A Major Decline in Wagering Revenue Shocks the City of Richmond
People outside of the casino industry prescribe to a number of myths. One myth is a casino is money-making machine that never has to suffer from declining fortunes. The world is full of people who like gambling and enjoy visiting casinos. Hence, revenue streams are always going to flow into casinos and the municipalities that rely on casino tax dollars. While this may sound like the perfect business scenario, no commercial enterprise operates in a perfect manner. The City of Richmond has revealed this sad fact to be true. All the anticipated casino cash the city was hoping for simply is not going to arrive as expected.
The casino world has not collapsed. The City of Richmond will still receive around $8.84 million. The figures are far lower than what was anticipated and needed. Since the original figures expected were conservatively arrived at, the decline really puts a damper on the town’s economic plans.
The River Rock Casino and Resort is the source of the gaming revenues the city hopes to rake in. The town’s budgeting is, likely, based heavily on the aforementioned conservative estimates of what the casino will deliver.
A sad bit of reality has to creep into the City of Richmond’s projections. There is no way to “conservatively” estimate how much money a particular casino – or any casino – can deliver. Far too many external factors play a role in what can drive a casino’s coffers down. The opening of a competing casino not too far away, an economic downturn, a weak marketing strategy, or any multitude of other things. The gambling industry is many things. Being in a constant state of flux is one of them.
Granted, the City of Richmond should have expected more from the Rock. In 2014, the amount of gaming revenues delivered to the city was roughly $21 million. The next year revenues dropped to around $19.5 million. The city assumed the continued drop would be a bit more. The expectation was to receive around $18 million. The $8.84 million received – a 49% drop below expectations – was a total shock and an unwelcome, costly one at that.
Ironically, the city made estimates were little more than a gamble. Hopefully, the town can absorb the effect of the decreased revenue. Over-budgeting is surely going to cause problems if the city assumed the $18 million was guaranteed.
What is the cause of the decline? Essentially, a decrease in high-limit gambling may be the culprit. Cutting the options for high rollers can have many negative effects. For one, the players may end up not wanting to visit the casino since they cannot wager their preferred amount and, potentially, win their preferred sum. Smaller wagers also mean less money for the casino to collect on losses. Things such as these add up. They added up to be far more than the City of Richmond ever anticipated.