In my first post in this series, I noted that the two Pocono resorts were not dramatically impacted by the opening of Sands Bethlehem. In fact both Mohegan Sun and Mt. Airy were doing relatively well in the down economy of 2009 compared to 2008.  Today, I'm focusing on the two Philadelphia properties proximate to the Sands: Philadelphia Park and Harrah's Chester.

Both the Philadelphia area casinos are very lucrative, and neither has been too hardly in the Depression 2.0.  In fact, Philadelphia Park actually increased its gross revenue from FY 2008 to FY 2009, from $325.2 million to $356.3 million - a 9.6% jump.  Harrah's Chester saw a reduction in gross revenue from FY 2008 to FY 2009, from $332.8 million to $319.6 million - a 4% drop.  (Note: I'm using fiscal year for this analysis because that's how the revenue is tallied by the Pennsylvania Gaming Control Board.)

The June numbers (2008 & 2009) for these two casinos showed a similar trend: Philadelphia Park made more money in June 2009 than it did in June 2008.  In contrast, Harrah's Chester made less -- approximately the same decline that it registered for the entire fiscal year.  The following table shows the June-to-June comparison:

In all likelihood, both Philadelphia-area casinos were slightly impacted by the Sands Bethlehem opening, given that both under-performed in June 2009 compared to the overall FY 2009 performance. There's also a possibility that Harrah's business was impacted more by the Bethlehem Sands opening than Philadelphia Park.  But, why would that be, especially since Philadelphia Park is closer to the Sands?  One possibility is that more serious players likely to frequent Harrah's Chester with Harrah's fabled customer loyalty program were drawn to Sands Bethlehem on name recognition alone.  

However, the more universal explanation is that Sands Bethlehem's opening had a relatively minor impact on eastern PA gaming because it pulled entirely new players into the eastern PA gaming market from greater New York City.  Therefore, the data from the Philly-area casinos corroborates the data from the Pocono operators in making this case.  Taken together, the June-to-June analysis showed that their was still room to grow for eastern PA gaming -- that market saturation wasn't yet a factor.  It also shows how smart a choice it was to situate a casino in the Lehigh Valley: allowing Pennsylvania access to the lucrative New York gaming market.  

Since its big opening in May, I've been wondering how the Sands Bethlehem has impacted the Pennsylvania gaming market.  As GA has reported before, PA gaming has been a major bright spot in the mid-Atlantic gaming market -- actually expanding its revenue whilst its competition declines (Atlantic City most notably).  PA gaming increased its total revenue from fiscal year 2008 to 2009: from $1.40 billion from 15,354 slot machines in FY 2008 to $1.75 billion from 21,718 slots in FY 2009 (June data).

For a more specific impact analysis, I decided to carefully compare the June 2008 & June 2009 data from the Pennsylvania Gaming Control Board.  June 2009 was the first full month of operation for the Sands, thus allowing for the comparison.  Specifically, my main question at the outset was: did the Sands Bethlehem significantly draw from nearby casinos OR did it attract altogether new players to Pennsylvania?  So, I looked at the Sands' numbers in comparison to the Pocono operations (Mohegan Sun, Mt. Airy), Penn National (central PA) and the Philadelphia casinos (Harrah's Chester, Philadelphia Park). Today's post focuses more on the Sands' impact on its Pocono region competition.

In June 2009, the Bethlehem Sands brought in $19.6 million in gross terminal revenue, out of a total of $165.1 million for all PA casinos.  The cumulative total was approximately $35 million higher than June 2008, suggesting at the outset that the Sands has drawn new customers rather than cannibalizing existing casinos.  Yet, the June numbers did reflect some downturn in the market-- mainly via significantly lower revenues-per-terminal across the board.  The following tables shows the June comparisons for the key properties specified above:

The June '08 & '09 numbers appear to show the Sands impacting Mt. Airy more, but the real story is different.  Mohegan Sun also doubled the number of slot machines at its facility to 2,465, whilst Mt. Airty remained relatively constant at about 2,500 slots.  

The data indicate that overall, the Pocono region was easily able to absorb the addition of the Sands.  Factoring in some loss for the recession, all three casinos made significant revenue -- the Mohegan Sun increasing, while Mt. Airy dropped, but not significantly so in the wake of the Depression 2.0, compared to Atlantic City.  Overall, the data suggests that for Pocono gaming, at least, the Sands Bethlehem grew the gaming market -- probably adding customers from the New York City region.