Big year at the boats

By RICK ALM The Kansas City Star “There isn't anything else like it in the market. We knew we were going to stand apart.” Argosy spokesman Jim Wise The rebuilt and much larger Argosy Riverside Casino was the big winner in Kansas City's 2004 battle for market share. Harrah's lost — big time. According to year-end financial data from the Missouri Gaming Commission, Argosy's expansion fueled a 5.99 percent market share gain that appeared to be snatched directly from Harrah's 6.12 percent loss. Worse, Harrah's was the lone area casino that failed to post admissions or revenue growth over 2003. Harrah's officials in Kansas City and Las Vegas did not return calls seeking comment. Argosy spokesman Jim Wise said Argosy's new Mediterranean-themed facility “captured people's imagination.” “There isn't anything else like it in the market,” he said. “We knew we were going to stand apart.” He said continuing construction work on a new parking garage and hotel offered opportunities for even greater market share. “We continue to have outstanding expectations for the Kansas City market,” Wise said. Meanwhile, Ameristar held steady as Kansas City's market leader for the third consecutive year, capturing a market record $237.5 million last year and a modest 0.7 percent gain in market share. Isle of Capri, the market's smallest gambling boat, also hung on to most of its modest slice of the consumer pie versus three heavyweight competitors, slipping about a half-point in market share but posting a property record $103.8 million in revenue along with a property record 4.5 million admissions. Sharp marketplace competition made 2004 the 10th consecutive year of growth for Kansas City's casino gambling industry. The riverboats won $677 million from gamblers, up 9.2 percent from the previous year's $614.2 million tally. Add player losses from local sales of Missouri and Kansas state lottery tickets plus losing bets at The Woodlands race track, and metropolitan area gamblers dropped a staggering $753.2 million last year. That figure doesn't include charitable bingo, which reports its annual revenues later in the year, or local players' gambling losses in other states and in cyberspace. Toss in fantasy sports betting and office pools on big sporting events such as the Super Bowl and college basketball's Final Four, and area gamblers quite likely gambled away $1 billion last year. Statewide, Missouri casino revenues were up 9.6 percent in 2004, topping $1.47 billion, also a record. Big losses With statewide lottery sales and all other forms of gambling — legal or otherwise — Missouri gamblers probably lost $2 billion last year. “Those numbers are staggering … astronomical,” said Mark Andrews, chairman of the state's grass-roots anti-gambling watchdog group Casino Watch. Andrews said he feared the numbers could balloon in 2005 as state lawmakers, perhaps as never before, are talking early and often about lifting the state's $500 loss limit and reaping $100 million or more in increased state casino taxes from high rollers. “Gambling on Main Street America causes neighborhoods and governments to become addicted to gambling,” Andrews said. “We think it's bad public policy for government to rip off its own people and then be on the take for the tax dollars. “We're going to look every legislator in the eye and say, ‘Do you really think this is good public policy to encourage your citizens to lose vast amounts of money so that you can pocket a little additional tax money?' ” The casino industry takes issue with that. “The government is not ripping off anybody,” said Troy Stremming, an Ameristar executive and president of the Missouri Riverboat Gaming Association. “Nor are the casinos ripping off anybody. “We are a legal, mainstream business in the state of Missouri that provides entertainment that many people enjoy and engage in responsibly. And they are voting with their feet,” Stremming said of the industry's record performance last year. “This isn't a question of government becoming addicted to the tax revenue. It is about government providing a business environment in which casino companies can make a sound return on their very significant capital investments that are providing significant tax revenues to the state of Missouri, which make Missouri a better place to live.” Kansas City area casinos rebounded in 2004 after stumbling to revenue growth under 1 percent in 2003. Three of the area's four casinos set property records for revenues and attendance. Harrah's was the lone Kansas City casino to lose ground, bringing in less money from fewer customers than in 2003. While Argosy's revenues grew 52 percent, to $146.8 million, Harrah's revenues fell 9.6 percent to $188.9 million. The area market's growth didn't let up in December, which was the Kansas City's riverboats' fourth-largest revenue month ever at $57.5 million Part of that big number can be attributed to the emergence in 2004 of penny slots, which could surpass quarter games this year as the most plentiful and popular on casino floors. Penny slots now represent 32.5 percent of the Kansas City area's inventory of 7,806 slot machines and rank second to quarter slots, which make up 33.1 percent of the total game mix. A year ago the market's inventory of penny games stood at 14.3 percent. Quarter games were king at 36.6 percent, followed by nickel games at 23.2 percent. Now nickel games are fading and stand around 14.4 percent of the mix. “Penny slot” is a misnomer. Players have the option to multiply the amount of each wager, and experts say the typical penny slot bet is around 40 cents. Lottery growth slows Other gambling venues in the area did not share the casinos' boom year. The Missouri Lottery saw 2.6 percent growth in 2004, and sales hit a record $781.8 million. Growth the previous year exceeded 8 percent. Lottery director Jim Scroggins has predicted a slowdown for three years since state lawmakers began slashing his agency's advertising budget. Four years ago the agency's ad budget exceeded $8 million. This year Scroggins has scrimped and saved elsewhere to assemble a $2 million ad budget. Anti-gambling lawmakers have pushed for the advertising cutbacks, arguing that lottery tickets sell themselves at gas station and grocery checkout counters. In the wake of falling sales, Scroggins said he expected lawmakers to revisit the issue this year. Another factor in the lottery's comparatively soft year, however, was just three $100 million-plus Powerball jackpots, which traditionally drive sales, compared with a rare five big prizes in 2003. The multistate Powerball game typically offers sales-hyping $100 million jackpots only twice a year. At this point Scroggins might settle for 2 percent annual growth. He said Wednesday that only one big Powerball jackpot had occurred so far in the fiscal year that ends June 30, and that total sales for all games are running around $11 million behind the pace of fiscal 2004. The Kansas Lottery, which also sells the multistate Powerball game, saw statewide total sales fall 1.2 percent last year, to $220.2 million. That followed a year of 5 percent growth. Meanwhile, betting at The Woodlands on races run at other tracks around the country was down dramatically in 2004. After two consecutive years of modest growth, the Wyandotte County pari-mutuel track saw its attendance grow around 10 percent but annual overall revenues fall 5 percent. General manager Jim Gartland said the decline could be attributed in part to 31 fewer greyhound races in 2004 plus the challenge of keeping pace with average 20 percent growth the past couple of years. The good news, he added, is that more tracks are beaming Woodlands races to their bettors. Gartland said his track might be broadcasting other races and sharing revenues with too many other tracks and that he planned to experiment this year with less off-track betting action. To reach Rick Alm, call (816) 234-4785 or send e-mail to ralm@kcstar.com.