Can casinos save the mall?

Discussion
Photo: Stadium Casino Westmoreland RE, LLC
Jan 08, 2020
Tom Ryan

In Pennsylvania, mini-casinos later this year will replace a Sears at York Galleria Mall and a Bon-Ton at Westmoreland Mall. 

Las Vegas illustrates the potential of mixing gambling and retailing. According to a recent profile in the New York Times, the opening of Forum Shops at Caesars Palace in 1992 demonstrated the opportunity for street-front retail. Many lavish flagships have since arrived on the Strip to support a thriving retail scene. Previously, most retail shops were only located inside casinos.

The Times report also noted that casino retailing benefits by attracting a constantly changing mix of customers, unlike an area such as Times Square that still counts many local residents and office workers among its daily traffic.

In Pennsylvania, it is hoped that the mini-casinos will support local jobs, spur development and revitalize the malls. A law enacted in 2017 allowed existing casinos to construct such smaller, satellite casinos.

At Westmoreland Mall outside Greensburg, PA, Live! Casino Pittsburgh is expected to open this summer in a former Bon-Ton with 750 slot machines, 30 table games, a sportsbook area and dining and entertainment options. About 500 permanent jobs and $188 million in annual economic impact is projected. Beyond Bon-Ton, the mall also recently lost a Sears.

At York Galleria Mall, the Hollywood Casino York will bring 500 slot machines and 24 table games as well as sports betting and entertainment options to a vacant Sears to draw customers from south central Pennsylvania and northern Maryland. About 200 permanent jobs and $1 million in annual tax and fee revenue are projected. The mall has also lost a Bon-Ton and J.C. Penney in recent years and now counts Boscov’s, Marshalls and Gold’s Gym as anchors.

In both cases, the potential negative impacts of the casinos were outweighed at public hearings by the promised community benefits. Expressed concerns included an increase in crime, gambling addiction, a drop in property values and each casinos’ proximity to schools and playgrounds in the surrounding areas.

Casinos remain highly-regulated, but states appear increasingly open to gambling as an economic driver with many recently legalizing online sports betting and gaming. 

DISCUSSION QUESTIONS: How open should shopping development operators and their tenants be to adding casinos to retail malls? Have the risks and negative perceptions around casinos lessened over the years?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"If adding casinos is legal as it is in Pennsylvania, why not? If it works, that’s good news for the tenants. If it doesn’t, it may be the last try for mall operators. "
"Are casinos the answer? Probably not. It might be time to acknowledge that we are over-stored, and re-purpose some of this property to residential."
"Interesting idea, especially when we look at the trend of adding theater and entertainment to the shopping experience. "

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23 Comments on "Can casinos save the mall?"


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Bob Phibbs
BrainTrust

So THIS is the silver bullet for malls? I don’t think so. York, PA is not Las Vegas. As someone who keynotes in Vegas multiple times a year I can tell you the buzz is off gambling in Vegas with fewer and fewer people at the game rooms and more at the pools and events. When I’ve been to Atlantic City and other cities that have casinos it is still a sad experience. People who buy are hopeful. Malls are positioned as family places. I think the stigma about gambling is still very much alive. I wish them well but suggest they #tryagain.

Richard Layman
Guest
8 months 21 days ago

Taubman’s attempt at a big retail venture in Atlantic City was a massive failure, if I recall correctly.

Cathy Hotka
BrainTrust

Are casinos the answer? Probably not. In my area at least, there are multiple casinos within easy driving distance, so they’re not the novelty they once were — and some of us never gamble. It might be time to acknowledge that we are over-stored, and re-purpose some of this property to residential.

Mark Ryski
BrainTrust

I agree Cathy. The West Edmonton Mall in Canada has had a casino for many years, and it’s coexisted with the other mall attractions well. And while casinos may be a useful way to fill empty space for mall operators, I doubt that it would translate into any meaningful impact on mall retailer sales.

