Winds of Change in Chicago-Area Gaming

Of the eight casino destinations in the Chicago-area (including Northwest Indiana), the one which has been the least aggressive in direct mail offers and promotions has long been the Grand Victoria in Elgin, Ill. That's why I was surprised to find in the mailbox a brochure titled "We're giving you more reasons to play Grand Victoria."

Among the 10 reasons I discovered inside were the addition of nickel slots and more table games, lower prices in the buffet and upscale restaurant, lower drink prices, and free valet parking Monday through Thursday.

The sudden interest in marketing at the Grand Victoria piqued my curiosity, especially in light of the fact the Elgin casino has enjoyed a long-standing reputation as the dominant and most financially successful riverboat casino in the Chicago-area, if not the country.

Just months after hearing the Illinois casinos complain about how hard hit they were with the tax increases, having the Grand Victoria announce a 33 percent reduction in the buffet prices and a 25 percent reduction in Buckingham Steakhouse prices got me scratching my head.

Then I took a look at the monthly riverboat casino reports published by the Illinois Gaming Board and got my answer. The Grand Victoria has experienced serious declines in adjusted gross receipts the last several months. Figures for February were $28.6 million as opposed to $32.9 million in February of 2002, a decline of 13.12 percent. January 2003 AGR was $31.3 million versus $36.3 million in 2002, a 13.69 percent decline.

Meanwhile, the Grand Victoria's competition approximately 25 miles due north in Aurora, the Hollywood Casino, saw increases during the same periods of time. In February 2003 the Hollywood's AGR was $23.1 million versus $21.5 million in 2002, an increase of 7.80 percent. In January 2003 the figure was also $23.1 million as opposed to $19.4 million in January 2002, an increase of 18.63 percent.

Hollywood Casino Aurora has for years been one of the area leaders in monthly cash-back coupons, scratch-offs, special holiday turkey and ham giveaways, and other guest-friendly promotions and special events. Its conversion to a single level permanently docked facility also has proved to be a boon to business.

Hollywood has been the only Chicago-area casino in Illinois to show increases in recent months. Joliet Empress and Joliet Harrah's have joined the Grand Victoria with declines in revenue in both January and February. And even though the Grand Vic is still the Illinois leader in the casino industry, its dominance has most definitely eroded.

Most importantly, however, the Grand Victoria in Elgin has been displaced as the most financially successful casino in the Chicago area. That title now belongs to Jack Binion's Horseshoe Casino in Hammond, Indiana. The Horseshoe's rise to Number One status in the market has not come by accident. It is the result of hard work and brilliant marketing and advertising strategy.

Take for example Horseshoe figures compared with the Grand Victoria in the all-important "table drop" category. In January 2003, the figure was $36.5 million at the Horseshoe compared with $33.2 million at the Grand Vic. Yet even though the Grand Vic handled less money at its table games, it won more from players: $6.8 million as opposed to $5.3 million for the Horseshoe.

The Horseshoe has actively promoted the Jack Binion name, one of the most famous in all of gaming, and has utilized tier-structured direct mail cash-back offers, regular monthly scratch-offs, player card point promotions, and steakhouse and buffet specials to optimum advantage.

The Grand Victoria, while trying to play "catch up" in the market, certainly isn't doing players a favor by being the last casino destination in the region to have nickel slots. Its 50 five-cent multi-line video slots is the area leader in "hold" on the machines with monthly figures ranging from 14 to 15 percent. Compare that to figures in the mid-12 percent range at Hollywood Aurora and Harrah's Joliet.