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Another credit-rating agency paints a grim picture of much of the casino industry's future, finding that "long-term, robust same-store growth in U.S. bricks-and-mortar regional gaming is unlikely."
Fitch Ratings, in a report released Monday, attributes its pessimism to saturation across regional markets; stagnant wages among lower-tier players who spend less than $100 per casino visit; reprioritization of disposable income; younger generations' potentially lower propensity to gamble; proliferation of online/social gaming; and baby boomers' lowered preparedness for retirement.
The Fitch report comes three weeks after Moody's Investors Service downgraded its outlook on the U.S. gaming industry from "stable" to "negative." Moody's cited recent declines in gaming revenue.
While its report focuses on all U.S. casino-based gaming, with the exception of the Las Vegas Strip, Fitch says its analysis is applicable, for the most part, to tribal gaming, too. Fitch says it excludes the Las Vegas Strip because that market's operating performance is largely driven by nongaming amenities while its gaming revenues are driven by foreign players.
In southeastern Connecticut, Foxwoods Resort Casino and Mohegan Sun are tribal casinos, owned and operated by the Mashantucket Pequot and Mohegan tribes, respectively. Both tribes' Connecticut casinos have experienced significant declines in gaming revenue in recent years and both tribes have sought commercial casino licenses in other states.
"The U.S. regional gaming supply has largely met demand, with most states now having some form of casino-based gambling," the Fitch report says. However, it adds, some "pockets of opportunity" exist, one of them being the "Boston-area license that could have attractive return on investment prospects."
Mohegan Sun is competing for the Boston-area license with Las Vegas-based Wynn Resorts. The license would be the second of three that Massachusetts gaming regulators could eventually grant. The first of the three has been awarded to MGM Resorts International, which plans to build in Springfield.
None of the Massachusetts projects would move forward if voters there support a repeal of the state's casino law in a November referendum.
Fitch estimates that gaming revenues derived from slot machines in regional markets will decline to roughly 75 percent of total revenue by 2030 from the current 85 percent.
"The shift largely reflects the younger generations' preference for table games," the report says.