MGM Springfield First Year Struggles Baffle Former Head of Massachusetts Gaming Commission

Posted on: August 27, 2019, 02:25h. 

Last updated on: August 27, 2019, 03:37h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

MGM Springfield recently celebrated its first anniversary, but the integrated resort’s year one performance in Massachusetts caught some market observers by surprise and doesn’t feature much worth touting.

MGM Springfield struggled in its first year and some experts can’t figure out why. (Image: Boston Globe)

As of July 31, MGM Springfield hauled in $252.82 million in gross gaming revenue (GGR) since opening on Aug. 23, 2018. The Massachusetts Gaming Commission (MGC) has yet to release August data for the state’s three gaming properties, but MGM’s New England property likely finished its first year of business well short of GGR expectations of $400 million or more.

When Massachusetts policymakers signed off on the project in 2010, expectations were in place for MGM Springfield to deliver first year GGR of $412 million. The shortfall has stunned people with knowledge of the industry, including former MGC head Stephen Crosby.

It’s a puzzle, frankly, to everybody,” said Crosby in a recent interview with New England Cable News. “There is something going on. It is a competitive market, but we thought we took that into consideration.”

MGM executives aren’t running away from the slow start at the Springfield property. But they are highlighting strength in the company’s other regional venues. On the company’s second-quarter earnings conference call last month, CEO Jim Murren said that while the company may be “behind in some place, like we’re behind in Springfield, we’re ahead in many other places.”

The company’s other regional properties include the Borgata in Atlantic City, N.J., MGM Northfield Park in Ohio, and Empire City Casino in New York, among others.

Stiff Competition

When MGM Springfield opened last year, Massachusetts had just one other gaming venue, the slots-only Plainridge Park Casino (PPC). But by their own admission, some MGM executives underestimated other rivals, including the two Connecticut tribal casinos, Foxwoods and Mohegan Sun.

In media interviews earlier this month, MGM Springfield President Mike Mathis said the company did not adequately anticipate Connecticut gamblers remaining devoted to the two casinos in their state.

Foxwoods and Mohegan Sun may be rivals to the casino in Springfield, but it appears all New England gaming venues are feeling some pressure from the recently opened Encore Boston Harbor. In July, the Wynn property’s first full month in business, the venue generated GGR of $48.57 million, or more than double MGM Springfield’s take for that month.

Other New England operators are acknowledging the competitive threat from Encore Boston Harbor. For example, Twin River Worldwide Holdings, Inc. recently announced a round of layoffs in its home state of Rhode Island, citing weakness there since the opening of the Everett, Mass. venue.

Altering The Recipe

MGM is making moves to make its Massachusetts property more appealing to gamblers. In June, the Starbucks there was shuttered and replaced with an area dedicated to VIP clientele. This week, the company announced a new stadium casino in the Springfield property aimed at capturing a younger demographic.

The stadium casino concept is in its infancy at MGM Springfield, so its success remains to be seen. But gaming companies are struggling with younger demographics, including millennials and “Gen Z.”

Crosby, the former MGC head, said in the New England Cable News?interview that part of MGM Springfield scuffling in its first year could be attributable to shifting demographics and lack of interest in traditional gaming environments among younger patrons.