Shep Hyken
BrainTrust

If malls are turning into entertainment centers (restaurants, theaters, ice rinks, etc.), why not casinos? The question is whether a casino customer is willing to do a little shopping when they win. Seriously, will this increase mall foot traffic in the right way?

Art Suriano
Guest
I see this as a good idea, and it’s already working. The Wind Creek Casino (formerly The Sands) in Bethlehem, PA, is connected to an outlet mall, and both are doing very well. I wouldn’t want to see casinos at every mall, but the attractions at malls are vastly changing with new concepts almost every day. The new American Dream Mall in New Jersey features three different theme parks, and that too is bringing in customers. The secret is keeping the mall exciting and, at the same time, still presenting reasons for the customer to shop. What has been lost due to online shopping is the art of “browsing.” Today people do more of their browsing online and then decide to purchase the item online or go to the store to see the item before buying it. But when you can create an environment that will get customers in to walk around like a mall and combine that with an exciting shopping atmosphere, browsing kicks in, which leads to sales due to the impulse buying.… Read more »
Richard Layman
Guest
8 months 21 days ago

I think you raise an important distinction, which I hadn’t thought of. A certain number of malls have the opportunity to add true casino operations, comparable to what you describe in Bethlehem. I never went to Maryland Live when I lived in DC, but it is proximate to Arundel Mills, which is another Cornish property. I can see a company like Cornish making this work. Obviously they’ve been spending a lot of time and energy and money developing their “Live” brand and operation; they’ve added casino to it in Maryland; and now they can do more of that elsewhere.

But it’s on a selective basis. Adding casinos to an average mall isn’t going to help retailers, although it might help absorb otherwise vacant space.

Harley Feldman
BrainTrust

Shopping development operators should be free to develop their malls to create a good business environment for their tenants. If adding casinos is legal as it is in Pennsylvania, why not? If it works, that’s good news for the tenants. If it doesn’t, it may be the last try for mall operators. Negative perceptions about casinos have lessened over the years and will be acceptable in mall settings.

Dave Bruno
BrainTrust

I don’t object to adding casinos to the mix as we reinvent malls as destinations, but I am not at all convinced they will consistently draw traffic to places outside the four walls of the casino. Just as we are over-stored, many places are beginning to be over-casinoed. I think there are plenty of other more interesting options for some of these big spaces in malls, but in certain markets maybe casinos will work.

Kathleen Fischer
BrainTrust

Interesting idea, especially when we look at the trend of adding theater and entertainment to the shopping experience. But, with that being said, casinos and gambling bring a whole different vibe to the shopping environment that may not be a benefit to retailers.

Richard Hernandez
BrainTrust

You know, yesterday we discussed serving alcohol in shopping centers to help bring in more customers, so why not casinos as an option?

Ian Percy
BrainTrust

Exactly what I was going to say Richard. But I hope this doesn’t become a thing. Retail is getting more and more desperate and more and more sad as well.

Lee Peterson
BrainTrust

We have a mall here in Columbus, OH that turned into a casino, which I pass often and I just have to say, I’m not sure you’d want frequent casino visitors rambling through your store every day. Looks to me like two totally different elements: shopper vs. gambler (other than in Vegas where everyone is both), at least on a local level. Bad idea IMO.

Gene Detroyer
BrainTrust

For the mall owner, it is probably an upgrade in ROI. But I don’t think it adds much for the retailers in the malls. The success of malls was based on the fact that they offered a leisurely shopping experience. One would go, walk by multiple stores, enter some, and eventually buy.

While I think some shoppers might swing by the casinos to throw a few coins in the slots, I doubt that those whose destination is the casino are going to take that shopping stroll.

As I said yesterday, malls must do something if they don’t want to close. Though closing may be the best option for many.

Mel Kleiman
BrainTrust

This is going to be a win/lose proposition. On the win side we have new jobs, new,traffic for the malls, more retail operations that will survive, and a new tax base. On the losing side we have the potential for a higher crime rate, addiction problems, and the fact that the people who lose the most at gambling are the ones who can afford it least (a hidden tax).

