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Chris Sieroty

AGA optimistic with increasing casino revenues

6 May 2011

LAS VEGAS, Nevada -- After two years of losses because of the recession, the U.S. casino industry showed a slight uptick in revenues in 2010, the American Gaming Association reported Wednesday.

The AGA annual survey found commercial casinos in 22 states collected $34.6 billion in gross gaming revenues last year, an increase from $30.74 billion in 2009 and $32.54 billion in 2008.

"There is no question, the last several years have been challenging for the commercial casino industry," said Frank J. Fahrenkopf Jr., president and chief executive of the Washington, D.C.-based AGA. "This year's report confirms that there's reason to be optimistic about the future of gaming."

Fahrenkopf credited the industry for making tough choices, including thousands of layoffs and implementation of new business strategies to persevere through the downturn.

But he cautioned that the "big unknown" going forward is the effect of continued high unemployment and the recent spike in gasoline prices.

"If the economy recovers and gas prices stabilize, it should be a good summer," Fahrenkopf said. "But those are unknown (outcomes)."

He said high gasoline and aviation fuel prices, which translate into higher airfares, could "have a negative impact" on Las Vegas as a world-class destination and dampen travel by car from Southern California.

Gaming revenue in Nevada increased slightly in 2010, to $10.4 billion from $10.39 billion in 2009. Las Vegas remained the top U.S. gambling market last year, bringing in $5.777 billion, compared to $5.550 billion in 2009.

The Boulder Strip area dropped one spot in the Top 20 rankings this year to No. 11 with $757.03 million, down from $774.33 million.

The Reno/Sparks area fell one spot to 13 with $684.05 million, compared with $715.23 million in 2009.

Downtown Las Vegas dropped from No. 18 to No. 20, bringing in $493.39 million, a $30.43 million decline from 2009.

Nevada had 175,024 commercial casino employees in 2010, a 1.3 percent decline from 2009, the report said.

Tax revenues generated by Nevada casinos were up 0.4 percent to $835.42 million in 2010, from $831.75 million in 2009.

The report covers only commercial casinos and excludes casinos operated by American Indian tribes.

Of the 22 states with commercial casinos, only seven reported declines in gaming revenues. One, Maryland opened its first casino last year, according to the report.

Kansas, which opened its first casino in 2009, experienced the largest year-over-year growth in gaming revenues, reporting an increase of 1,799 percent, from $1.99 million to $37.79 million.

Pennsylvania reported a 26.4 percent jump in revenues, to $2.49 billion. The opening of the Sugar House Casino in Philadelphia also helped Pennsylvania, which with Delaware introduced table games last year.

New Jersey, with 11 casinos, showed the largest decrease in revenue among U.S. gaming markets, down 9.4 percent, from $3.94 billion to $3.57 billion. Gaming employment in the Garden State also declined 6.1 percent, or 2,232 jobs, to 34,145 last year.

The declining fortunes of Atlantic City's casinos last year prompted Republican Gov. Chris Christie to initiate a state takeover of the aging resort town with plans to spur new growth.

Fahrenkopf said he supports Christie's move, noting that Atlantic City also faces challenges from other areas in the Northeast where gaming has expanded.

Mississippi and Louisiana reported revenue declines in 2010, as the British Petroleum oil spill in the Gulf of Mexico affected tourism in both states. Mississippi saw revenues decline 3.2 percent while the Louisiana gaming market was off 3.7 percent.

Florida reported the largest increase of any state surveyed, with revenues up 51.9 percent, to $329.12 million last year.

This year's AGA report for the first time included the commercial and racetrack casino industries.

"Combining the figures provides a clear picture of the true impact of the national industry," Fahrenkopf said.

The racetrack casino sector generated $6.74 billion last year, up from $6.38 billion in 2009.

As a result of the improved industry numbers, gaming tax revenues increased 3 percent, to $7.59 billion. The number of commercial gaming jobs fell 1.3 percent to 340,564 while wages jumped 1.5 percent, to $13.3 billion.

Also new in the AGA report is a detailed profile of casino patrons. The survey of 550 casino visitors revealed that 51 percent list slot machines as their favorite game and 88 percent set a gambling budget before they play.

The gaming floor is not the only draw in Las Vegas or in other gaming markets: 73 percent also spent money on fine dining, and 56 percent saw a show. Sixteen percent of those surveyed said they never gamble when they visit a casino.

That shows casinos have gone beyond gaming to become "entertainment hubs in the community," Fahrenkopf said.