rate, 1.29, in the state. 

Perez and others said the ongoing pandemic and the potential for future closures if cases surge in Maryland make predicting the balance of the year very difficult. 

One note of good news for the agency: Sales of traditional lottery products, including scratch-off games, have rebounded significantly since early April. The rebound is similar to trends seen in other states and Canada.

Revenues from traditional lottery products could exceed projections by $12 million, according to current agency estimates.

Medenica attributed the rebound to disposable income that would have gone to concerts or closed businesses such as theaters and other activities going into gaming.

“I think we will continue to do very well as long as these other activities are constrained,” he said.

 

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