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Votes for gambling seen as saturating market

By Brian Hallenbeck

Publication: The Day

Published November 08. 2012 4:00AM
Gaming in Maryland, Rhode Island only adds competiton, Moody's says

Election Day voting results in Rhode Island and Maryland authorized more gambling in the Northeast, "further saturating" the market, Moody's Investors Service concludes in a report issued Wednesday.

On Tuesday, Rhode Island voters approved the introduction of table games at Twin River in Lincoln, as did Lincoln electors in a separate vote. While a similar measure pertaining to Newport Grand in Newport also passed in statewide voting, Newport voters rejected table games in a local referendum. As a result, only Twin River will be able to add such table games as blackjack, craps, roulette and perhaps poker to the video lottery terminals and simulcast racing the Rhode Island facilities now feature.

In Maryland, voters approved a measure that will allow table games at three existing casinos and at two casinos that may be built in the future. They also endorsed a sixth casino for the state.

For Twin River's owners, Twin River Management Group, the voting results are "credit positive," Moody's reports. Not surprisingly, the agency finds the referendum outcomes are "credit negative" for owners of Connecticut's nearby casinos, the Mohegan Tribal Gaming Authority, which operates Mohegan Sun, and the Mashantucket Pequot Tribe, which owns Foxwoods Resort Casino.

"The authorization of table games at Twin River casino is bad news" for the Connecticut casinos, writes Keith Foley, the Moody's senior vice president who authored the report. "Rhode Island, along with Massachusetts, is one of several key feeder markets for these casinos."

The report offers no estimate of the revenue the Connecticut casinos could once table games are in place at Twin River.

The Lincoln facility's owners had sought permission to introduce table games as a way to stay competitive with casinos that are expected to materialize in Massachusetts, which authorized expanded gambling a year ago.

"Twin River is now better prepared to deal with this significant competitive threat," the Moody's report says. "Twin River could begin offering table games as early as next summer, giving Rhode Island a first-mover advantage over Massachusetts, where casinos are still years away from opening."

Moody's also finds that a newly expanded Twin River is likely to take business from Newport Grand, a smaller facility that generated $55 million in gaming revenue during the 12 months that ended Sept. 30. By contrast, Twin River generated $515 million in gaming revenue in the same period, according to the Moody's report.

The expansion in Northeast gambling "will not necessarily attract more gamblers," Moody's finds. "We believe this 'keeping-up-with-the-Joneses' mindset will only further deluge a regional market that is already saturated and forced to reach out ever farther to attract the same number of customers. Increased supply will increase pressure on existing operators in the Northeast, and possibly on the U.S. gaming sector as a whole."

b.hallenbeck@theday.com

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