Penn National Gaming Inc. officials said Feb. 6 they don't believe a roughly $100 million decline in net revenue is associated with customers opting for other forms of gambling or entertainment.
In its four-quarter 2013 earnings report, the company said net revenue for the final three months of the year was $644.7 million, down from $743.8 million for the final three months of 2012. For all of 2013, however, net revenue was $2.9 billion, almost even with that of 2012.
PNGI attributed the soft third quarter and early 2014 results on consumer economics and poor weather conditions. The company is the largest racetrack owner in the United States by number of properties.
Some markets in which PNGI operates are saturated with gaming outlets, and a few now offer in-state Internet casino gambling that has gotten off to soft start.
"I don't think there is any substitution going on," PNGI president and chief executive officer Tim Willmot said. "Generally, we're seeing a macro effect on the consumer. The middle-income consumer is being squeezed. There is no evidence they are looking at other forms of entertainment to replace visiting our casinos."
The company reported a net loss of $888.7 million for the fourth quarter of 2013 versus a $20.2 million net profit for the same period in 2013. The figure is largely attributed to $1.06 billion in non-cash impairment charges related to many of its properties.
For all of 2013, PNGI reported a net loss of $794.3 million, again related to the impairment charges, versus net earnings of $212 million the previous year. The company on Nov. 1, 2013, completed a tax-free spin-off to its shareholders of Gaming and Leisure Properties, a publicly traded company that owns the real estate associated with 19 PNGI gaming facilities.
Wilmott said the fourth-quarter results also reflect "continuation of the soft regional gaming revenue trends the industry experienced throughout 2013, which were exacerbated by adverse weather conditions in December."
PNGI properties also are experiencing new regional competition. Officials noted the impact the opening of a casino in Maryland has had on Hollywood Casino at Charles Town Races in West Virginia, and the impact a casino in Cincinnati, Ohio, has had on its gaming facility in nearby Lawrenceburg, Ind.
The Pennsylvania-based company doesn't expect the impending opening of more gaming facilities in those markets to create "major hits to our top line" properties, Willmot said.
PNGI expects to find out at the end of February whether it will be awarded a slot-machine license for Plainridge Race Course in Massachusetts. If it does win the license, Plainridge would be the first gaming facility to open in the greater Boston area.
Officials also said two new racetrack gaming facilities in Ohio—Hollywood Gaming at Mahoning Valley Race Course and Hollywood Gaming at Dayton Raceway—are on schedule to open in the fall of 2014
