Slot machine and other gaming revenue is proving to be more stable than racetrack revenue prompting casino operators to be keen to invest in new bingo halls and casino assets.
Great Canadian Gaming Corp. (GCG) spokesman Howard Blank was quick to say, “There are no racetrack assets for sale right now.”
But, the trend of horse racing tracks producing lower revenue is picking up speed and could also be a reason why GCG (TSX:GC) has recently put more focus on its gaming assets.
Racing revenue at GCG’s four racetracks fell 26% to $4.6 million in the three months that ended March 31, compared with the same period in 2010. That drop would likely have been steeper had the 2010 Olympics not forced Hastings Racecourse to close between February 1 and March 3, 2010, thereby cutting off simulcast horse racing revenue from that track.
In 2010, GCG’s $23.3 million in racetrack revenue was 19% less than the $28.7 million that it generated from racetracks in 2009.
“The racetrack business is obviously difficult because people are going and spending their entertainment dollar on other options,” Blank told Business in Vancouver in July.
Earlier this year, he speculated that GCG may close Hastings Racecourse in September 2012, when its lease with the City of Vancouver expires.
“Is there a chance that Hastings won’t exist? Yes, there’s a chance, but that’s not something that we’re pushing,” Blank told Business in Vancouver in March.
“We have to communicate to our shareholders all the options out there.”
Blank said his company is negotiating with the City of Vancouver to renew the lease and that the city wants his company to spend millions of dollars on a parkade, a renovated back stretch and other upgrades.
City of Vancouver spokeswoman Wendy Stewart told BIV the city and CGC have only had “preliminary discussions” about the lease renewal so far.
GCG invested $4.4 million to build the 7,000-square-foot Hastings Park Childcare Centre, which has 44 daycare spaces and opened on April 9. Several years ago, it also spent $40 million to:
- create a 42,000-square-foot racino that includes 596 slot machines;
- put on a new roof;
- install new restroom facilities; and
- add more than 100 new televisions.
A large, outdoor screen was installed in July on a trial basis for what Blank called “community movie nights” It also shows live racing.
Track regulars, such as Ian Ross, told BIV in early July that they had long wanted to have a screen in Hastings Racecourse’ infield that shows live racing.
Other track operators, such as Global Gaming Solutions (GGS), have similarly been installing screens. GGS unveiled a 47-foot-tall, 60-foot-wide screen – the largest high-definition video screen at a horse racing facility in North America – at its Remington Park racecourse in Oklahoma in March.
GCG’s gaming revenue, however, is performing much better than its racing revenue.
Gaming revenue increased 2% to $274.9 million in 2010 and fell a comparatively small 1.5% to $67.5 million in the three months that ended March 31.
Those figures support GCG CEO Ross McLeod’s view that this is still a challenging time for the gaming sector.
“Great Canadian’s 2010 revenues of $383.5 million represent a year of transition,” McLeod noted in the company’s 2010 annual report.
“While revenues increased by $1.3 million from the prior year, they remained $20.2 million below the level achieved in 2008.”
McLeod went on to note that because times remain tough for many casino operators, asset values have sunk. The result is buying opportunities for those stable enough to buy new properties.
In April, GCG spent $10 million to buy Chilliwack Bingo and, Blank said, his company “will put in a Chances Community Gaming Centre in that facility in the future. That would have slots and a racebook, food and bingo but no tables.”
Back in 2007, GCG spent $1 million to buy Ridge Meadows Bingo Association’s assets. GCG plans to replace the Haney Bingo Plex in Maple Ridge with a facility that would house bingo and also have slot machines and other gaming options.
On July 18, Gateway Casinos & Entertainment Ltd. announced that it had spent an undisclosed amount of money to buy Boardwalk Gaming & Entertainment Inc.’s B.C. assets including Chances Community Gaming Centres located in Mission, Squamish and Surrey.
The most high-profile proposed casino expansion in Metro Vancouver during the past year was Paragon Gaming’s failed attempt for a mega-casino connected to BC Place.
That casino remains open at its Plaza of Nations location and will continue to operate there until its lease is up in 2013, said Paragon spokeswoman Tamara Hicks.
What will it do when its lease ends?
“We’re looking at various options and once we decide we’ll make a formal announcement,” Hicks said. “It’s a private company so we don’t even talk about revenue. It’s business as usual.”