I grew up in a part of Connecticut that didn't have much going for it other than a shipyard that cranked out nuclear submarines from time to time. As long as we were building boomers, people had jobs. If the local congressman couldn't wrangle the contracts, we starved.
You might have heard what happened next. The last vestiges of a Native American tribe got the idea to build a casino on tribal lands. Casinos were illegal, but you can do whatever you want on tribal lands, because they're sovereign. The tribe itself -- the Mashantucket Pequots -- went out of its way to get federally recognized.
So the Pequot tribe hired some developers, and they built a monstrosity out in the middle of the woods. Actually, it didn't happen that fast. It started out as a bingo hall, and then the tribe added poker, then table games and finally slots. Lowell Weicker, the governor at the time, extracted huge concessions to allow slots.
So why go to a casino in the middle of the woods in Connecticut? Answer: because otherwise, you would have to go to Las Vegas or Atlantic City.
Foxwoods opened in 1992. It's been a race to the bottom since then. What I mean is that pretty much every Native American tribe in the country that was federally recognized built a casino. And the ones that weren't federally recognized, lobbied the Bureau of Indian Affairs hard. (The BIA was a very political place during the Clinton administration.)
Then governments started to relax the rules on casinos altogether. The Sands Casino in Bethlehem, Pa., certainly isn't a tribal casino. But casinos pay property taxes, and there seemed to be an endless appetite to gamble.
I think we've reached Peak Casinos. I saw an article in the Hartford Courant the other day asking if we have too many casinos. You see, as hundreds of casinos of varying sizes have gone up across the country, Foxwoods and Mohegan Sun, another Indian casino in Connecticut, are no longer the only games in town. Their revenue has been steadily declining since 2006, and the economy hasn't helped. And everyone knows what happened to Atlantic City. It has been getting crushed by legalized gambling in Pennsylvania and elsewhere. Four casinos in Atlantic City closed last year.
Well, the folks at MGM Resorts (MGM) just broke ground on an $800 million (you read that right) casino in Springfield, Mass., which is not the most scenic location in the world, to put it mildly. Business was bad at the Connecticut casinos to begin with -- they have already laid off more than 8,000 people -- but the new casino in Springfield might do them in once and for all.
MGM has been a pretty great stock (I used to own it, not anymore), but the company, under the leadership of Jim Murren, who was a sell-side analyst, has been mostly a pure-play on Vegas. The gambling industry in the rest of the country is pretty awful. And Macau is awful, for those who care about that. Vegas is surviving is because it has diversified into shows and clubs and shopping. Gambling is almost an afterthought now.
I live in one of the few areas of the country that doesn't have a casino nearby (there is a boat casino about an hour up the road). I'm not sure people around here really miss it. I don't think anything moves the needle on gambling unless something big happens, like New Jersey legalizing sports betting. Outside of that, you've got more casinos chasing after a constant size gaming wallet. Pretty bleak, my friends, pretty bleak.
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