Baltimore adds to urban gambling jackpot with new casino
BALTIMORE - The inside of the new Horseshoe casino looks like any gambling palace on the Las Vegas Strip, filled with blinking slot machines, blackjack tables, cocktail waitresses and crystal chandeliers.
But one glimpse of the Royal Farms convenience store across the street is enough to remind you: This is not the Bellagio. This is Baltimore.
The owner, Caesars Entertainment, wouldn't have it any other way. The company is one of many developers that have vied to open casinos in places such as Pittsburgh, Philadelphia and Cleveland - cities that other industries abandoned decades ago.
Postindustrial towns are casino gambling's newest frontier. Located mainly in the Midwest and Northeast, they were off limits to Vegas-style gambling until their states began embracing casinos as a source of tax revenue and jobs.
Maryland, which didn't open its first slots parlor until 2010, is now one of the fastest-growing casino markets in the country - and one with an increasingly urban focus. The largest of its four casinos, Maryland Live, is located just 12 miles south of downtown Baltimore. On Tuesday, a fifth, the $442 million Horseshoe casino, is scheduled to open in the Inner Harbor amid expectations that it will turn gambling in the Free State into a billion-dollar-a-year industry. And at the other end of the Baltimore-Washington Parkway, MGM Resorts International has begun work on a $950 million gambling complex at National Harbor that is expected to open in 2016.
A decade ago, no one would have imagined that Maryland would become a gambling mecca, siphoning bettors away from neighboring states and Atlantic City in New Jersey, where four casinos will be shuttered by the end of the summer.
For years, much of the opposition to casino gambling centered on its potentially harmful effects on Baltimore, a city of 622,000, where a quarter of the population lives below the poverty line.
"We don't need to put 4,500 slot machines in the middle of a community trying to right itself," Maryland House Speaker Michael Busch, D-Anne Arundel, once argued, before the lure of millions in gambling revenue and thousands of new casino jobs drained away the state's resistance.
Now, Horseshoe is bringing slot machines, blackjack, craps and poker within a few miles of thousands of low-income residents, most of whom can't afford to gamble but may do so anyway. Gambling addiction experts contend that proximity matters. A 2004 national study found that living within 10 miles of a casino is associated with a 90 percent increase in the odds that a person will become a problem gambler.
The casino has generated 2,000 construction jobs and 1,700 permanent paychecks for dealers, bartenders, cashiers, security guards and janitors in a city where the unemployment rate is almost 10 percent. And the mayor already has plans for millions in gambling revenue, promising to reduce property taxes and pump money into school buildings and recreation centers.
It will be a while before the social costs and economic benefits are clear. But one thing is certain, said Sen. Paul Pinsky, D-Prince George's: "The bottom line is the house always wins."
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Casino developers have always wanted to be in cities, said Kahlil Philander, director of research at the International Gaming Institute of the University of Nevada at Las Vegas. But "we have not seen it more before because they didn't have the opportunity," he said.
After Congress enacted the Indian Gaming Regulatory Act in 1988, Native American tribes were able to build casinos under state compacts, but only on land they controlled, which was mostly far from major cities. Gamblers got used to schlepping to rural towns, and making the occasional pilgrimage to Las Vegas, Atlantic City or riverboat casinos along the Mississippi.
Detroit was a notable exception. In the 1990s, after witnessing the success of a casino in nearby Windsor, Canada, city officials looked to casinos to generate desperately needed jobs and revenue. The first of three opened in 1999, though not even being ranked as the country's fourth-largest gambling market allowed the city to stave off bankruptcy last year.
Detroit was the beginning of an urban casino gold rush, as chronic budget shortfalls and shrinking tax rolls eroded public resistance to legalized gambling. Once states began to give in, their neighbors felt pressure to follow suit or lose potential tax revenue to other states.
"I call it, 'Only in my backyard,' '' said Jacob Miklojcik, a Lansing marketing consultant who works with casino developers. "The idea is to block other states from getting" that money.
By 2013, 23 states had state-regulated casinos, more than twice the number a decade earlier, according to the American Gaming Association. When Indian gaming establishments are included, 40 states now have legalized gambling.
Gaming companies, which spent millions lobbying for legalization, touted casinos as catalysts for urban revitalization in overlooked areas such as the gritty stretch of Russell Street where Horseshoe Baltimore is located, or the former department store in downtown Cleveland where Rock Gaming and Caesars opened another Horseshoe casino in 2012. More than 4 million gamblers flocked there in its first year.
"We think we can be a part of a transformation within the city of Cleveland," Matthew Cullen, chief executive of Rock Gaming, told Crain's Cleveland Business. Ultimately, he said, the impact of the casino in Cleveland will be judged by the city's own success. The impact on the casino's bottom line is easier to discern. It shrinks the distance between the gambling halls and their customers. And in the new world of localized gambling, convenience is king.
Instead of trying to get someone to take a six-hour flight to stay at the Wynn in Vegas a few times a year, "you have a customer who comes for a shorter time more frequently," said Wendy Hamilton, general manager of the four-year-old Sugarhouse casino in Philadelphia. "It is not different in the total amount of time. It's the nature of that time. It's after the end of a shift and I have one hour before I need to meet my kids."
In Philadelphia, there have been enough people willing to squeeze in a trip to Sugarhouse to make it one of the top attractions in the city, with about 2 million annual visitors. But being in the middle of a major metropolitan area is no guarantee of a flood of gamblers. Slot revenue in Pennsylvania is down for a second year, state data show, partly as a result of increased competition from Ohio and Maryland. As a result, Sugarhouse executives have been trying to persuade state gaming control officials not to award a second casino license in Philadelphia.
"The false premise is that somehow or other there is this tribe of gamers lost in the Mid-Atlantic states that no one has found and no one has brought in to game anywhere," said Neil Bluhm, chair of HSP Gaming, the owner of Sugarhouse, at a January hearing. "There is no lost tribe of gamers out there."
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In Maryland, casino operators and regulators are already bracing for some cannibalization of gambling revenues from the state's existing four casinos when Horseshoe opens. Just as Live's success has come at the expense of the casinos in West Virginia and Delaware, Horseshoe is expected to take business away from Live, a state-commissioned study projected. Another state-backed study estimated that Live could lose as much as $90 million, or 18 percent of its annual revenue, once MGM National Harbor opens in 2016.
Miklojcik, the consultant, said given the region's population size and affluence, all three should all be able to survive, provided they are well managed and have not taken on too much debt.
All of that is academic at the moment to Horseshoe's hundreds of workers, who have their eyes trained on one thing - opening day. On a recent afternoon, freshly trained card dealers were practicing on their colleagues. Another set of employees tried to stay pumped by shouting, "What time is it? Cage time!"
Everything inside has been carefully laid out, casino executives said, including the expanse of windows along "the marketplace"where gamblers will soon be able to sample food from well known local eateries. There are brick walls and street lamps. Windows by the escalators offer a view - if it can even be called that - of traffic whizzing by on Route 295. The effect is intentional, Horseshoe general manager Chad Barnhill said.
"Wherever you walk in," he said, "we want you to see Baltimore."