NORTON NOTES: South Carolina Casino Potential
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by Steve Norton
CEO, Norton Management
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Atlantic City now has casino competition, that is closer to 95 percent of their previous markets, Philadelphia, New York City and North central New Jersey; yet it still produces over $2 billion in casino win and its casino hotels enjoy occupancies of over 80 percent.
Myrtle Beach is further South, meaning better weather, has far more golf courses, and a larger hotel room inventory than Atlantic City (nearly 40 thousand rooms, plus plenty of homes that rent by the week). But even with air service, 100 plus golf courses, and warmer weather, Myrtle Beach occupancy is just over 50 percent.
I was an executive of Resorts International, that purchased the Chalfont Haddon Hall Hotel, before the 1976 casino referendum, and I remember occupancies, at our 1,030 room resort, sometimes falling below 10 percent, during the 200 mid-week nights outside the summer season. That was before we opened our casino, on Memorial Day 1978, and our occupancies have stayed in the 80 percent to 90 percent range since.
Casino gaming provides a voluntary tax, like the lottery; but unlike the lottery, it creates tourism demand, that could greatly increase overnight demand, from gamers. And this demand would come from States with larger populations, creating a lot of new tourism from Georgia and North Carolina.
And Myrtle Beach, unlike Atlantic City, has plenty of air service from a number of metropolitan areas, adding potential visitors from many areas, without casino gaming nearby.
And with past history, in Atlantic City, showing that a dozen casinos can be to many; South Carolina could look at one or two resort casinos in Myrtle Beach, and possibly casinos placed near significant population in Charlotte and Atlanta. North Carolina has two Tribal casinos in the Western part of the State, but a destination casino resort on I-77, possibly near the Catawba River, would be much closer.
Also another casino resort on I-85, on the lakes created by the Savannah River, and only 100 miles from Atlanta. This could be the location for a major destination casino, providing the closest casino gaming to the City's near 6 million population. Atlantan's now drive to Tribal casinos in North Carolina and Alabama; or fly to Biloxi, South Florida or Las Vegas; where Atlanta's Hartsfield International has over 90 flights a day.
However this location, near Atlanta, could be at risk of possible future casinos, now being considered for various cities in Georgia, including Atlanta. Both of these locations have wonderful potential, because of the large acreage available for multiple land and water attractions, found at few other casino resorts.
South Carolina could enact high tax rates, like 50 percent on slot win, and 20 percent on table win; similar to Maryland and Pennsylvania. And the investment required could be a $billion or more for each resort, although, any new casino Legislation, with high investment requirements, should consider tax rate deductions, if casinos should be built nearer to the Charlotte or Atlanta markets.
When looking at other true casino destinations, Las Vegas and Atlantic City, the strip casinos in Vegas are now generating more of their earnings from the rooms department, that the casino; and the win that used to represent over 70 percent of a casino resorts revenue, is now under 35 percent, and the non casino departments earning over 73 percent of the departmental profits. The Vegas Strip has learned that casino gaming brings new conventions and trade shows, and increases attendance and exhibitors to existing group business. Myrtle Beach has the air service that the convention business demands, and it has enough rooms to handle all but the very largest shows. And the beauty of the convention trades, is that they book primarily mid-week, in the Fall, Winter and Spring; increasing average occupancies and room rates substantially.
South Carolina should take a close look at the potential.