Oak Tree Casino not meeting revenue projections
Thursday, December 6, 2012
The Oak Tree Casino in Woodland continues to fall short of generating the revenue city officials projected it would when it opened nearly a year ago.
When the casino first unbolted its doors last December, there were high hopes it would provide a much-needed bump to the city’s coffers. But the casino has generated less than a third of the $200,000 city officials expected to see by the end of the year.
Through October, the Oak Tree Casino has accounted for $63,342 in tax revenue for the city. General Manager Chuck McCormick said the casino’s struggles have taken a turn for the worse in recent months, even as he holds out hope that business will pick up by the end of the year.
“November, for some reason, was one of our lowest months,” McCormick said.
He called the casino’s numbers disappointing but not unexpected. It faces competition from La Center’s four existing cardrooms, as well as poker clubs in Portland.
On top of that, early revenue projections for the casino ended up being wrong, skewing expectations. McCormick said the casino’s development plan, presented to Woodland City Council, likely overstated its earning potential.
At the time, the casino’s developers used La Center’s cardrooms as barometers for projecting how much money the Oak Tree Casino could earn.
But since the beginning of the year, La Center’s cardrooms have outperformed Woodland’s by millions of dollars.
They’ve generated $2.8 million in tax revenue for La Center through the end of November, according to the city’s figures. That’s a slight decrease from the $2.9 million La Center received from its cardrooms through the same period in 2011. The revenue comes from a gambling tax that’s more than twice Woodland’s rate of 4 percent.
Woodland’s cardroom makes money off a set amount for poker games — $1 for every $10 pot for poker tables. For blackjack and baccarat, the casino plays directly against gamblers and takes money depending on whether it wins or loses.
Woodland city officials recalibrated expectations over the summer, slashing their anticipated year-end earnings from $200,000 to $100,000 and agreeing to place the money into a reserve fund rather than into the general fund.
With revenue showing no signs of notching up, taxes will continue to stay in the reserve fund through 2013, Woodland Mayor Grover Laseke said.
The slowdown at Woodland’s only gambling enterprise has forced McCormick, one of nine investors in the cardroom, to contemplate other ways to bolster business.
For one, the casino plans to place a new billboard on Interstate 5 at exit 16, which feeds into La Center Road.
The casino has also attempted other attention-grabbing techniques, such as raffling off a car. Giveaways like that one are not big moneymakers, McCormick said, because they’re not restricted to casino gamblers and are instead open to anyone who walks through the doors. Not all of those folks are paying customers.
“It’s tough because Washington doesn’t really like to promote gambling,” McCormick said. “And people don’t have to buy anything to win.”
Although money is tight and investors have gotten cold feet about going all-in on developing another casino, McCormick said he believes that more competition could actually boost gambling in Woodland.
He and other investors have backed off plans to develop a second cardroom in Woodland.
McCormick, who’s managed casinos in California and Washington, said having competition within walking distance could actually drum up more support for local casinos.
“If you have a variety of tables, and accessibility to them, that helps the gambling business,” McCormick said.
Despite the weak returns, Laseke said he expects the casino to generate more money for the city in 2013, adding that he’s not “tremendously concerned” about the shortfall.
He said he didn’t think it was a good time to add more competition to the casino, and voiced skepticism about whether it would be a good time in the future.
“It’s like having three grocery stores on the same block,” Laseke said. “At a certain point, they’ll start stealing away customers.”