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Best of Chris Sieroty

Gaming Guru

Chris Sieroty
 

Gaming growth greater in Asia-Pacific region

7 December 2011

LAS VEGAS, Nevada -- Gaming is a growth industry worldwide, but it's growing faster outside of Nevada, according to analyst projections by a major accounting firm.

According to its latest 2011-2015 Global Gaming Outlook, PriceWaterhouse-Coopers LLC estimates overall U.S. gaming revenues will grow at an average of 5 percent per year, from $57.5 billion in 2010 to $73.3 billion in 2015.

But that is dramatically less than in the Asia-Pacific region. The survey expected gaming revenues to increase by an average 18.3 percent per year over the same period, from $34.3 billion last year to $79.3 billion in 2015, overtaking the U. S. as the world's largest regional gaming market.

"We talk about a global economy, but this has never been more evident than in casino gaming," said Marcel Fenez, PwC's global entertainment and media leader. The turbulent global financial markets have curtailed consumer spending in some of the major markets for casino gambling, But, we've seen huge growth in Asia as the affluent middle class seek new forms of entertainment."

The increase in U.S. revenues will be driven by a combination of factors from improved economic conditions, and expansion in the regional casino market, said Mary Lynn Palenik, director of development, research and analysis for the financial consulting firm's Las Vegas-based National Gaming Practice.

Palenik attributed the growth in Asia to "new capacity" and continued economic growth, which has increased disposable income along with the emergence of a prosperous middle-class.

In Singapore, for example, revenues have surged from zero in 2009, to $4.4 billion in 2011 and a predicted $7.2 billion by 2015. Although a growth rate of 49.7 percent for the region was achieved last year, that number, will decline to 9.7 percent in 2015 as the gaming market matures, she said.

In the United States, regional casinos will drive growth, triggered by new gaming in Massachusetts; introduction and expansion of table games in Pennsylvania, Delaware and West Virginia; and electronic table games and roulette in New York.

For example, gaming revenue in Pennsylvania increased 26.4 percent last year to $2.49 billion, up from $1.97 billion in 2009, according to the American Gaming Association.

Prospects for Nevada are a little brighter in the next few years as the industry continues to recover from three years of recession, the survey found.

The survey found that gaming revenues peaked in 2007 at $13 billion, and the state will not return to 2007 levels until late in 2015, when gaming revenues are expected to reach $12.9 billion, Palenik said.

Nevada gaming revenues were $10.4 billion in 2010, according to the state Gaming Commission.

Palenik said she expects Nevada gaming revenues to show modest growth of about 2.8 percent over 2010.

"The challenges are not over for us," she said.

Palenik said Nevada will be impacted by high rollers in Asia who stay closer to home; modest improvement in the unemployment rate; and high gasoline prices. She said California's economic doldrums and high unemployment rate are a factor for Nevada.

While Nevada is expected to continue its recovery, the future is bleak for Atlantic City, according to the report.

By the end of 2015, Atlantic City will see annual gaming revenues of $2.8 billion, a steep decline from the $3.57 billion in 2010 and far below that market's peak of $5.2 billion in 2006. The report attributes that decline to expansion of gaming in neighboring states.

"Since it attracts most of its patrons from Pennsylvania, New York, Delaware, and Maryland, the opening of racetrack casinos and regional casinos in those markets has cut into Atlantic City's business," the report found.
Gaming growth greater in Asia-Pacific region is republished from CasinoVendors.com.