Nationwide revenue rose marginally and set a record in 2013 as new states legalized or expanded gaming, but existing operators have been hurt by the increased competition
Arecently released report on the US gaming industry from accounting and business consulting firm RubinBrown LLP shows commercial and tribal casinos generated a record US$66.3 billion in revenues in 2013, up 1.6% from the $65.24 billion the industry produced in 2012. The RubinBrown report, “Commercial and Tribal Gaming Stats 2014,” pools data from over 1,000 commercial and tribal casinos in 39 states with legalized gambling. The data utilized within the report was obtained from the National Indian Gaming Commission (NIGC) and the various state gaming regulatory authorities. The report was compiled and written by RubinBrown’s National Gaming Services Group Leaders—Daniel Holmes and Brandon Loeschner.
According to the report’s authors, the gaming industry has welcomed a steady increase in revenue over the past four years following the recession. Revenue growth has largely been attributed to market expansion, as states continue to legalize gaming and more tribes enter the gaming industry.
But while the market expansion has increased revenue for the overall gaming industry, existing operators have seen declining revenues from the increased competition, the report said.
Commercial gaming expanded 1.3% in 2013, reaching $37.83 billion, in part because six states with commercial gaming operations built new or expanded existing gaming facilities this past year. Las Vegas experienced a small increase in revenue in 2013, hitting nearly $6.51 billion and remaining the top US commercial gaming market. In addition, the state of Nevada dominated the country, generating $11.14 billion in commercial gaming revenue. Atlantic City again held the second top market spot; however, revenue slightly decreased in 2013 to $2.93 billion, while the entire state of New Jersey experienced a 3.7% decline in revenue.
The state of Ohio had the largest increase in gaming revenue at 149.1%, generating $1.07 billion, as the market benefited from the opening of three new “slot-only” racinos, one new full-service casino in 2013, and having 12 full months of operation for the existing casinos. Maryland was second to Ohio, with a 98.2% increase in revenue, due in part to the state’s legalization of gaming tables. Market saturation was most notable in Pennsylvania, which, despite opening its 12th casino, experienced its first year-over-year decline of 1.5% in gaming revenue since its first casino opened in 2006.
Delaware saw the largest decline in gaming revenue, decreasing 17% from 2012 to $432 million
Mr Holmes noted three significant trends that will be the focus of the gaming industry in 2014: continued market expansion, partnerships between states, and diversification beyond the gaming floor. In particular, he believes casinos and gaming markets should take notes from the Las Vegas Strip, which, although recording prerecession gaming revenue levels, achieved a near-record visitation volume in 2013. He attributes this to the Strip’s ability to transform itself from a gambling town into an entertainment and vacation destination.
“The target market for the traditional brick-and-mortar casino floors is aging, so now is a critical time for casino operators to identify ways to make their facilities more attractive as local entertainment destinations for the younger generations,” said Mr Holmes. Tribal gaming grew by 2.8% in 2012, which set a new industry record of $27.91 billion in gaming revenues (fiscal year 2013 data is not yet available). The Oklahoma market continues to lead the nation in growth, as the Oklahoma City and Tulsa regions produced the highest growth rates, at 6.6% and 5.8%, respectively. Meanwhile, the Washington, D.C., and Sacramento, Calif., regions experienced the lowest growth rates in 2012, but continue to generate the most revenue, $6.74 billion and $6.96 billion, respectively.
Collectively, these two regions generated 49.1% of the tribal gaming industry’s revenue. However, now more than ever, tribal gaming is feeling the impact of the expansion of commercial gaming.
Since 2008, noted Mr Loeschner, tribes in Connecticut, Kansas, New York, New Mexico and Oklahoma have seen negative effects of commercial gaming operations. Additionally, expansion within the tribal gaming industry itself has increased as well, notably as 20 new casinos have opened over the past five years.
Mr Loeschner noted the tribal gaming industry will focus on four things in the coming year: federal recognition and the push for Congress to enact meaningful legislation providing tribes protection from infringement on their sovereignty; state gaming compact negotiations in New Mexico and Michigan, which will likely establish a precedent for the future; Internet gaming and the prospect of more states legalizing it; and NIGC compliance with recently issued regulations for Class II gaming.
“Overall, the US gaming industry will continue to grow through the emergence of new markets, such as Massachusetts and New York,” said Mr Holmes. “However, this growth will be offset by continued declines in existing markets which continue to experience year-over-year revenue declines.”