Scott Butera is nothing but blunt when it comes to explaining what casino operators want from their customers — “their wallet and their spend.”
The chief executive of Foxwoods Resort Casino is also candid about customers he can do without — for example, those stereotypical busloads of senior citizens who show up with walkers and oxygen tanks.
“We’ve dropped a lot of that … not for humane reasons,” Butera jokes. It’s because those darn elders don’t gamble away enough of their money to help Foxwoods reach its goal, which at this point is basic survival. Butera is also unhappy with “whales” — big-time gamblers who, naturally, want all their winnings, but expect reductions when they lose.
As Massachusetts moves ahead with plans to license up to three casinos and a slots parlor, Foxwoods is “fighting for its life,” as a recent New York Times magazine article described it. Located in Ledyard, Conn., and owned by the Mashantucket Pequot Tribal Nation, Foxwoods is the largest casino in North America. Butera, a turnaround expert who has rescued other troubled casinos, is working hard to rescue this one from a bad economy and a diluted market that Massachusetts will dilute even more.
With Foxwoods as a cautionary tale, how much dilution is too much dilution for Massachusetts? Or, to put it another way, how much greed is too much greed? Are there really enough gambling addicts, bored oldsters, and people in general who think it’s fun to watch their money melt away, to support multiple facilities?
Sheldon Adelson, the billionaire Boston native who runs a worldwide casino company, saw a potentially saturated market and took a pass on the Bay State. A company spokesman for Adelson’s Las Vegas Sands Corp. said the Massachusetts formula doesn’t “synch with our business model.” Steve Wynn, another major Las Vegas casino developer, also abandoned plans to build a casino in Foxborough after residents made it clear he was unwelcome.
The absence of key players like Adelson and Wynn could mean lower bids for Massachusetts casino licenses and less ambitious projects that stand to undercut the state’s rosy revenue projections.
It’s just another aspect of the perversity that is a natural part of casino economics. States turn to gambling in bad times, when other revenue drops. Politicians look at a gambler’s wallet the same way Butera does. Once opened, it can fill coffers and plug deficits.
Yet the gambling industry is far from recession-proof. Casinos in Atlantic City, Las Vegas, and elsewhere are suffering in bad economic times. After all, the unemployed have no paychecks to gamble away or spend on acts like Jerry Seinfeld or Duran Duran, which are among those coming to Foxwoods soon.
Foxwoods overbuilt and over-borrowed, and then ran up against a brutal economic downturn. Now, Butera is trying to get $2.1 billion in debt down to $1.7 billion. Although he said he is confident Foxwoods will meet its financial obligations, he sees little evidence of any strong economic recovery for the country or his industry.
After a little “bump-up” during the first three months of 2012, “There’s no significant revenue growth … It’s going to be pretty challenging. I don’t see any real growth,” he predicted. Indeed, slot machine revenues plummeted in April.
In the meantime, Butera is happy Foxborough is off the table in Massachusetts. He considers a casino at Suffolk Downs less threatening, because it would be a casino of “convenience” versus “destination.” However, that could represent mostly bravado on his part. Plenty of gamblers prefer convenience, and it doesn’t get any more convenient than a stop on the Blue Line.
In Connecticut, Foxwoods is already up against the Mohegan Sun. Casinos in New York and Pennsylvania add another level of competition. Butera believes casinos will finally come to Massachusetts, but, given the Bay State’s reputation for foot-dragging: “When? Who knows?”
According to Butera, gambling is “still a lucrative market” with “untapped” customers. To tap into them, Foxwoods is quickly moving ahead with plans for a massive premium mall, a “wellness” center, and a gas station with 24 pumps and cheap fuel — the better to lure those “destination” gamblers and their wallets to Connecticut and away from Massachusetts.