Phil Rubin
BrainTrust
8 months 21 days ago

Such is the desperate state of retail landlords and perhaps their tenants too, to the extent that they support this strategy. Casinos are in business to take their customers’ money. Period. That is their business model and the odds are dead set against their customers, by definition.

How is this good for a retail tenant that needs that money too? Las Vegas was built around and for gambling and part of its strategy in attracting visitors is offering retail in the same way it offers entertainment.

The original Macy’s, 35+ years ago, was among the first to recognize shopping as entertainment. While gambling is much the same, that’s their only commonality.

Good luck landlords and retail tenants who are sharing real estate with “anchor” casinos.

Liz Crawford
BrainTrust

“Regular” gamblers aren’t the same as “regular” shoppers. It’s pretty sad and feels a little exploitative too. I just hope they tax the hell out of it.

David Naumann
BrainTrust
David Naumann
Retail Industry Analyst
8 months 21 days ago

This is a double-edged sword! It is definitely a good way for mall development companies to generate revenue from vacant space and existing retailers in the mall may generate extra traffic. The downside is the potentially undesirable aspects that casinos attract: gambling addicts, inebriated customers, and people that have lost all their money and may resort to theft at stores. Malls don’t have a lot of choices and I suspect many will weigh the increased revenues to be more important than the potential pitfalls.

Richard Layman
Guest
8 months 21 days ago

The problem with the question “can casinos save the mall?” is that it is two questions: One about the mall as a real estate asset. The other about the mall as a place that brings a wide variety of retailers together, who collectively share and attract customers who buy goods and services.

A casino will likely improve a mall as a real estate asset. But with the exception of Las Vegas, which doesn’t attract what we might call “itinerant punters” as opposed to multi-day visitors, there aren’t many examples of retail and casinos succeeding together.

In short, people who go to play slots are spending money that they otherwise could spend on retail goods and services.

Georganne Bender
BrainTrust

I’m with you Bob Phibbs 100 percent on this one. Rich and I have worked in Las Vegas six to 12 times a year for as long as I can remember. Vegas has changed, gambling is no longer the big money maker – or draw – that it used to be.

As I write this I am sitting in a nearly deserted local mall, waiting to meet with a client. Both Sears and Macy’s will close here in February, Carson’s bailed last year. There’s a lot of empty space but the clientele is still families. Moms pushing strollers, kids in play areas, people meeting for coffee. As tempting as it might be to fill empty spaces, I just don’t see casinos in malls as a good thing.

Ralph Jacobson
BrainTrust

There definitely needs to be some innovation injected into many malls to keep them viable. Some malls have great, consistent traffic. Those malls most often have high-end food courts and restaurants. That is what is attracting the people. Casinos thrive on their food and retail offerings, so I’m not certain that casinos, alone, will be the big draw.

Craig Sundstrom
Guest

Sorry Tom, but I’m afraid the analogy of “York Galleria” to “Shops @ Caesars” doesn’t sway me.
To put it bluntly, I see nothing to recommend in this idea, other than the obvious that an empty building and parking lot has been paired with someone looking for those things … the synergy with the rest of the mall will be virtually non-existent.

Yesterday it was malls as bars, today as casinos. I shudder to see what the idea tomorrow will be … funeral homes?

Kenneth Leung
BrainTrust

Is it a silver bullet to all existing mall development? No. If you have an underperforming mall, putting a casino in may draw more traffic, but obviously the location and other factors are involved for the success to the rest of the merchants. I think a well-run casino can co-exist in retail; you see many casinos with retail close by already.

wpDiscuz
Braintrust
"If adding casinos is legal as it is in Pennsylvania, why not? If it works, that’s good news for the tenants. If it doesn’t, it may be the last try for mall operators. "
"Are casinos the answer? Probably not. It might be time to acknowledge that we are over-stored, and re-purpose some of this property to residential."
"Interesting idea, especially when we look at the trend of adding theater and entertainment to the shopping experience. "

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