Tribes rake $25B in ‘06

Jul 3, 2007 5:12 AM

Tribal gaming revenues increased 11 percent to about $25.5 billion in 2006, a sign that Indian casinos from California to Florida are still attracting gamblers, according to a report released last week.

The revenue growth rate represents a slowdown from the average rate of about 15 percent over the past 10 years, but observers say 11 percent still isn’t bad and Indian gaming still has plenty of room to blossom.

"Yes, growth is down, but don’t be fooled," said Alan Meister, an economist with Los Angeles-based Analysis Group, and author of the report. "Indian gaming has a lot of growth potential. A lot of that growth is already happening."

Indian gaming generated $23 billion in revenue in 2005. But last year’s revenue growth rate of about 11 percent is the lowest since 1988, when the Indian Gaming Regulatory Act was passed, the report showed. From 1996 to 2006, Indian gaming experienced an average growth rate of about 15 percent per year, and it had a 14.6 percent growth rate in 2005.

One reason for the slowdown is that the total number of Indian gaming facilities (423) increased by just one in 2006, compared with an increase of 10 in 2005. There’s also more competition from non-Indian gambling and racetracks with slot machines.

Twenty of the 28 Indian gaming states had lower growth rates in 2006 compared with the year before, with California the most notable of those.

While it led all states by a wide margin with more than $7.7 billion in revenues last year, California’s 10 percent growth rate was half of what it was in 2005 — though it still accounts for more than 30 percent of the total Indian gaming revenue, the report showed.

That could change as California last week approved an increase in 30 percent of the total number of slot machines in the state (see related story on Page 3).

Other states with lower growth rates in 2006 compared with the year before were second-ranked Connecticut, No. 4 Oklahoma and No. 5 Florida.

Nonetheless, every Indian gaming state reported some growth, except for Louisiana, which saw revenues drop from about $402 million to $395 million.

Regardless of the slowdown, overall revenue growth is expected to continue because of strong demand, new or expanded gaming facilities and the addition of amenities such as restaurants, bars and concert venues at gaming facilities, the report showed.

Another factor that will fuel the growth rate is that a handful of new facilities is being developed by tribes in Michigan, New York, Washington and Wyoming. Many more tribes have planned or proposed facilities that are awaiting federal recognition or an agreement with their states to allow new or expanded gambling.

The relatively strong performance of Indian gaming corresponds with the popularity of gambling in general over the past 60 years — though future success is not guaranteed, said David Schwartz, a gambling expert with the Center for Gaming Research at the University of Nevada at Las Vegas.

"Gambling is a consumer behavior, which is never going to be constant," Schwartz said. "People are always changing where they gamble, how they gamble."

In 2006, Indian gaming generated 42 percent of all U.S. casino gaming revenue, the report showed. Nationally, commercial non-Indian casino gaming grew about 7 percent, from $29.6 billion in 2005 to $31.7 billion in 2006, the report showed.

The report also showed that gambling enterprises on tribal lands employed about 327,000 people, led to about $80.7 billion in output to the U.S. economy and generated $11.7 billion in taxes.