That’s where the U.S. economic outlook and Kansas City’s riverboat gambling market headed in September. Local boats’ USD 54.5 million month was their smallest haul since early 2005.
With a nationwide credit meltdown triggering layoffs and Wall Street panic, American consumers, including gamblers, are tightening their belts.
“I can’t think of a time in my responsible adult life that I’ve seen economic conditions look more frightening than they look now,” said Tom Cook, general manager of Harrah’s North Kansas City Casino and Hotel.
“Our business really started to decline the last three weeks in September, and it correlated with all the doom and gloom on the economic front.”
Though gambling once was considered recession-proof, Cook said, “the business is not quite as strong as it was, and it won’t be until we see stability in the financial markets.”
Longtime market leader Ameristar Kansas City Casino and Hotel held its place in the shrinking market, but it banked just USD 18.3 million, down 10.3 percent from September of last year. It was the market leader’s smallest revenue take since late 2003.
Ameristar’s monthly turnstile count of 557,000 was down 13.5 percent and represented the casino’s thinnest crowds since 1998, when Sam’s Town was still open and the market had five casinos.
“We’re like every other business,” Ameristar vice president Troy Stremming said. “It’s tracking the stock market, and everybody’s in the same boat.”
Rivals posted equally dreary revenue performances compared with a year ago. Isle of Capri was down 10.2 percent last month, while Harrah’s was down 9.1 percent. Both posted double-digit admission declines.
Even the Argosy Casino Hotel & Spa in Riverside, on a roll in the past 18 months, saw revenues fall 1.9 percent while its turnstiles slowed 5.2 percent.
Cook said he doesn’t think a quick recovery is likely, and neither are prospects for any large uptick in freebies and new player incentives to bring more business through the doors.
“Now is not the time to overreact,” he said. “You’ve got to maintain your strategy … buckle down” by controlling expenses and focusing on customer service.
Former Lehman Brothers gaming analyst and now industry consultant Jane Pedreira pins a lot of the decline on worried baby boomers “who have seen their net worth evaporate.”
“The casinos are almost a victim of their own success,” she said, “by going after younger clientele and boomers who were benefiting by the growth in the stock market.”
That strategy has been turned on its head.
Retired railroad worker Ronnie Johnson, of Olathe, won’t argue with that. “This stock market is just killing me,” he said of his retirement portfolio.
But Johnson added that so far, the market downturn hasn’t eroded his gambling budget, which he taps every Tuesday for a trip with his girlfriend to a casino or two.
Lately, he said, they play where the giveaways and cheap buffets are the most generous and the slots appear to be the loosest.
“You kind of wonder what they’re thinking,” he said of casinos that have tightened slot paybacks and cut back on promotional spending.
He said he hated the wave of penny slot machines that were among the tightest on gaming floors and now make up more than 57 percent of all electronic gaming devices in the Kansas City market.