Once state's only casino, Hollywood Perryville seeks its new reality

Maryland's first casino may seem small now but says it's like neighborhood bar

A bank of slot machines sits just inside an exit door at Hollywood Casino Perryville. "Hot slots," says a sign atop one, depicting leaping red flames.

But it's a misnomer. The area around the six machines is drafty, and customers' interest in the machines has gone as cold as the air.

"There is not a person alive that would want to sit there by the door," said general manager Matthew Heiskell, who intends to eliminate the six unpopular machines — and 302 others — in a retooling he hopes will represent addition by subtraction for a casino he fondly calls "the little engine that could."

In 2010, Hollywood became Maryland's first casino, opening in an Art Deco-style building near Interstate 95 in Cecil County and generating more than $2 million in revenue during its first four days, and almost $11.4 million in its first full month.

Its days as a mini-monopoly in Maryland are long past — the state now has five casinos, with a sixth on the way — and Hollywood is trying to position itself for its new reality. In what is now one of the country's most saturated gambling markets, Hollywood Casino took in $6.2 million in slots and table game revenue in November, down 6.9 percent from a year earlier. And it has fallen far short of what the state projected when slots were legalized.

But Heiskell described Hollywood as "completely profitable" and said the casino plans to invest in new slot machines, diversify amenities with new meeting spaces and present itself as the less flashy but more relaxed alternative. "We're going to continue to be the safe, comfortable friendly place," he said.

"I've called it the neighborhood bar. You know where your machine is."

When the casino recently decided to reduce the number of slot machines over the next four months, Heiskell wrote in a message to roughly 350 employees that the loss of 308 of 1,158 slot machines is not a foreboding sign. Underperforming slots will be plucked from various areas around the floor — including some from near the door, and others near restrooms and a slots redemption window.

"It's just like any retail store — like Target," Heiskell said during an interview at the casino, where "Silent Night" and other Christmas carols mixed with the ringing of slot machines. "If something wasn't selling, you pull it off the shelf and put something else out there that would sell."

The overhaul coincides with a change in state law. Maryland law initially required the state to own or lease the slot machines. But several of the state's casinos now must acquire their own by April 1.

Hollywood Casino plans to spend several million dollars to purchase many of the existing machines from the state, as well as new machines from manufacturers. The transition period gives the casino time to assess its slots offerings, Heiskell said.

The casino also is working with the town of Perryville on a new $250,000 exterior road sign. And the casino started advertising at the Maryland House and Chesapeake House travel plazas along I-95, and is trying to place signs in truck stops and gas stations.

With all the hoopla surrounding other casinos — Horseshoe Casino Baltimore's August opening featured Las Vegas-style dancers and pop star Iggy Azalea — it's as if Hollywood wants to make certain everyone knows it's still around.

Maryland Live, the state's largest casino with 4,185 slots, opened in 2012. Horseshoe has 2,500 slots.

Maryland is hardly the only market in which older or smaller casinos find themselves squeezed by new competition. Even Atlantic City, N.J., has seen its status as a gambling destination tarnished, as a number of casinos have closed in the face of increased East Coast competition.

"It's clear that every market is unique and so too is every casino," said Geoff Freeman, president and CEO of the American Gaming Association, an industry group. "Unlike the perspective that's been out there, particularly around some policymakers, that a casino can easily succeed — that's certainly not true. You have to constantly adapt. You have to ask yourself what your customers are looking for. You have to reinvest."

The slots reduction at Hollywood Casino could mean a revenue hit to the state of about $1 million in the first year, according to a recent consultant's report. A percentage of casino revenue also goes to local impact grants that have been used for land preservation, road resurfacing and trucks for the local volunteer fire department.

Heiskell disagrees that the short-term impact will be that great. "You've got a machine that somebody really isn't playing that much, then that play is going to go to a new machine," he said.

Stephen Martino, director of the Maryland Lottery and Gaming Control Agency said "there may be some short-term impact to the budget." But he added, "We want to make sure that not only Hollywood Casino Perryville but all the casinos are sustainable in the long term."

The casino's declining revenues surprise nobody. From the beginning, its task was to steel itself for the storm that lay ahead.

With Baltimore to the south and Philadelphia to the north, "they are hemmed in," said James Karmel, a casino analyst and history professor at Harford Community College. "It's like how the Ravens' fan bases are hemmed in between Philadelphia and D.C. They have developed a very locally oriented casino drawing from Cecil County, parts of Harford, maybe a little bit in the Baltimore area, and some in Delaware and Pennsylvania."

By cultivating a loyal base, Hollywood, owned and operated by Gaming and Leisure Properties of Wyomissing, Pa., has kept revenue from declining as much as feared. State-commissioned consultants have forecast a revenue drop-off of nearly 20 percent a year once the newer casinos establish themselves.

"It never feels good to be down, but we are not down as much as either we or the state anticipated," said Heiskell, a former manager of Caesar's Entertainment in a number of locations, including Atlantic City.

"You're not going to be the only player on the block forever," he said.

The casino, which displays large, movie-themed signs as part of its Hollywood theme, may not be as exciting as Las Vegas, "but it's convenient and it's clean," said customer Fran Bobb of Forest Hill. "It's a good place to bring my elderly parents."

She and her husband, Walter, had a row of slots machines to themselves on a recent weekday afternoon. The casino says it does its best business in March, when people often stay close to home.

"People come here for the individual attention," said Denise Ogbin, a dealer and supervisor. "I can tell you most of the people's names. It means a lot when you say, 'Hey, Tim,'" she said.

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