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Best of Howard Stutz

Gaming Guru

Howard Stutz

Gaming revenues from casino industry plummet again

7 May 2010

LAS VEGAS, Nevada -- Americans have grown seemingly comfortable with the idea of having a casino in the neighborhood.

But in 2009, they just weren't willing to spend as much on gambling as in the past.

For the second straight year, gaming revenues produced by the nation's commercial casino industry tumbled as the recession caused gamblers to watch their wallets more closely.

According to figures released Thursday by the Washington, D.C.-based American Gaming Association in its annual "State of the States" report, commercial casinos in 13 states collected $30.74 billion from gamblers, a 5.5 percent decrease compared to $32.54 billion collected in 2008.

A year ago, the commercial casino industry saw revenues decline by 4.7 percent. The two-year drop has sent the annual revenue figure back to levels last seen in 2005.

"This past year was tough for all Americans, and it was tough for our business as well," American Gaming Association President Frank Fahrenkopf Jr. said in unveiling the comprehensive report. "There is no way to sugarcoat it."

Of the 13 states with commercial casinos, eight reported declines in gaming revenues compared with 2008. One, Kansas, opened its first casino in 2009. The American Gaming Association found the 12 states with racetrack casinos saw revenues increase 5 percent over 2008.

States with gaming markets that are considered destination resorts, such as Las Vegas, suffered the deepest revenue declines in 2009.

New Jersey's casinos in Atlantic City took the largest tumble, falling 13.3 percent from $4.54 billion in 2008 to $3.94 billion last year. Nevada casinos won $10.39 billion from gamblers in 2009, down 10.4 percent compared to 2008. Mississippi casinos, which includes the Gulf Coast, saw revenues decline 9.4 percent while the Louisiana market was off 5 percent

"Nearly every industry that depends on consumer spending to succeed has been negatively impacted by the recession," Fahrenkopf said.

Gaming revenues weren't the only declining numbers. Gaming tax revenues nationwide fell to $5.59 billion, a decline of 1.6 percent. The number of commercial industry jobs fell 8.1 percent to 328,377 while the wages declined 7.1 percent to $13.1 billion.

"I don't care what business you're in. People are not spending as much and they are going to have tighter budgets until unemployment figures change," Fahrenkopf said.

If the report has a bright spot, however, it was Americans' attitude toward legalized gaming.

In a public opinion poll conducted by VP Communications and national pollster Peter Hart, 81 percent of Americans surveyed thought casino gambling was an activity acceptable for themselves or others.

However the "acceptable for anyone" figure has fallen from a high of 57 percent in 2003 to 45 percent this year. The figure, "acceptable for others but not you personally" has risen from a low 27 percent in 2004 and 2005 to 36 percent this year.

Hart blamed the recession for the figures' adjustments, saying people are more free about their money when times are good financially.

"You have to look at the overall economic climate," Hart said. "What will be interesting for me to see is if those figures change if the economy turns around in 2011 and 2012."

The survey also looked at how individual residents in counties that house either commercial casinos or racetrack casinos view the activity. Hart said the pollsters talked to residents in 20 states and 106 different counties to gage different attitudes.

About 64 percent said the casino had a positive impact on the community while 69 percent said the casino had a positive impact on tourism. More than two-thirds of those questioned said they would vote yes if a referendum were held on keeping casino gaming.

"What this shows us is that people have grown comfortable with the idea of casino gaming in their community and the industry has become acceptable," Hart said.

Several states, including Ohio, have recently passed casino gaming referendums. Others, such as Massachusetts, are debating the idea.

Fahrenkopf said that during tough economic times, gaming expansion is often looked at as a way to shore state budgets and provide jobs.

Market expansion is one reason a few states showed gaming revenue increases.

The largest single-year increase, 21.6 percent, was recorded by Pennsylvania, which added two casinos in 2009 including Las Vegas Sands Corp.'s Sands Bethlehem.

Indiana's 13 casinos increased gaming revenues by 4.9 percent during 2009. The collections of almost $2.8 billion pushed the state ahead of Mississippi and Louisiana to become the nation's third-largest gaming revenue-producing state.