Ohio casino operator says revenue will see big jump

Penn National CEO predicts growth in ’14

4/15/2014

Wilmott

COLUMBUS — Ohio’s casinos and racinos haven’t come close to the initial revenue estimates, but the CEO of Penn National Gaming Inc. said it’s only a matter of time.

“There’s no question Ohio will be a $2 billion casino state,” said Timothy Wilmott, speaking at the Mid-America Gaming Congress in Columbus last week.

Mr. Wilmott predicted that casino and racino revenue in Ohio will total $1.45 billion this year, increase to $1.63 billion in 2015, and reach the $2 billion mark by 2019 or 2020, “assuming no added competition from neighboring states.”

That would be a big jump from the 2013 revenue total of $1.1 billion. Only one of the four racinos and three of the four casinos were open the entire year; the state’s three other racinos are slated to open this year.

Penn National operates the two Hollywood-branded racinos and the Hollywood casinos in Columbus and Toledo.

The Ohio Department of Taxation and the Innovation Group, a consultant to the gambling industry, both estimated in 2009 that the four casinos would generate about $1.9 billion in revenue in 2013.

“But this was without the [impact of the] racinos,” Mr. Wilmott said of the predictions.

Nevertheless, the combined casino and racino total was well below the $1.9 billion estimates.

The sluggish economy and competition from illegal Internet gambling contributed to the sluggish revenue totals, Mr. Wilmott and other industry experts said at the Mid-America Gaming Congress.

“You can throw the 2009 estimates out the door because of the economy,” said Duane Bouligny of Wells Fargo Bank Securities. “Investors had more realistic expectations, given the competition in Pennsylvania, Indiana, and West Virginia.”

The March revenue totals were encouraging, he said.

“It’s still early in the process in Ohio, and we have to let it mature and see, as more [racinos] open, whether there will be cannibalization or growth,” Mr. Bouligny said

The four casinos generated revenue of $79.6 million in March, while the four racinos added $50.9 million. That was the second-highest monthly total for the casinos and the highest for the racinos.

“When a casino opens, you don’t expect much the first 12 months,” said Soohyung Kim, CEO of New York investment firm Standard General. “I’m pleasantly surprised by how much gambling Ohio has [borne]. It’s over a billion, and $2 billion is possible with the additional venues.”

Casinos pay about one-third of their revenue in taxes to the state, which divides the money among education, counties, cities, and other uses.