Hard Rock Opens First Rocksino in Ohio

It wasn’t exactly Pete Townshend’s signature guitar demolition, and it was definitely not your average ribbon cutting. The smashing of guitars on Dec. 18 signaled the opening of the new Hard Rock Rocksino Northfield Park in northeast Ohio.

It turns out guitar smashing is Hard Rock International’s take on the standard ribbon cutting, and the event was apropos because the first-ever Rocksino is also not your standard racino and is unlike any of the three other currently open racinos in Ohio. By year’s end, three additional racinos are expected to open, in Dayton, Youngstown and Cincinnati.

The $268 million, 200,000-square-foot Rocksino, a partnership between track owner Brock Milstein and Hard Rock International, was built from the ground up—a marked departure from many racino projects that sometimes are not much more than “slots in a box.”

“Our goal was to create was something that is not just a room with machines but an entertainment destination, and I think that we are constantly hearing when people come for the first time, they are just really, really blown away with the fit and finish and the excitement that’s in the facility,” said Jim Allen, chairman of Hard Rock International and chief executive officer of Seminole Gaming.

Allen, who is in charge of close to 200 Hard Rock properties in 58 countries, spoke with CEM a couple weeks after the Rocksino’s opening. “The first thing that we did that nobody else has done in the state is to create a true destination live entertainment venue, which we believe is something that creates excitement and gives a nongaming resident another reason to come by and utilize the other amenities in the facility. And all the shows that we’ve done so far have sold out and frankly sold out at a very rapid pace so we are real excited and frankly pleasantly surprised at how the local consumer there is interested in coming and enjoying our new venue.”

One of the Rocksino’s biggest attractions is its $1 million, 110-piece memorabilia display from the likes of Elvis Presley, John Lennon, Bruce Springsteen, the Jackson 5 and Eddie Van Halen, whose red-hot motorcycle graces the heart of the Center Bar. Other attractions include dining options, such as Kosar’s Wood-Fired Grill affiliated with Cleveland Browns quarterback and Youngstown native Bernie Kosar and the Hard Rock Café; the Hard Rock Live concert venue; and The Club, a soon-to-open smaller comedy entertainment facility. In addition, the property has features designed to make it easier for visitors to brave Ohio’s sometimes-bitter winter weather, with a heated sidewalk at the entrance driveway and heated outdoor smoking patios replete with VLTs.

Concerts have sold out quickly, and Allen said he believes that interest will remain high in the musical acts and the performers in the comedy venue.“Once again, I think we’re going to surprise some people with some of the very exciting names that will create more reasons to come to Hard Rock Rocksino at Northfield Park,” he said.

When asked whether the state’s requirement that racinos have no table games is an issue, Allen said it’s not. “When you look at the gaming revenues across the United States, about 75 percent comes from machine games sales, either video gaming machines or slot machines so certainly table games are a nice amenity to have, but we certainly built our business model around the understanding that the laws of Ohio for this particular location are limited to the VLTs,” he said.

Allen also noted that Ohio may one day later change its view on table games, as many other states have. “If the state of Ohio elects to do that, we certainly would be happy to put them in. At this date we’re very excited about this facility and the way it turned out.”

While the Rocksino concept of a racino as entertainment destination is a new direction for Hard Rock, Allen noted that concepts must be properly suited for the unique characteristics of their markets, and there’s no one-size-fits-all answer.

“Really, the key to success is designing a product that fits the experience that the local potential guest may be looking for,” he said. “I think the one thing that our brand immediately separates ourselves from the others that are in the space that operate casinos is truly [that] Hard Rock is one of the most recognized brands in the world, and it represents entertainment.”

“One thing that I’ve been saying for probably the last 18 years is that music is in our DNA. It truly makes up part of our being as individuals, and there is no other brand in the world that represents music more positively than Hard Rock,” he added.

Hard Rock also has evolved since it was established in 1971 with one venue in London.  “What’s happened now is the brand doesn’t just represent rock ’n’ roll music, but it represents jazz, blues, country, Asian…demographics from all over the world,” Allen said. “That diversity has allowed us to have this amazing global footprint, and that resonates with people as they become more exposed or frankly become reintroduced to the brand because certainly the brand is much different today than what it was in the ’80s.”

In addition to all of its amenities, Hard Rock also sets itself apart by its long-established philanthropic efforts, which Allen called “truly unrivaled on a worldwide basis.” Hard Rock often works with the group or artist’s foundations, as well as other charitable organizations.

