AGA Survey: Gaming Industry Continues to Expand

15 May 2002

By David Waddell

The American Gaming Association (AGA) released its fourth annual State of the States Survey last week, addressing the industry's contributions to the economy and illustrating the potential benefits that commercial casino gaming holds for many cities and states. The survey provides a national, as well as a state by state report on the economic impact of the gaming industry in 2001. Despite an economic down turn in the past year, the amount that casino visitors spent on casino gaming nationally in 2001 grew by 5 percent compared to 2002. The performance of the gaming industry should be encouraging as a means to attract tourism and entertainment dollars, in addition to the appeal it presents for new business.

In Detroit, last year the overall revenues were just over $1 billion. This is at the low end of the revenue projected at the time the developers were selected, which various firms projected anywhere from $1 billion to $3 billion. Further, Michigan's commercial gaming industry employs 7,599 people at its three casinos and paid their employees just over $309 million in wages last year. Bringing commercial casino gaming to Detroit and to Michigan has resulted in lower unemployment, welcomed city and state funds and has served as an economic stimulus. Out of the revenues received, hundreds of million of tax dollars have been paid and numerous infrastructure improvements have been made. Although the revenues for the casinos are significant, it is important to keep in mind that most of the money reflected in these figures flows immediately back into the community as wages, taxes, supplies and other expenses which the casinos have to pay.

Being involved in a burgeoning industry such as commercial casino gaming has awarded Michigan a very unique opportunity. Michigan and Detroit should recognize that with this industry rapidly drawing interest as a popular entertainment option, the potential for future growth is almost ensured. The competition for the entertainment dollar is growing often and casino gaming seems to be carving its own niche as an important factor in this competition. A poll conducted by Harrah's Entertainment, Inc./NFO WorldGroup, Inc. was included in the release of the AGA's survey. This poll noted that casino entertainment saw nearly as many patrons as amusement and theme parks did over the previous year. Movie theaters still claimed considerably more customers than either casinos or amusement parks. Although customers visited the golf course more than casinos, casinos were attended considerably more than both major and minor league baseball games. Bringing commercial casino gaming to Michigan has been an excellent experience for Detroit and for Michigan. The industry is a nice draw to have here, not simply for its ability to attract the tourist and entertainment dollar, but for attracting more business and development.

Nationally, the commercial casino gaming industry also continued to contribute to the U.S. economy in a positive manner. Beyond a 5 percent growth in market revenues, the industry employed 364,000 people and paid $11.5 billion in wages to these employees. Moreover, commercial casinos contributed $3.6 billion in tax money to state and local governments. The AGA's survey noted that there are currently 433 commercial casinos operating in 11 states nationwide. Overall U.S. commercial casino revenue figures show that even in difficult economic times, the industry continued to grow steadily. Revenues rose from $24.5 billion in 2000 to $25.7 billion in 2001.

According to the AGA's State of the States survey, the state of the commercial casino gambling industry in the United States is strong. States that did not see considerable industry growth still saw revenues remain stable. At this point, the state of the commercial casino gaming industry in Michigan is rather strong as well. Michigan's industry has shown consistent growth since it legalized commercial casino gaming, and its Native American casinos are shown to be thriving also, creating an excellent business portfolio worthy of attracting visitors, tourism dollars and new business. Polling shows the majority of Americans view casino gaming in a positive light, citing the ability of casino gaming to stimulate the economy, create jobs, bolster tourism and generate revenue for city and state improvements. The vast majority of patrons are shown to visit casinos with friends or family members, suggesting that casino gaming is beginning to assume its place as another acceptable entertainment option, in line with restaurants, clubs, bars and sporting events. With the commercial casino gaming industry as a whole in its relatively early stages, the survey released by the AGA and other gaming industry studies offer a promising glimpse at both the present state of the industry, as well as the future.