Creek casinos continue to strike a royal flush
Officials still bullishly optimistic about potential for record-breaking season
Will the summer of 2016 become a banner season for the Cripple Creek gaming community, and a time when local casinos finally pull the curtain on the Great Recession?
That’s a question that still generates debate, with some operators not ready to uncork the champagne bottles yet. Others, meanwhile, are reeling in cautious optimism, while some say the industry still has a long way to go to reach its bustling playing field, prior to the smoking ban.
But last week, Cripple Creek Finance Director Paul Harris stuck to his guns in declaring the current gaming season as a gang-buster year, with casinos on pace for recording their best showing since 2004. In fact, Harris stated that the town has even made strides in gaining more market share over its big rival competitor, Black Hawk. “Cripple Creek had a strong performance,” said Harris, in describing the recently released May gaming numbers, during a report before the city council last week.
According to the city’s latest report, Cripple Creek casinos hit the jackpot for a spike in $17.4 million in monthly betting action, representing a 12 percent hike from the previous month. Altogether, gamblers posted nearly $160 million in slot device activity at Cripple Creek casinos, according to the Colorado Division of Gaming.
And for the 2016 season, officials report that the coin-in and table drop for Cripple Creek casinos (which tracks top-line sales activity) is up $27.6 million or 3.8 percent, compared to 2015. According to Harris, this is the biggest increase in more than 12 years.
As for casino winnings, the town’s gaming establishments in May generated $11.46 million in adjusted gross proceeds, which tabulates what casinos take in, minus what they give out in prizes and jackpots. This represents an 11.3 percent hike from the previous month.
And in comparing this figure to the same period a year ago, Cripple Creek emerged as the only gaming community to post a positive gain. For this year, the town has seen its overall casino winnings rise by 4 percent.
Harris reiterated that this is good news for the town. He especially lauded the fact that the town picked up additional market share in the state’s limited stakes gambling arena.
Still, some gaming operators say the town has a long way to go reach the level of its former gambling heyday, prior to when a smoking ban was implemented.
Recently, David Minter, the head operator of the Johnny Nolon’s and Colorado Grande casinos, questioned the city’s ultra-positive prognosis about a potential record-breaking year in a letter to the editor published in The Mountain Jackpot. “In order for a record year, the city would need to generate $114 million in the last eight months of 2016. That figure would require an increase over 38 percent over last year. That seems beyond wildly optimistic,” stated Minter in his letter.
At last week’s meeting, Harris slightly addressed this criticism, and stressed that the current figures represent the biggest positive improvements since 2004, when tabulating the industry’s top-line sales activity. Overall, he viewed the latest gaming figures as quite positive for the city
Similar sentiments have been echoed by council members in recent weeks. They have expressed much satisfaction with the direction the city and industry are headed. Plus, they are happy about new legislation that would allow the state auditor to better scutinize the way historic preservation money is spent in the gambling towns, including Black Hawk, its arch enemy for the last five-plus years
An Increase in Betting Device Fees?
The city, though, is still not out of the woods.
According to the most recent audit performed by RubinBrown, the city faces major financial challenges from declining revenue due to a big decline in betting devices housed inside local casinos. Each betting device is assessed an annual fee. The city has experienced a nearly 30 percent decline in gaming devices and table games from the summer of 2008.
And although local sales tax revenue has increased, the auditors note that more than 70 percent of the city’s revenue comes from gambling-related activities, with fees and taxes. Consequently, fewer betting devices amounts to less money for the Cripple Creek government to operate. In fact, the city’s annual expenditures are now out-pacing its revenues.
“The long-term solutions to these financial issues are for the number of devices in town to increase or the fee per device to be raised. The fee charged per device has not increased in 24-plus years,” according to one of the conclusions in the audit report.
On the upside, the auditors indicated the city is in good financial shape and in much better condition that most other communities.