Seminoles Out-Dueling Other South Florida Casinos

Broward County slot machines, not run by the Seminoles, are a disappointment to the State of Florida. Industry analysts had forecast that Las Vegas style slot machines would be an instant hit at Broward County racetracks. Broward County has a large population and is a major tourist area.

Eight months after the first slots began working; those same Wall Street analysts say they were wrong. Business at the fledgling racetracks fell well short of expectations, losing the competition with the more powerful Indian Seminole and Coconut Creek brands.

The state of Florida projected that the three racetracks where slots were added would generate $177.2 million for schools during the 2007-08 fiscal year. That estimate, is based on each slot machine generating on average $219 per day. Only one of the three casinos hit that benchmark.

The first casino to open, Gulfstream Park Racing & Casino, has been a particularly weak performer. Gulfstream Park's 1,221 slots generated an average of $70 in revenue per day for May, according to state division of Pari-Mutual Wagering.

"The average take for slots on the East coast for April was $262 a day," said Joe Weinert, editor of Gaming Industry Observer, an industry newsletter that puts out monthly reports on East Coast slots.

"Gulfstream's number is really anemic," Weinert said, "When you get down to $100 a day per machine, you are profitably challenged."

The Isle Casino & Racing at Pompano Park, owned by Isle of Capri Casinos, which owns and operates 15 other casinos, including three in Mississippi and one in Louisiana, has built a $160 million two-story casino at Pompano Park with 1,500 slots. Many in the gambling industry predicted that each machine would generate at least $300 a day. The slots at the Isle generate about $202 a day, falling way short of expectations, which in part may be due to the casino opening at the end of tourist season.

Since it's late December opening, Mardi Gras Racetrack & Gaming Center, formerly Hollywood Greyhound Track, has done the best financially with its slots generating an average of $222 a day since it opening. Since February, which averaged $268 a day, Mardi Gras numbers have been falling and by May, those same slots were only making $173 a day – a 35% drop.

Chief gaming executive of Mardi Gras, Dan Adkins said, "The Pari-Mutuals are struggling to establish themselves as the Seminoles have been marketing us to death. Every time I run a promotion, the Seminoles run three. If I run two television commercials, they run twenty. If I buy a billboard they buy six."

KeyBanc Capital Markets gaming analyst and managing director, Dennis Forst said, "The Seminoles have demonstrated the power of their casinos' brand. I don't think anyone, including myself, could appreciate the strength of the Seminole name in that market – both Hard Rock and Coconut Creek."

"The state did us a favor by the high tax rate that it has imposed on them, so there's not a lot of dollars and cents left over for them to get into a marketing war with us," said Seminole Gaming CEO James Allen, acknowledging in a May 2006 meeting with federal and state officials that heavy taxing will leave the other casinos with about 40 cents on the dollar, giving the Tribe a clear advantage since there are no taxes and they do not report revenues.

"We believe the Florida racetracks will continue to be challenged in head-to-head competition against the Seminole tribe, given the tax advantage enjoyed by the Seminoles and more amenities, such as hotel/retail/entertainment," wrote Morgan Joseph gaming analyst Adam Steinberg in a June 4 report on Isle of Capri stock.

"The Seminole Hard Rock Hotel & Casino near Hollywood, with its 500-room hotel and entertainment/shopping district, has become a destination spot less vulnerable to seasonal fluctuations," said Deutsche Bank gaming analyst Elizabeth McNellis.

"The Hard Rock has a lot more to offer — the shopping area, all those restaurants," said a 68-year-old resident of Davie. "It's similar to Vegas."

"I don't think there is a bigger market than South Florida for this kind of gaming, but we have to compete with non-taxpaying tribes," Adkins said.

Adkins added that he "hopes recent legislation that allows ATM machines at the racetrack casinos as well as extended hours will provide a boost. But," he said, "the key to the pari-mutuels' success will be the Legislature lowering the tax rate so more money can be sunk into capital improvements and advertising." A chance of that happening is not likely at least until next year's legislative session.

June 24, 2007
Posted By Larry Rutherford
Staff Editor, CasinoGamblingWeb.com    Previous Page | Internet Gambling | Top Online Casinos | Submit News!

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