Is Harrah's grossly overestimating casino revenues?

[Stoosh]

Check out the link to this recent Post-Gazette article. Pay close attention to the comments by Mr. Barden and especially those of Mr. Morehouse. Morehouse asserts that Harrah's may have grossly overestimated casino revenues in the past to win slots licenses, particularly in New Orleans.

http://www.post-gazette.com/pg/06046/655402.stm

Now check out the following link, which deals specifically with the New Orleans casinos...

http://www.hotel-online.com/News/PR2004 ... asino.html

Note the similarities in some of those numbers, particularly those between Harrah's projections for the Pittsburgh slots parlor and the projections that were being tossed around by various bidders on the New Orleans casino.

And then there's this from the New Orleans article...

"And annual gaming revenues, minus payouts to winners, are in the neighborhood of $300 million at the casino. That's $200 million to $900 million less than was projected by various bidders."

According to Morehouse, Harrah's is projecting the revenues from their casino plan to be in the neighborhood of $600 million in the casino's second year? With this article on the New Orleans casino as leverage, I would think Morehouse's concerns are very well-founded. Harrah's could be promising the area something it just can't deliver.

Even if it could, that begs the question...if indeed this casino of theirs could generate $600M in revenues in its second year of operation, how on earth could they not kick in funding for a new arena for the city?

[dboss]

Check out the link to this recent Post-Gazette article. Pay close attention to the comments by Mr. Barden and especially those of Mr. Morehouse. Morehouse asserts that Harrah's may have grossly overestimated casino revenues in the past to win slots licenses, particularly in New Orleans.

http://www.post-gazette.com/pg/06046/655402.stm

Now check out the following link, which deals specifically with the New Orleans casinos...

http://www.hotel-online.com/News/PR2004 ... asino.html

Note the similarities in some of those numbers, particularly those between Harrah's projections for the Pittsburgh slots parlor and the projections that were being tossed around by various bidders on the New Orleans casino.

And then there's this from the New Orleans article...

"And annual gaming revenues, minus payouts to winners, are in the neighborhood of $300 million at the casino. That's $200 million to $900 million less than was projected by various bidders."

According to Morehouse, Harrah's is projecting the revenues from their casino plan to be in the neighborhood of $600 million in the casino's second year? With this article on the New Orleans casino as leverage, I would think Morehouse's concerns are very well-founded. Harrah's could be promising the area something it just can't deliver.

Even if it could, that begs the question...if indeed this casino of theirs could generate $600M in revenues in its second year of operation, how on earth could they not kick in funding for a new arena for the city?

I thought this was interesting as well, given FC's assertion that Harrah's name brand will bring in customers:
On the leisure side, Harrah's use of its nationwide customer database to market the New Orleans casino amplifies the city's efforts to attract tourists, he said. Still, it remains difficult to measure impact.

"Last year, Harrah's New Orleans had 6.2 million customers, with about 40 percent coming from out of town.

Surveys show about one in four city visitors go to the casino, spending an average of $115, said Janet Speyrer, associate dean for research at the University of New Orleans College of Business Administration. But less than 1 percent of surveyed visitors say that gambling was their primary reason for visiting the city.

"It hasn't been that mecca that's attracting lots and lots of additional visitors," she said."

[Draftnik]

The NO numbers will be different from Pittsburgh for a couple of reasons. I've been to the Harrahs in NO. They also have table games in addition to slots. The house take on table games is substantially less than slots, so that will depress the percentage of revenue gambled that they hold.

The Harrah's in NO also has an excellent location. It is on the street that runs perpendicular to where Bourbon street begins, almost directly across the street. There is a ton of pedestrian traffic in this area of NO and the casino is located almost in the middle of the 2 largest downtown hotels, the Hilton and Hyatt. There is no way Station Square would get that kind of exposure to people passing through Pittsburgh. The casino also isn't very far by foot from the NO convention center. The NO convention center is (was ) one of the 3? largest in the entire USA. NO is/was a tourist magnet. Pittsburgh is not a tourist magnet and is a B level convention city at best.

The claims that Pittsburgh is an excellent competition free location for a casino are also disingenuous because WV is nearby. Western and Southern suburbs may still be closer to those casinos that may also have table games in the near future. There also will be the racino at the Meadows. It may be in the Pens best interest though to ultimately get revenue from Forest City/Harrahs since they are so optimistic in their projections. They are inferring that they should be able to easily foot a substantial portion of a new arena.

[Jamie]

Sure they are grossly overestimating revenues. I think that public pressure right now has them sweating. I think that it is not going to be easy to hand Harrahs the license. Due to this Harrahs has to whatever it can, so when they win the license, it does not look so "sleazy" as to how it happened.

I would not be surprised at all if Rendell is not a part of what Harrahs is putting out to the press. We all know that the political leaders, always play "dirty pool" to ensure their agenda.

[ExPatriatePen]

...if indeed this casino of theirs could generate $600M in revenues in its second year of operation, how on earth could they not kick in funding for a new arena for the city?

They'll tell you it's because they're already going to pay millions in Tax revenues from slots operations, that they're going to employ thousands who will be paying payroll taxes, they'll be developing properties that will pay property taxes and spur business development... and that they HAVE offered to kick in a million or two to a regional assets fund steered by Franco.

The follow up question to that is "Whose plan doesn't include those items?"

The IoC plan trumps the FC by funding a $290 million dollar Arena (As opposed to a measley contribution to a local figurehead).

But, Ratners group will argue, a new Arena will cost the taxpayers money for infrastruture improvement (As will the Station Square site) andMr. Ratner, if your proposal is selected the taxpayers will then be faced with the 50 yearold Arena and funding to keep it running WITHOUT a tenant.

FC is the wrong choice for Pittsbugh.

[NIN]

Well if you win by overestimating revenue then why did'nt the Penguins over-estimate or grossly exagerate theirs?

Why not say we will bring in a million - cagillion- frazillion- flatillion dollars!?!

If thats how you win these things then may as well do it. Honesty isnt going to win anything, not in this commonwealth.

[ExPatriatePen]

Well if you win by overestimating revenue then why did'nt the Penguins over-estimate or grossly exagerate theirs?

Why not say we will bring in a million - cagillion- frazillion- flatillion dollars!?!

If thats how you win these things then may as well do it. Honesty isnt going to win anything, not in this commonwealth.

Like anything, you paint a rosey picture to sell it, but if you paint to rosey a picture you lose credibility.

In this part of PA, you can stretch it pretty far as most Pittsburghers aren't really that discerning

[Draftnik]

Harrah's projections are a pipe dream. Nobody is going to come to Pittsburgh as a tourist destination to play slots. Their casino will be away from the hub of downtown Pittsburgh and the convention center/adjacent hotels. The local market sucks also. Marketing studies indicate Pittsburgh is notoriously cheap with Walmart, Kmart, other low end retailers leading the way and attracting a heavy percentage of the business here relative to other large metro areas that shop at higher end retailers. High end retailers like Nordstrom's, Bloomingdale's, etc don't even come to Pittsburgh. Pittsburgh is for low rollers. That said, the Pens could benefit from these fraudulent projections in a possible Plan P, so the pie in the sky may end up being the Pens salvation in the end.