Are Casinos Now A Losing Bet For States?
BALTIMORE, Md. (CBS News) — Casinos have never been more flush than they are right now.
“We went from 800 to 3,000 employees in less than six months,” said Rob Norton, president of Maryland Live.
The sprawling casino in the Baltimore, Maryland, suburbs opened just four years ago.
“So the demand is there?” CBS News correspondent Mark Albert asked.
“The demand is there,” Norton said.
After rounds of expansion, it now sells itself as one of the nation’s largest gaming, retail and entertainment venues.
“We are going to absolutely keep growing,” Norton said.
And like a gambler on a winning streak, the casino is plunging ahead. It’s just broken ground on a $200 million convention center and hotel.
A confident David Cordish owns Maryland Live.
“Is it a bet for you to build this hotel, or is it a sure thing?” Albert asked.
“It’s pretty much a sure thing,” Cordish said.
Cordish is doubling down because he said he only builds casinos near three things: a high-income community, busy interstate and a major retail magnet. Maryland Live sits next to Arundel Mills Mall — a 1.6 million-square-foot shopping paradise.
“You’re a bullish man on a lot of things,” Albert said.
“I am bullish. Very optimistic,” Cordish said.
But even an optimist dreads a losing hand.
“Thirty years ago, only two states had casinos; now 42 states do. You’re running out of room to expand them?” Albert asked.
“By and large, the United States is running out of good locations,” said Cordish, who is also the chairman of Cordish Company.
“Does that mean you’re running out of customers? That at some point casinos will be cannibalizing from each other?” Albert asked.
“At some point, it’s already happened,” Cordish said.
On Election Day, New Jersey voters will decide whether to amend its constitution to allow casinos beyond Atlantic City — the one-time Las Vegas of the East, where the chips are most certainly down.
In 2001, the New Jersey resort city had 16 percent of the U.S. commercial casino market. Now, it’s just 6 percent after neighboring New York, Pennsylvania and Maryland let casinos open there.
And it’s hurting the bottom line. New Jersey’s casino tax revenues are half what they were 10 years ago — meaning less money for senior citizens, the disabled and economic revitalization programs — while New York’s quadrupled, sending a windfall to education.
Delaware’s general fund hit the jackpot with five casinos since 2009 and a sixth — the MGM at National Harbor — opening Dec. 8.
“It’s basically kind of an arms race,” said Alex Bumazhny, an analyst at Fitch Ratings.
Even though commercial casino revenue nationwide is up 48 percent since 2001 — to more than $40 billion — Bumazhny said the casino industry is now extremely saturated.
“Fortunately, most states at this point, they already have gaming. And have a little bit of amount of licenses to issue so we’re getting to the point where future development is very limited,” Bumazhny said.
“Does that worry you?” Albert asked.
“Well, it doesn’t worry me for the ones we’re involved with,” Cordish said.
“You think you’re immune?” Albert asked.
“I think we’re immune in the locations we’ve picked,” Cordish said.
Cordish now has plans for a new Live casino in Philadelphia — his fifth casino, convinced he’s on a roll.
“Do you think there are too many casinos opening?” Albert asked one gambler.
“Actually, no, I don’t,” said Andrea Hanks. “I don’t feel like there’s too many casinos.”
“Why not? Because you want choice?” Albert asked.
“Yes. Most definitely,” Hanks said.
Hanks came with her fiance two-and-a-half hours north from Richmond, Virginia, to give Maryland Live a spin.
So did Betsy Bayne, a shrewd shopper at the slots who vows to check out MGM’s brand new mega-casino when it opens in National Harbor.
Bayne said she’ll keep sampling.
“You can try another one,” Bayne said.
“So you don’t have a loyalty to one particular casino. You want to try them all?” Albert asked.
“Yes. With their different promotions, slot tournaments,” Bayne said.
“You want them to fight for you?” Albert asked.
“Yes. Exactly,” Bayne said.
There are now more than 1,000 casinos nationwide, and just like gamblers, states are hoping to strike it rich, too, no matter what the odds.