Metro-East News

August 13, 2014

The house loses: Queen, Argosy suffer awful year

The number of visitors entering metro-east casinos has dropped to levels that have grabbed the industry's attention, and industry observers are blaming the spread of video gambling in bars and gaming parlors.

The Casino Queen in East St. Louis saw a 12 percent drop in revenue in July compared with July 2013, to $9.176 million, down from $10.461 million. This coincides with a decline in attendance of almost 15 percent, or nearly a million visitors.

At Argosy Casino in Alton, the results were nearly as bad. Revenue declined in July by 11 percent from the same month a year ago, or $4.901 million, down from $5.513 million. Argosy also saw a 15 percent drop in attendance from July 2013.

The two metro-east casinos mirror a statewide trend. Illinois' 10 casinos saw a 5 percent drop in revenue, to $124.7 million from $131.9 million, and an overall drop in attendance of nearly 10 percent. Only Harrah's Casino in Joliet saw slight increases in revenue and attendance for the month.

Tom Swoik, executive director of the Illinois Casino Gaming Association, said the proliferation of now-legalized video gambling has cut into Illinois' casino business. The state legalized video gambling in public places outside of casinos in 2009 and machines started appearing in the metro-eat two years ago. These machines are mostly found in bars, restaurants, fraternal organizations and gaming parlors.

At the time of the Video Gaming Act's passage, Swoik said the state's casinos were satisfied with a provision in the law that limited each establishment to five video gambling machines per licenseholder. However, the number of gaming positions have saturated the gambling market, beyond the state casino gaming association's expectations.

"At the time we underestimated the impact it would have," Swoik said. "I think we underestimated the impact because of convenience."

Jeff Watson, president and general manager of the employee-owned Casino Queen, could not be reached for comment.

Swoik said that in September 2012, the state had 6,100 gambling machines. By September 2013, there were 10,000. By this September, an estimated 18,000 machines will be in operation.

"That has had a significant impact," he said. "They are so dispersed. In the past, people lived 50-60 miles away from a casino. Now, they can just go down the street to gamble. It impacts us a lot more than we thought it would."

Swoik said that when he testified at a hearing in Chicago last spring, there were more than 650 of these video gaming machines that had sprung up within 30 miles of the East St. Louis casino. That is the equivalent of another half of a casino, he said, and the problem will only be compounded if Illinois horse racing tracks are ever permitted to add on-site slot machines, which the state horse racing industry has been pushing for years.

"If that happens, we will have as many gaming positions as they have on the strip in Las Vegas," he said.

The casino association is supporting a bill that was introduced before the General Assembly this spring that seeks to further regulate video gambling licenses to businesses that generate at least 60 percent of their business from food and beverage sales. Swoik said the association has found that businesses such as gas stations, scuba diving equipment stores and even floral shops have secured licenses and added video gambling machines.

"We're hoping it will at least put some limits on this from here on out," he said.

Contact reporter Will Buss at wbuss@bnd.com or 239-2526.

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