City, casino fighting to reverse loss of gambling revenue

By ALAN J. ORTBALS
    ALTON — Southwestern Illinois casinos have been hit hard in recent years by a combination of legislation and growing competition, according to Philippe Khouri, vice president and general manager of the Argosy Casino Alton. And, when an Illinois casino loses revenue, so does its host city. In the case of Alton, the city and the casino are working together to try to reverse the tide.
    The Alton operation’s gross annual revenue has fallen from a high of $125.4 million in 2007 to $64.3 million in 2013, the last full year currently available. The Casino Queen in East St. Louis has been victimized by a similar slide in revenues although not as great — from a high of $185.2 million in 2008 to $124.5 million in 2013.
    “The biggest impact has come from the introduction of the video gaming terminals in the state,” Khouri said. “The number of those is increasing steadily. We monitor how many there are in the neighboring area, their win per unit and how many are being added. The numbers are substantial and it certainly has affected us pretty significantly.”
    Khouri has only been with the Argosy for six months but has been with Argosy’s parent company Penn National Gaming for almost three years and was with Harrah’s in Joliet, Ill., prior to that. He said that the border casinos also took a substantial hit in 2008 after the smoking ban, imposed by the state, took effect.

    “It really hurts when you have a neighboring state that allows smoking,” Khouri said. “We get hit here because people can smoke at the four casinos on the Missouri side. The Chicago area casinos take a hit too because people can smoke in the Indiana casinos as well. If everything were non-smoking, it would be a different ballgame, but when one allows smoking and the other doesn’t, that hurts.”
    Khouri said that the overall strategy is to spruce up the boat both inside and out; provide more quality entertainment; and focus attention on gaming where the casino has the advantage over the video gambling terminals (VGTs). One of those advantages is in the payout. VGTs are limited to a relatively low $500 payout. The casinos have none. Another is table games like black jack, craps and roulette. Players who enjoy those games can’t get them at the local bar.
    “We try to concentrate on those types of customers,” Khouri said, “the ones who seek higher payouts or enjoy table games. How do we attract those customers, develop loyalty and get them to return? It’s all encompassing. It’s not just offering the games they want. It’s also offering more from an amenity standpoint.”
    To that end, the Argosy has moved its table games to a more prominent location, the main floor — and is planning improvements to both the interior and exterior of the facility. Those may include improvements to the restaurants as well as a new paint job on the façade.
    “The goal is to re-invest in the property and to try to attract more people here,” Khouri said.
    Falling revenues at the Argosy is also a problem for the city. Alton’s share of casino taxes was $4 million in 2013, according to the Illinois Casino Gaming Association. That’s down from nearly $8 million in 2007. Since the casino first opened in 1991, those tax revenues have helped fund a street improvement program, development of the Alton riverfront and marina, construction of a new fire house, a new law enforcement center and establish a “rainy day” fund. Because of the importance of this revenue stream, the city is collaborating with the Argosy on events and entertainment that will draw people to the riverfront and, hopefully, to the boat.    
    “The city and the casino are working together to bring in more national acts to attract folks in from out of town and generate revenue,” said Alton Mayor Brant Walker. “We are also partnering with the casino on advertising. The idea is that, if we get more folks over here, hopefully, that they come here; they’ll stay here; they’ll gamble here; they’ll eat here; and that will all generate revenue for the city.”
    Alton’s declining casino tax revenue has led to a freeze on hiring with the city reducing staff through attrition. It’s also led the city to try to focus on generating revenue elsewhere.
    “It’s definitely made this administration much more resourceful,” Walker said. “You have two choices–you can cut or you can figure out how to grow. The city has been cutting, which we still maintain but we also have to re-evaluate how we do business. How do you make your city more attractive? What are your quality of life issues? How are your parks? How are your streets? If you want a better future, you need to build it and that’s what we’ve been doing.”
    To that end, Walker said, they’ve been making business retention visits, made parking changes and have tackled infrastructure issues like streets, sewers and sidewalks.
    Another project of the city that may help the casino is the development of a hotel on the site of the former Great Central Lumber Co. The city has purchased the property near the foot of the Clark Bridge and is seeking a developer.
    “It’s certainly a great idea,” Khouri said of the hotel development plans. “If successful, we would want to try to leverage that and see if we could partner with the hotel on certain types of things to draw more people to the hotel, to the riverfront and to the casino.”