Chips are down for US casinos as revenues slide

by Bob Lever (AFP) 3/7/10

WASHINGTON — US casinos have run into a string of bad luck as the recession and other factors cut into gambling revenues, even as more states move to get a piece of the action.

Gaming revenues in the 12 US states authorizing casinos fell 5.7 percent in 2009 to 30.7 billion dollars, according to a preliminary estimate by the American Gaming Association, a trade group.

This followed a 4.6 percent drop in 2008 gross gaming receipts, the figures showed.

Gaming industry analysts say the recession has hit gambling along with all other consumer and leisure activities.

But some say other factors are hurting casinos, including new entertainment offerings such as Internet gambling, which is illegal in the United States but according to some surveys is still widely practiced.

A study by market research firm Mintel showed that 30 percent of adults visited a casino in the past year, down from 35 percent in 2001 — a 14 percent decline.

“This shift has been gradual, which suggests that this is not a result of the recession,” said Billy Hulkower, a Mintel senior analyst.

Hulkower said the trend suggests little or no growth in casino attendance over the past decade, a period that included two recessions and an economic upturn. This means economics is not the only factor, he said.

“Casinos may be losing audience to the increasingly compelling entertainment offerings in the home; such as HDTV (high definition TV), high-end video game systems and the Internet, including Internet gambling,” he said.

Of those who did visit a casino in the last 12 months, 27 percent were Indian reservation casinos, followed by 24 percent in Las Vegas and 12 percent in Atlantic City, Mintel found.

AGA spokeswoman Holly Thomsen said the industry’s own surveys show steady or slightly rising casino attendance, even if gamblers are betting less.

“Our industry has been impacted by the recession like most other consumer-discretionary reliant industries,” she said.

“We know that people are watching their entertainment spending more in the tight economy.”

Thomsen said the worst hit by the sour economy were “destination” areas such as Las Vegas, Nevada, and Atlantic City, New Jersey, with some gamblers choosing casinos closer to home.

In Nevada, the major casinos lost nearly 6.8 billion dollars in gaming activity in the fiscal year to June 30, the latest for which data is available. Revenues for the state’s casinos doing more than one million dollars in business fell 12.6 percent in the period, according to the state gaming commission.

Atlantic City gambling revenue for the city’s 11 casinos in 2009 was at its lowest in more than a decade.

The hard luck for casinos also means woes for states depending on gaming revenues for education, health care and other general government needs.

New Jersey figures show casino revenues for January fell 8.5 percent from the same month a year ago to 294.2 million dollars.

Twelve states currently authorize casino gambling, but Mintel notes that at least 25 states have proposed or are considering expanding gambling operations including lotteries and sports betting to help balance their budgets.

If a whole lot of states are suddenly starting to allow gambling and were counting on this revenue you’re going to have a problem,” Hulkower said.

A survey by the Rockefeller Institute of Government, meanwhile, said state and local government tax revenues from authorized gambling operations excluding tribal casinos declined by 2.6 percent in the fiscal year 2009, marking the first time those revenues have declined in over three decades.

“The expansion of gambling does not bring more customers into the market,” said Lucy Dadayan, a senior analyst at the Rockefeller Institute.

“There are only so many customers, so with every new casino there are only marginal increases.”

Although the economy is showing signs of reviving, casinos are still struggling, based on tax receipts, said Dadayan, who calculated a decline of five to six percent in state revenues for the July-December period.

“The overall trend for the state tax collections from casinos… is still downward,” she said.

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