For the first time since Ontario entered the commercial casino business in Windsor in 1994, the province has released financial statements that show its four Las Vegas-style casinos are losing money.
Financial statements obtained by The Star Thursday show that what is now Caesars Windsor, Niagara Casino, Niagara Fallsview Casino and Casino Rama in Orillia lost CAD 55.9 million in 2007-08.
The revenue of those four resort casinos — as well as the smaller Great Blue Heron Charity Casino northeast of Toronto — was a combined CAD 1.4 billion while operating expenses were about CAD 1.47 billion. Other interest income and foreign exchange gains reduced the net loss.
The four commercial casinos and Great Blue Heron also lost about CAD 16.3 million as a group in the 2006-07 fiscal year, which runs from April 1 to March 31.
The province keeps 100 per cent of net income from the Niagara and Windsor casinos, but it also collects 20 per cent of gross revenue before expenses, which was CAD 285 million for the last fiscal year.
Profits from Casino Rama go to the province’s 134 First Nations.
In the last three years, the Ontario Lottery and Gaming Corporation hasn’t provided separate figures to show which of the big casinos make or lose the most.
Based on previously released OLG reports and interviews given by casino officials, the Windsor casino is likely grossing less than half of its best year in 1999-2000 when revenue was about CAD 840 million.
In those years, civic officials, including then-mayor Mike Hurst liked to brag that Casino Windsor was the most profitable casino in the world on a per square foot basis.
The last annual report with a specific comparison of casinos showed Casino Windsor with revenues of CAD 501 million in 2003-04. Casino Niagara grossed CAD 499 million the same fiscal year and Casino Rama, CAD 497 million.
Financial reports for later years began grouping the commercial casino revenues and expenses.
But its clear from OLG financial statements that Niagara Fallsview — a CAD 1 billion investment — was earning hundreds of millions of dollars less annually than expected after its opening in 2004.
The single biggest factor in sliding casino profits, although not the only one, has been the increased competition with casinos in New York State and Michigan that required major capital investments as well as more costly promotion.
The Niagara casinos now compete with four casinos and four racetracks with casinos in New York State and Erie, Pennsylvania.
Caesars Windsor competes with three casinos in Detroit that invested more than a USD 2 billion in their permanent facilities over the last three years. In addition, 21 native American casinos are scattered across Michigan with one more to open this year. Most are small operations, but some include hotels with large casinos that represent USD 100 million-plus investments.
Caesars Windsor spokesperson Holly Ward said it was up to the OLG to discuss the profitability of its individual casinos in Ontario. She agreed the competition was fierce.
But Ward stressed that a new era has begun with a CAD 439-million expansion completed, the rebranding under the Caesars name and new initiatives in big name entertainment at its 5,000-seat theatre and convention space. “The Caesars brand is attracting a lot of customers”
“It allows us to drive new business,” said Ward. The sold-out performance by comedian Jay Leno on New Year’s Eve contributed to about 30,000 customers going through the casino that evening, Ward said. “A lot of people had never been to the casino before.”
The Caesars Total Rewards program also has 40 million members worldwide, the biggest of any of the casino customer loyalty programs, Ward noted.
The Michigan Gaming Control Board reported last month that total revenue and taxes for all three Detroit casinos for the month of November was down by 6.74 per cent compared to the same month in 2007, the first drop in a decade of growth.
Revenue for the MGM Grand, MotorCity and Greektown casinos were down by 0.7 per cent, 7.1 per cent, and 16.4 per cent respectively.
Robert Russell, a gaming consultant and editor of Michigan Gaming Newsletter, doubted that any major casino in Michigan or Ontario was in danger of closing even with the recessionary economy expected over the next few years.
Governments have teamed up with casino operators in multibillion-dollar investments to create thousands of jobs at a time when manufacturing jobs are disappearing, said Russell. He expects the gaming industry in the region to weather the economic storm.
Ontario’s commercial casinos employ more than 12,000 people, including 4,000 at Caesars Windsor.
The OLG separates its various gambling operations into three main groups: Lotteries and bingos, resort casinos and charity casinos and Slots at Racetracks.
The five charity casinos and 17 Slots at Racetracks were the most profitable division in the last fiscal year with net income of CAD 971.1 million. Lotteries and bingos had net income of CAD 687.2 million.
The province’s total profits from gambling in 2007-08 were CAD 1.61 billion, down from the CAD 1.67 billion the previous year.
Windsor’s first casino opened in the renovated Art Gallery of Windsor in May 1994 with just 50,000 square feet of gaming space. Because of the crowds, the Northern Belle riverboat casino was brought in the following year.
Windsor’s permanent casino opened in mid-1998 with a CAD 500-million investment in its 389-room hotel, plus 100,000 square feet of gaming space, and a 3,000-car garage.