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Casino Closures in the U.S.

Published on October 25, 2014, 4:32 pm

by Jeff Grant Twitter account Jeff Grant LinkedIn account

Logo of Harrah's casino in Tunica, MississippiIn what appears to be an growing trend in today's gambling industry, another American casino has permanently closed its doors. The lights at Harrah's in Tunica, Mississippi went out just a few minutes after midnight on June 1, signifying the end of employment there for approximately 1,300 workers and a huge change in the landscape of the southern gambling town.

The Harrah's structure opened in 1996 under the name The Grand Casino. In 2008, it became Harrah's Tunica, an offshoot of the Caesars Entertainment Corporation. Caesars tried unsuccessfully to sell the Harrah's building in the months leading up to its closure. As the owner of Tunica Roadhouse Hotel/Casino and Horseshoe Tunica, the company has promised to relocate as many employees as it can to other casino jobs in the area. So far, close to 400 workers have found new work.

Mississippi Gambling: Down and Out

Tunica is an impoverished area in the Mississippi Delta that, in many ways, has “beat the odds” by establishing a thriving casino industry that supports its residents. The Tunica timeline is a rags to riches story, but unfortunately, some of those riches are now dwindling. In general, the state has been losing revenue since the spring of 2011, when it was stricken by severe flooding from the Mississippi River. Over the past several years, the overall profits at Mississippi's 18 gambling houses have slid to the tune of about $30 million.

In spite of this trend, casino construction is on the rise in America. The economic law of supply and demand is at work here: As gaming halls become increasingly popular, overall profits in the industry have gone down. People are still gambling, but the dollars they spend are spread across a wider area now.

Some Tunica residents blame the revenue decline on the obscurity of their location. The city's nine casinos are located amongst cotton fields and other farm land; the glamour of Atlantic City and Las Vegas Strip gambling simply isn't as abundant in the Mississippi Delta area as it is in other areas of the country. Consumers hoping for a glitzy gaming experience are more likely to visit New Jersey or Nevada for their betting fix, according to some Tunica critics.

New Jersey: Also Struggling

Although Atlantic City beats out Tunica in terms of tourists and revenue, the New Jersey gambling mecca has suffered its share of business woes as well. Last January, the Atlantic Club Casino Hotel shut down after filing for Chapter 11 just two months earlier. The Atlantic Club had been suffering declining profits along with increasing debts, a losing situation that the company was not able to ameliorate with strategical business changes.

Six other casinos in the Atlantic City zone have also filed for bankruptcy over the past six years. Stock analyst John Kempf hypothesizes that the New Jersey gaming mecca has been losing revenue because there is “so much new competition (in) . . . the area.” Indeed, neighboring states Pennsylvania and Maryland are slated to acquire more betting halls in the coming year. Increased competition, paired with the availability of at-home Internet gambling for New Jersey residents, has stolen profits from Atlantic City's brick-and-mortar casinos.

Reducing the Number of Slot Machines: A Business Strategy

One strategy these businesses use when revenue begins to fall is to reduce the number of available slot machines on the gaming floor. Atlantic City's Bally's, for example, has cut 3,000 machines over the past eight years. Tropicana Atlantic City removed almost 1,300 slots in that same time period. Tropicana manager Steve Callender explains that the goal in removing the slots is to “enhance the experience,” not make patrons feel like they're jammed inside a maze of endless machinery. When casinos take this pruning approach, the freed-up space is often converted to social space: nightclubs, restaurants, lounges, and lobbies. Administrators hope this will encourage guests to relax and enjoy the atmosphere at their casinos.

California Tribal Casino Closure: The Santa Ysabel

A San Diego casino by the name of Santa Ysabel closed this spring after struggling with finances for nearly a decade. Santa Ysabel's problem: The tribal facility's debts had escalated to $50 million, yet its bankruptcy application was rejected. Virgil Perez, the tribe's chairman, told reporters the Santa Ysabel have always “strived to meet all of our obligations.” Over 100 workers were left without jobs when this facility closed its doors.

Santa Ysabel Casino closure
Santa Ysabel Casino closure

Foxwoods: Shutting Down to Save Money

Foxwoods of Connecticut houses six different gaming facilities on its campus. Administrators recently announced that one of the six facilities, the Rainmaker Casino, will close during the less-busy days of the week in order to save money. This closure is the result of declining revenue and will lead to some layoffs. Foxwoods is currently one of the biggest gaming facilities the nation.

The Mashantucket tribe manages the Foxwoods business. The Mohegan Sun Casino Resort, also in Connecticut, is managed by the Mohegan tribe. Both of these facilities are quite large, yet Connecticut continues to wrestle with a need for increased casino revenue. As a result, 600 new keno centers are slated to open up in Connecticut. Some predict that legalized online gambling will come to the state soon, too.

New Casinos on the Horizon

While some casinos are closing, others are just getting started. A new Horseshoe Casino is set to open in Baltimore at the end of August. New Yorkers anticipate the arrival of the Rivers Casino at Mohawk Harbor. Harrah's Cherokee Valley River Casino will open in September 2015. It seems that, in spite of increased competition and adversity, American casinos are not in danger of extinction. In 2013, in fact, Americans lost more money gambling than the citizens of any other country. To be precise, they lost $119 billion.

The U.S. casino industry fluctuates over time, but one thing remains the same: Americans enjoy betting. The names and locations of the casinos may change, but the American habit of wagering money on games of chance is not going to change.


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