By Luke Jeffress | Consulting Research Manager (QLD)
Back in May 2016, Synergies Economic Consulting released a report detailing the potential impact that the two new casinos (Queen’s Wharf in Brisbane and the ASF project on the Southport spit) could have on the South-East Queensland gaming market. (The report is publicly available on the Clubs Queensland website here. To summarise the 100+ page report, Synergies estimated that the two new casinos could take over $190 million from the south-east gaming market with about half coming from Club’s coffers.
What’s more important than how much, is where. All venues aren’t expected to be hit evenly; larger venues (clubs with greater than 100 machines) near the casinos are expected to suffer the greatest losses. 32 clubs in the south-east were deemed to be ‘very high risk’, which equates to gaming revenues falling below costs and 21 clubs were considered ‘high risk’, where a club’s EBITDA could fall below 12%. 90% of these clubs were within 15km and all of them were within 25km. Whilst the Synergies report only included clubs, hotels are expected to suffer similar losses in a similar manner – with larger hotels closer to the city suffering the biggest losses.
So what are local venues doing about this?
Last Thursday, our very own John Dickson and Steve Parker from DWS were asked to present at The Club Collective – an initiative designed to bring clubs together and start preparing now to collectively combat the impact of the planned casinos. DWS ran its own calculations on the total market (both clubs and hotels) as well as examining the potential impact for areas further away, such as Toowoomba and the Sunshine Coast.
With the 1,800 additional slots planned for the south-east, operating with a daily revenue per machine of $300, DWS estimates that the casinos will generate up to $197m in metered win every year. The table below shows the maximum estimates of metered win lost in each of the regions in the south-east.
Being the closest, the Gold Coast and Brisbane are expected to be the hardest hit, potentially losing up to $77m and $64m respectively. This could mean a 12% decline in the Brisbane market and a whopping 24% decline in the Gold Coast market. Tweed, Logan-Beaudesert and Ipswich are all expected to lose $11-16m each, equating to roughly a 10% decline in their gaming markets. Moreton Bay, the Sunshine Coast and Toowoomba were all expected to lose less than $10m each from their gaming market.
Overall, the south-east may see a dip of 12% in metered win for both clubs and hotels as a maximum estimate. Tourism will absorb some of the $197m and induced demand will also help to ease the burden on local venues. But a mountain of research indicates that the clear majority of visitation to casinos comes from locals or visitors within the same state. The slots are also more appealing to locals, with international tourists and high rollers tending to play table games. The evidence from Sydney, Melbourne, Cairns and Townsville is undeniable – a casino will have a marked negative impact on local venues’ metered win. But two casinos in close proximity…
So what can local venues do?
With the Queen’s Wharf Casino opening in 2021, that leaves four years to prepare. What are some things that you can do to protect your venue?
- Exceptional localised service and products – do you use prawns caught from local waters? Great, make sure your patrons know this and that you’re supporting local fisherman.
- Ensure your technology is top notch – the casinos’ certainly will be.
- Personalise the service to your patrons – make them feel like you’re a part of their lives and a friendly local face.
- Make sure everyone in your team is aware of the challenges and are on the same page – that includes boards, management and staff.
- Promote your community projects – if you support a local charity or initiative, make sure your patrons are aware. “Every meal sold here helps support the local xxxx”
The casinos have plans in place. Do you?
To find out more or for assistance with creating a plan for your venue, contact Luke at email@example.com or on (07) 3878 9355.