Philadelphia Seen as Risky Investment

As reported by the EDP24: "Plans for a third casino in Yarmouth yesterday won unanimous backing at the borough council development control committee.

As reported by the Philadelphia Inquirer: "When Pennsylvania approved slots parlors, one might have thought a city as hot as Philadelphia would have high-end gaming firms lining up for a shot at a license here.

"Not so, it seems.

"So far, few have applied. Some have already withdrawn.

"Last week, Ameristar Casinos packed up and left, saying it could not have made enough money in the city with a $500 million casino in Fishtown.

"…So what gives?

"Simple, say the experts.

"City locations are hard to find and expensive. Big-city politics can be difficult to navigate. Powerful unions can drive up the cost of construction and wages for service employees.

"Then there is the competition for customers. Four casinos, two in the city and two in the suburbs, will all compete for the same local gamblers. Just an hour away is Atlantic City, where casinos pay lower taxes - about 9 percent compared with Pennsylvania's 54 percent of gambling revenue - and can offer card games and a dozen locations.

"All this adds up to higher costs and risks for casino developers, which is why casinos have not traditionally fared as well in urban markets as in suburban, said Bill Eadington, the director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

"…Some developers, who were initially eager to build in the city when the state legalized gambling in July 2004, quickly cooled on the idea after seeing how difficult and expensive it would be…"