Can new St. Louis casino compete in crowded marketplace?
By Bill Raack, St. Louis Public Radio
St. Louis – The state of Missouri's 13th casino opens its doors to gamblers Thursday. Pinnacle's River City Casino in south St. Louis County joins a crowded marketplace. There will now be seven casinos within about 30 miles of one another in the St. Louis region.
While the recession has hit the gambling industry hard, Missouri was one of just three states that saw casino revenue increase last year. But industry insiders, gaming regulators and government officials all want to know if there are enough gambling dollars to go around?
River City is one of the largest casinos in the state. It's 90,000 square feet; it has 2,000 slot machines, 55 gaming tables and five restaurants. General manager Todd George is understandably proud of it. As he walked through the $380 million facility recently, last-minute construction work continued and training sessions for dealers, hostesses, waiters and waitresses buzzed in every corner of the facility.
He touted the 1,200 jobs that have been created, the food, the lighting, even the quality of the casino's air. When asked about the casino getting a toe-hold in an extremely competitive market, George remained confident.
"Everyone can speculate on that and the truth is going to be there in a few months," George said. "Our goal was not to come just to come in and try to take market share from Harrah's or Ameristar or across the river at Casino Queen. It's to grow and expand this market."
George says the way that will happen is to market St. Louis as a Midwestern gambling destination. That may be because relying solely on area residents to support the casinos might not work. Don Phares is an economics professor at the University of Missouri-St. Louis.
"It does reach a point where you put another license and build another casino and you've reached the saturation point and then it's just a question of spreading an existing pie which may be growing half a percent or one percent per year. What you're doing is you're spreading it now around more venues so someone's going to be hurt by that," Phares said.
Pinnacle expects to make $17 million a month in gaming revenues at River City. That compares to about $23 million at Harrah's in Maryland Heights, $23 million at Ameristar in St. Charles, and $17 million at its own Lumiere Place casino downtown, the nearest competitor.
So who will get hurt? Is there enough new gaming money out there? Or will the market become saturated?
"I guess I'm a little hesitant to think, well, game over, we've reached the saturation point. No more casinos. I'm not there yet," said Tom Garrett, an economist with the St. Louis Federal Reserve Bank. "One point of view is if there are new casinos opening up then that would suggest, based on just general economic principles, that there is money to be had because certainly the casino companies would not open new casinos if they would not find them profitable."
That's not always the case. University of Southern Mississippi political science professor Denise von Herrmann has written extensively on casino gambling. She says the state of Mississippi's open market approach is working - there are now 30 casinos there -- but the state has seen its share of casino failures.
"Having an unlimited number of licensees allows the market to expand to its natural limit and if too many players attempt to enter the market and they go beyond the demand, the weakest among them will end up suffering and ultimately will shut down and it will self-correct," von Herrmann said.
The decision to build River City was made after a 2007 market study indicated there was room for growth in the St. Louis region. But much has changed since then, most notably the economic recession .and the elimination of the state's 500-dollar loss limit.
There's no going back now but Gaming Commission Executive Director Gene McNary says those factors will be considered going forward.
"Before we would award another license we will have those answers. We'll know what the impact would be of a casino being located in St. Louis or Kansas City and how it would affect the other casinos and whether or not you've reached saturation and so all we're doing is cutting the pie in more pieces," McNary said in an interview in his Maryland Heights office.
With a new piece of that pie being cut Thursday in Lemay, the answer to the question should be fairly obvious very soon.