U.S. casinos on a roll

May 15, 2007 5:17 AM

Gambling revenues at U.S. commercial casinos rose 6.8 percent to a record $32.4 billion in 2006, according to the American Gaming Association’s annual State of the States survey released last week.

The survey assembled data from about 460 commercial casinos in 11 states from those states’ regulatory agencies.

It also found those casinos employed 366,197 people, up 3.2 percent from a year earlier, and contributed $5.2 billion in gambling taxes to state and local governments, up 5.5 percent from a year earlier.

The survey did not include the gambling revenues from 372 American Indian casinos in 28 states, 713 card rooms in five states or 11,567 video lottery terminal locations in six states.

The survey found strong growth in the 36 racetrack casinos found in 11 states. The "racinos" took in 16 percent more in gambling revenue than the previous year, or $3.6 billion.

American Gaming Association president Frank Fahrenkopf attributed the steep growth in racino revenues to public officials’ relative willingness to approve expansion.

"You don’t run into the old NIMBY argument — not in my backyard," Fahrenkopf said in a conference call. "Here, there’s already an existing facility and the state has already made a commitment to this kind of activity within its jurisdiction and all they’re doing is changing the mix."

Fahrenkopf added that the addition of slots to racetracks is spawning a "revival" of the horse racing industry in some states.

In addition, gambling no longer has the stigma attached to it as it once had.

Peter Hart, whose polling firm conducted the survey, said people today relate to gambling differently than they did 20 years ago.

"Prostitution, crime, and the mob were once mentioned as concerns surrounding casinos," Hart said. "Today, those are no longer mentioned as a concern."

The biggest gambling states by commercial casino revenue were Nevada at $12.6 billion, New Jersey at $5.2 billion, Indiana at $2.6 billion, Mississippi at $2.6 billion, Louisiana at $2.6 billion, and Illinois at $1.9 billion.

Poker continued its four-year rise in popularity in Nevada and New Jersey, though the survey showed a slowdown in the rate of revenue growth.

Casinos in those states took in $238.1 million in poker revenue in 2006, a 15 percent increase over 2005, when revenue jumped 37 percent.

The number of poker players heading to casinos doesn’t appear to have been affected by a federal Internet gambling ban passed last fall, though it may be too early to tell, Fahrenkopf said.

His association initially backed the bill but Fahrenkopf said it has switched positions and now supports legislation calling for a study of the issue.

Changes that could affect casino revenue in the future include smoking bans. Fahrenkopf said the industry appears to have resigned itself to the wave of anti-smoking measures being passed in big gambling states — including Nevada and New Jersey. And, although casinos in some states have been granted special status, Fahrenkopf said he didn’t expect those exemptions to last long.

"A year or two down the road there’s not any public facility you’re going to be able to smoke a cigarette in and that includes us," he said.

Fahrenkopf added that any restrictions applied to commercial casinos should also be imposed on Tribal casinos as well.

"We think that ought to go across the board," he said.

While casino-style gambling continues to expand across the country, Fahrenkopf said he didn’t see the market reaching a "saturation point."

"When do you get too many McDonald’s?" he asked.

New to the survey this year is a section on sports betting in Nevada. Last year, the state’s sports books handled more than $2.6 billion in sports bets, a 7.6 percent increase over 2005 figures.

However, sports books retained only $192 million of the handle, an 8 percent hold percentage.

While sports revenue represents a relatively small percentage of a casino’s bottom line, sports bettors contribute in other sections of the casino, as well as spend money on non-gaming activities, such as food, shows, spas and hotel rooms, Fahrenkopf said.