“The brand is built on the concept, ‘Love all. Serve all,’ and clearly we’re able to create those relationships. It certainly opens doors to create events and to create excitement that in turn is good for the image and the perception of the brand; at the same time we’re also giving back to the community,” he said. “When it’s all said and done, it’s truly the most important attribute of the brand itself is that it is always going to be involved in philanthropic efforts.” In the case of northeast Ohio, the Rocksino pledged a portion of proceeds from the grand opening to three local charities, the Akron-Canton Regional Food Bank, Cleveland Food Bank and The Kosar Foundation, which provide food and other essential items to hunger relief programs and local pantries throughout the region.

Competitive Field
One thing’s for sure—the Rocksino won’t lack for competition, as three more racinos will be operating in Ohio by the end of this year, joining the four already operating.

Early results look promising for Hard Rock’s Rocksino. Recently released December revenue figures showed that the Rocksino’s $8.15 million in adjusted gross video lottery terminal revenue may have come at the expense of Rock Ohio Caesar’s Thistle Down Racino and Horseshoe Casino Cleveland. Both saw their gaming machine revenue numbers drop in December. The Ohio Lottery Commission’s financial reports released Jan. 14 showed visitors spent more than $75 million gambling and the Rocksino paid out $67 million in its first two weeks of operation. It earned $260 per day per machine, according to the commission’s report. It also gave out just a little under $20,000 in free play.

Ohio University Assistant Professor Alan Silver was quoted in a January Akron Beacon Journal as saying the Rocksino’s numbers were, overall, “really good.” “The real magic trick now is to keep the numbers up and keep the people returning,” added said Silver, an assistant professor of restaurant, hotel and tourism at Ohio University.

Miami Valley Gaming in Lebanon, the state’s other new racino, saw visitors gamble $69.9 million from its Dec. 12 opening to Dec. 31, and it posted a net win of $5.7 million, with a handle of $181 per day per machine.

In 2011, Ohio Gov. John Kasich authorized the operation of video gaming terminals at seven racetracks. Currently, there are 7,074 machines are operating at four tracks, and by the end of this year, three additional tracks will add another 4,100 VLTs to the mix.

Under the regulations, racetrack owners are required to spend at least $150 million on capital improvements and pay a $50 million fee charged by the lottery. The tracks are not allowed to operate table games or poker. In addition, the regulations require any tracks seeking to move for competitive reasons to pay the state relocation fees.

Penn National Gaming, which owns the Toledo and Columbus casinos, moved two tracks. To keep from having its Raceway Park compete with its Hollywood Casino Toledo, Penn National received state approval to relocate it to Dayton. That property, Hollywood Gaming at Dayton Raceway, is slated to open this summer with as many as 1,500 VLTs.

Penn National also received approval to move Beulah Park in Grove City, near Columbus, to Austintown Township, near Youngstown. When it opens, Hollywood Gaming at Mahoning Valley Race Course will operate some 1,000 VLTs.

Pinnacle Entertainment will open Belterra Gaming and Entertainment Center in May with 1,600 VLTs.

For the year 2013, Ohio’s four casinos and four racinos generated combined revenues of $1.07 billion. In 2009, an Ohio Department of Taxation study estimated total revenues of $1.4 billion once all of the state’s 11 gaming facilities are up and running, according to the website ohiogaminglaw.com.

Beyond Ohio
Looking toward future expansion, Hard Rock International is continuing to examine opportunities worldwide, Allen said.

“The brand has an amazing ability to play on the international stage,” he said, noting Hard Rock is building two hotels in China, and it recently opened a Palm Springs property in California. “As we look globally, we are certainly the category leader on a worldwide basis already being in 58 countries around the world, [and] as gaming expands or as entertainment or destination resorts expand, we are certainly somebody who’s playing in that space, and we will continue to look and continue to have success.”

When queried about Hard Rock’s stance on online gaming, Allen noted that the company is paying attention to the online space, in which it has had some involvement in legal jurisdictions over the past four or five years.

When asked whether he was concerned about the effects of online gaming’s growth on the health of brick-and-mortar casinos, Allen responded that it’s “more of a 10-year question than it is a short-term question, but I certainly understand those who feel that the business could be affected because if you look at somebody who is 10 years old, 11 years old, 12 years old, so much of their communication, so much of their entertainment, is coming through the Internet or through some type of device, whether it be the iPhone or whether it be playing video games on TV. So I do think the industry has to be prepared for that, but I don’t see that being a major effect on revenues in the short term.”