OREANDA-NEWS. The addition of Plainridge Park Casino to the New England gaming landscape has heated up the competition for gamers, according to Fitch Ratings. Plainridge is the first casino to open in Massachusetts under the ownership of Penn National Gaming.

Fitch analysts recently visited Plainridge as well as Twin River in Lincoln, RI and the two tribal casinos in Connecticut (Foxwoods and Mohegan Sun). The trip confirmed our view that Plainridge will deliver solid return on investment (ROI) at least in the first three years until Wynn Everett opens in late 2018.
We also believe that Twin River will continue to get considerable business from Massachusetts, albeit less and at a lower margin. We anticipate only modest impact on the Connecticut casinos, but expect Foxwoods to be hurt more than Mohegan Sun given its closer proximity.

Fitch estimates Plainridge will generate $176 million and $44 million of annual revenue and EBITDA, respectively, until Wynn Everett opens. This represents 18% ROI and will allow Penn to cover over 60% of project cost before additional competition comes on line.

We observed a busy Plainridge on a Friday morning with almost all Massachusetts license plates in the garage (management said about 20% of business comes from Rhode Island). Penn is aggressively marketing in both states with the intent to build a seasoned database by the time other Massachusetts casinos open. We expect Boston and Springfield projects to open late 2018. The southeast region license remains in limbo as the regulators decide whether to award it to a commercial operator or wait until Mashpee Wampanoag Tribe gets its land placed into trust by the Department of Interior, a prerequisite for casino construction.

The slot floor felt a bit tight, the high limits area could easily be overlooked and there was no VIP area - perhaps reflections of Penn's disciplined $250 million all-in budget. Food & beverage (F&B) offerings provided a good price point and atmosphere mix. F&B plus the e-tables took up much of the square footage, providing optionality to allocate more space to slots if a need arises. Management indicated that they are still reconfiguring the gaming floor, putting in more video poker to meet strong demand for the product.

Twin River was busy late afternoon Thursday with parking license plates split about 50/50 between Rhode Island and Massachusetts. Management noted that they did not lose many customers to Plainridge yet. However, the Twin River customers from Massachusetts are now spending less as part of their gambling budget is spent at Plainridge. Management expects to lose some Massachusetts customers after the trials but expects to retain the bulk of the Rhode Island players due to proximity and Twin River's amenities, which generally exceeded Fitch's expectations.