Plainridge Park, the state’s first casino, opened last June to sky-high hopes. Perched near the Rhode Island line, the slots parlor would stop the southward flow of Massachusetts gamblers and haul in as much as $300 million in its first year.
But after a fast start, revenue dropped sharply. Gamblers bypassed Plainridge for Twin River Casino in Rhode Island, a full-scale casino with more than three times as many slot machines. As business slowed, the state’s top gambling regulator acknowledged that Plainridge was “underperforming,” an inauspicious start to the state’s casino era.
As it turns out, the modest Plainville casino may have been the victim of unrealistic expectations.
At a recent meeting of the state’s Gaming Commission, the casino’s manager, Lance George, reported that on a per-machine basis, daily revenue this summer was $346, the highest total among the two dozen casinos run by Plainridge’s parent company, Penn National.
“That’s very robust,” George said.
A subsequent Globe review, which analyzed revenue at more than 50 casinos in a dozen states, found that Plainridge is outperforming all but a handful when capacity is considered, a sharp rebuttal to its struggling image and a promising indicator for the two resort casinos under construction in Springfield and Everett.
“There isn’t a casino operator in the country who wouldn’t be happy with the level of revenue Plainridge is generating,” said Clyde Barrow, a University of Texas professor who studies the New England casino industry.
Plainridge is licensed for just 1,250 slot machines, far fewer than its competitors in Rhode Island and Connecticut. Mohegan Sun in Connecticut, for instance, has more than 5,000 slot machines, and Wynn Boston Harbor is slated to have more than 3,000 when it opens in Everett in 2019.
In light of the recent report on Plainridge’s revenue, Stephen P. Crosby, chairman of the state Gaming Commission, changed course, saying he was mistaken to worry about Plainridge’s performance.
“Plainridge is doing extraordinarily well,” he said. “We couldn’t be more pleased. We are entirely satisfied.”
The disappointment in Plainridge dates back to its initial revenue projections, which quickly proved well beyond reach. In an interview, Crosby said the “extravagant” revenue estimates, the product of casino industry consultants, created the misconception that the casino was performing poorly.
At the time, he and Gaming Commission staff carefully reviewed the consultants’ reports, but found no flaw that would account for the wide disparity. Plainridge brought in $160 million in its first year, barely half of the rosiest projections, and is on pace for a similar performance this year.
“We thought there was a flaw in their methodology but we couldn’t find it,” he said. “It’s just inexplicable.”
Representatives of consultant HLT Advisory, which prepared an analysis for the Gaming Commission, and The Innovation Group, which worked for the casino’s developer, declined to comment.
Twin River Casino, just a few miles away in Rhode Island, had similarly projected that Plainridge would cut substantially into its profits, but eventually lowered its estimates.
Casinos typically measure revenue performance on a per-machine basis, and often adjust the number of slot machines as customer demand shifts because of changed competition and other factors.
To generate $300 million in revenue, each of Plainridge’s 1,250 slot machines wouldneed to average almost $660 a day. But a survey of other casinos, from Maine to Missouri, shows that figure is far-fetched. On average, those casinos brought in $240 per machine, about one-third of what Plainridge was projected to collect.
In its first week, Plainridge exceeded $700 per machine a day, as gamblers lined up two and three deep to try their luck. But that initial enthusiasm soon proved unsustainable, and by winter per-machine revenue had dropped below $300. State budget analysts tracking the casino’s performance slashed their estimates of annual revenue to $160 million.
This spring and summer, revenue rebounded. In the past 10 months, per-machine daily revenue has average more than $340, a “very healthy number” even in a state where gambling is widely accepted and incomes are relatively high, Barrow said.
Judging Plainridge by its fast start was unfair, Barrow said. Few, if any, casinos ever top their first week’s performance, when throngs of casual gamblers come to see what all the fuss is about.
That opening surge, which seemed to confirm high expectations, “helped reinforce the unrealistic expectations that had already been made for Plainridge,” Barrow said.
“There was bound to be a letdown,” he said.
Crosby notes that Plainridge has generated $87 million in state taxes since the casino opened, revenue that is especially needed as the state grapples with a major budget gap. Most of that money goes to cities and towns for police, firefighter, and teacher salaries.
Other states receive far less help from their casinos. Mississippi, for example, collects just 12 percent of casino revenue in taxes, while Plainridge pays 40 percent, plus another 9 percent to support the state’s horse racing industry.
In Mississippi, slot machines average less than $170 per machine per day. Told that Plainridge was bringing in twice that, Allen Godfrey, executive director of the Mississippi Gaming Commission, said he was impressed, and that people in Massachusetts should be, too. “That’s a tremendous number,” he said.Sean P. Murphy can be reached at email@example.com. Follow him on Twitter @spmurphy-boston.