Illinois Gov. J.B. Pritzker on gaming expansion
There are nearly as many gaming spots in the St. Louis area as there are in Reno, Nevada.
There are 11,857 gaming spots here, which include four casinos on the Missouri side of the Mississippi River and two on the Illinois side, along with video gaming terminals in bars, restaurants and gaming parlors throughout the metro-east, according to data from the Illinois Gaming Board and Missouri Gaming Commission.
That compares with 12,957 gaming spots in casinos, bars, convenience stores, grocery stores, liquor stores and the Reno airport, according to the Nevada Gaming Control Board.
But St. Louis has the potential to outpace the so-called “Biggest Little City in the World” in the coming years.
With the gaming expansion bill signed into law by Illinois Gov. J.B. Pritzker to help pay for infrastructure projects in the state’s $45 billion Rebuild Illinois capital bill, even more gambling spots could be on the way.
Fairmount Park could have 900 gaming positions, which could be slot machines or table games, or a combination of both. And, the race track is poised to host the first legal sports book in the region. The Casino Queen in East St. Louis and Argosy Casino in Alton could each consider adding 800 positions under the new law. And area bars and restaurants will be allowed to have up to six video gaming terminals, instead of five. Large truck stops will be able to have 10 video gaming machines.
Some say the St. Louis area already is saturated with gaming, and that more gaming spots won’t bring more gambling dollars, it will just spread them out.
“There’s going to be significantly more competition. We’re not creating more gamblers,” said Tom Swoick, executive director the Illinois Casino Gaming Association.
As the debate on whether to expand gambling took place in the General Assembly, the gaming association lobbied against the massive expansion, arguing there has been cannabilization in the state with the advent of video gaming terminals in bars.
Over the last seven years as revenue from video gaming terminals increased, revenue at the Casino Queen and Argosy Casino dropped. The Casino Queen has seen revenue decline from $131.2 million in 2012 to $96.4 million in 2018. Argosy’s revenue went from $70.9 million to $46.8 million during the same period.
The casino gaming association argued the planned additional casinos and slots at racetracks would create further diluting of gaming dollars in Illinois.
“The Casino Queen has always been a spot that seemed to maintain a very large successful patron base, even as some of the new casinos, such as the Lumiere, opened across the river,” Swoick said. “They lost a little business, but always seemed to kind of hang in there. When video gaming started, that really started hurting them.”
Missouri does have larger casinos than in Illinois, and people are allowed to smoke inside casinos in the Show Me State.
In the last five years, the adjusted gross revenue at the four St. Louis-area casinos in Missouri has increased from $829 million in 2014 to $894 million in 2018, according to the Missouri Gaming Commission.
State Rep. Jay Hoffman, D-Swansea, said the gaming expansion included provisions to help reduce the tax burden for the Casino Queen, as long as it keeps at least 450 employees and operates the same number of gaming positions.
“The net effect is their revenue will remain constant,” Hoffman said.
The legislation also allows for casinos to move onto land, which could be helpful for the Argosy Casino, especially after this year’s flooding.
Hoffman said he did have concerns about the possible over-saturation of gaming in the St. Louis market, but added the ability for casinos and racetracks to have sports wagering will help those establishments.
“That concerns me, but the way the (law) is crafted, and with the advent of sports betting, it’s going to be OK,” he said.
Illinois’ gaming expansion allows casinos in Illinois to expand from a maximum of 1,200 positions to 2,000 positions. Swoick said casinos may not take advantage of the possible expansion, though, because not all of the positions they currently have are being used now.
Now that video gaming has taken off, “we can’t keep the positions we have now filled,” Swoick said.
St. Louis area gaming market is mature
While the gaming bill didn’t exactly list the metro-east as one of the six locations for a new casino, it essentially gave the OK for a seventh casino in the St. Louis market by authorizing Fairmount Park in Collinsville to become a “racino.”
Fairmount Park President Brian Zander, who has long lobbied for the ability to have casino-style gaming at the racetrack to help increase prize money for races to attract more horse owners, said he believes there still could be gaming growth in Illinois.
Zander argues that overall gaming revenues in the metro-east have increased every year since video gaming terminals came online in 2012.
“I think there’s a lot of reasons to believe that a casino at Fairmount will do well. Is the market mature? I would agree with that,” Zander said. “Is it over-saturated? I wouldn’t go that far.”
Zander said he expects Fairmount to become a destination for gamblers from the Missouri side of the river with the ability to offer casino-style gaming, sports wagering and horse racing all in one location.
He added anywhere from 65 to 75 percent of the vehicles that come to Fairmount Park have Missouri license plates.
“We’re not here to take business away from existing Illinois casinos,” Zander said. “We market into the St. Louis market because that brings Missouri dollars into Illinois. We’ll see if that ends up being true.”
Zander said that’s only fair.
“Look at all the dough that goes from Illinois into Missouri,” Zander added. “Every single thing you want to do. You want to see a play, it’s at the Fox Theatre. You want to go to a concert, it’s at the (Hollywood Casino) Amphitheater. In terms of the balance of trade, I might be mildly apologetic, but not really. It’s about time our state has a shot.”
He said the additional gaming options and increased competition would benefit gamblers.
“Normally when there is competition, the actual public benefits, because there’s all kinds of things … in terms of incentives, making life a little more fun,” Zander said.
Where will new customers come from?
Swoick, of the Illinois Casino Gaming Association, said he thinks Fairmount’s expansion will take some business away from Alton Argosy and the Casino Queen, and some business from the smaller video gaming establishments.
“Video gaming revenues may all go down a little bit because of all the new casinos, just like ours went down because of all the video gaming (in bars),” Swoick said.
Too many casinos could lead to other problems.
Customers can become loyal to certain casinos or brands, but keeping them does require the ability to offer giveaways, like a free meal, or promotions, such as $20 in free play for regular players.
“Once you become oversaturated, you could offer less promotions … you offer less giveaways,” Swoick said. “While they’re loyal, it doesn’t take a whole lot to lose them.”
Swoick said there was casino saturation in New Jersey and Mississippi, and there were casinos that closed down.
“I think what you’ll see is over a period of time is the less lucrative ones shutting down,” Swoick said. “Whether they would be on the Missouri side or the Illinois side, I don’t know.”