Casinos revenues slide

Mar 9, 2010 7:05 AM

Expert: don’t put it all on the recession

Commercial casinos in the United States saw revenues slide last year, as the recession and other factors have deterred customers, even as more states look for ways to expand gambling.

Gaming revenues in the 12 U.S. states that authorize casinos fell 5.7 percent in 2009 to $30.7 billion, according to a preliminary estimate by the American Gaming Association (AGA).

This followed a 4.6 percent drop in 2008, when commercial casinos raked in $32.54 billion.

The figures don’t include tribal casinos, which aren’t required to publicly report their earnings.

In addition to the effects of the recession, gaming industry analysts say other factors such as new entertainment offerings like Internet gambling, have drawn customers away from casinos.

A study by market research firm Mintel showed that 30 percent of adults visited a casino in the past year, down from 35 percent in 2001 – a 14 percent decline.

"This shift has been gradual, which suggests that this is not a result of the recession," said Billy Hulkower, a Mintel senior analyst.

Hulkower said the trend suggests little or no growth in casino attendance over the past decade, a period that included two recessions and an economic upturn.

"Casinos may be losing audience to the increasingly compelling entertainment offerings in the home; such as HDTV (high definition TV), high-end video game systems and the Internet, including Internet gambling," he said.

Of those who did visit a casino in the last 12 months, 27 percent went to Indian reservation casinos, followed by 24 percent in Las Vegas and 12 percent in Atlantic City, Mintel found.

However, AGA spokeswoman Holly Thomsen said the industry’s own surveys show steady or slightly rising casino attendance, even if gamblers are betting less.

"Our industry has been impacted by the recession like most other consumer-discretionary reliant industries," she said. "We know that people are watching their entertainment spending more in the tight economy."

Thomsen said the worst hit by the sour economy were "destination" jurisdictions such as Las Vegas and Atlantic City, with some gamblers choosing casinos closer to home.

In Nevada, the major casinos lost nearly $6.8 billion in gaming activity in the fiscal year to June 30, the latest for which data is available. Revenues for the state’s casinos doing more than one million dollars in business fell 12.6 percent in the period, according to the state’s Gaming Control Board.

Atlantic City gambling revenue for the city’s 11 casinos in 2009 was at its lowest in more than a decade.

Not all states reported less gaming revenue in 2009. Pennsylvania, which continues to expand gaming in the state, witnessed increases in gross gaming revenue.

Twelve states currently authorize casino gambling, but Mintel notes that at least 25 states have proposed or are considering expanding gambling operations including lotteries and sports betting to help balance their budgets.

"If a whole lot of states are suddenly starting to allow gambling and were counting on this revenue you’re going to have a problem," Hulkower said.

A survey by the Rockefeller Institute of Government, meanwhile, said state and local government tax revenues from authorized gambling operations excluding tribal casinos declined by 2.6 percent in the fiscal year 2009, marking the first time those revenues have declined in over three decades.

"The expansion of gambling does not bring more customers into the market," said Lucy Dadayan, a senior analyst at the Rockefeller Institute. "There are only so many customers, so with every new casino there are only marginal increases."