November 2, 2006

Re: Destination Versus Convenience Gamblers

Justin Katz

At the risk of sounding cutsie, it seems to me that the most accurate method of categorization might be to say that there are gamblers, and then there are gamblers. I don't think, for example, that Andrew captures the salient distinction here:

The study found that most (meaning numbers in the 80% range) Lincoln and Newport patrons have made a visit to Foxwoods or Mohegan Sun, but most Foxwoods and Mohegan Sun patrons haven’t visited Lincoln or Newport. The sensible conclusion is that the most significant partition of the gambling population is not between destination and convenience gamblers, but between slots-only players and more diversified gamblers. Diversified players are not satisfied by slots alone, so they go to the destination casinos (Foxwoods or Mohegan Sun). Slots players, on the other hand, will go anywhere where there are slots (Foxwoods, Mohegan Sun, Lincoln Park, or Newport Grand) regardless the other activities that might be available.

For this partitioning to be accurate, it would have to be true that the Lincoln/Newport customers who visit Foxwoods/Mohegan Sun play slots almost exclusively, and I'm not sure that's the case. This is not to say that Andrew isn't correctly identifying a shortcoming of the convenience versus destination gambler analytical scheme. The problem with that scheme, however, is not one of category, but of conceptualization: convenience/destination isn't a partition, but a spectrum. The equation yields a ratio of convenience to the gambling experience.

Some people treat gambling as merely a pastime. They'll go all the way to Foxwoods for the Big Casino experience, rather than Lincoln or Newport for down-and-dirty gambling, but the $154 loss of the average Lincoln Park visitor would be an expensive night out no matter where they went. Other people more specifically enjoy the thrill of gambling, and the convenience of finding it will carry more weight, with the "experience" factor serving mainly for periodic differentiation. And still other people treat gambling like a drug and will go wherever they can get their fix; the longing for trips to an addiction mecca, while the stuff of daydreams, falls away once the urge has been sated.

Presented thus, it becomes clear that, no matter the category, the proximity of the Big Casino experience makes a difference. If addicts can get the big score more easily, they'll be more likely to pursue it. If pastimers can save money and effort by getting the authentic casino experience closer to home, then they'll do so. But the notion that a full casino will not cannibalize the business of smaller and less glitzy venues is experientially absurd. The only way its appearance will not result in a decrease for the other outlets is if it helps to transform pastimers into addicts, which would be devastating for Rhode Island more fundamentally than through a mere loss of tax revenue.

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

In the 1999 analysis they did for Boyd Gaming, Christiansen Capital Advisers (who also prepared Harrah’s most recent projections) estimated that a new casino would reduce revenues at Lincoln and Newport by 33 percent. This is similar to Harrah’s recent internal projections for revenue reduction at their Atlantic City casino after their new Chester Downs slots-only track facility opens in Pennsylvania. As Maria Evans, Harrah’s manager of consumer insights noted at a conference last December, this is simply due to the shorter drive time to the Chester facility, even though it doesn’t offer table games: “We know that with Chester being closer than Atlantic City for some customers, we will lose some amount of our share to Chester Downs.”

Posted by: John at November 3, 2006 12:21 AM
Post a comment

Remember personal info?

Important note: The text "http:" cannot appear anywhere in your comment.