Casino 1995 Gross Revenue
The first casino opened in the United States in 1931. Today, there are nearly 1,500 that generated a total of $34.6 billion in gross gaming revenue in 2011.
Gaming Credits for purposes of calculating Taxable Casino Gross Revenue subject to the 8% tax. Beginning November 2013, the 15% tax on Internet Gross Revenue is deposited into the Casino Revenue Fund. Casino Licensees are permitted a deduction from the 8% tax on Casino Gross Revenue for Promotional Gaming Credits related to Internet Gross Revenue. A tale of greed, deception, money, power, and murder occur between two best friends: a mafia enforcer and a casino executive compete against each other over a gambling empire, and over a.
Twenty years ago, just six states in the nation offered legalized land-based or riverboat casinos. Today, that number has grown to 22 states, and doesn’t include the 24 other states with Native American properties, card rooms, slot parlors or racinos.
In fact, 10 states joined the casino race for the first time in the last five years alone.
Of the 50 states, only Hawaii and Utah can claim to be wager free. All other states offer at least a lottery, card room, racetrack or riverboat, if not a fully functioning land-based casino.
The last five years have seen an arms race develop for casino properties in the United States. The North East, in particular, has been especially busy. A market once dominated by Atlantic City has recently since seen its power shift to Pennsylvania, which last July became the second biggest gambling destination in the country behind Las Vegas.
With many states experiencing budget shortfalls, lawmakers in many states have been pressured into loosening or sometimes even completely overhauling existing gambling statutes in an effort to increase tax revenue.
The Major Players
Nevada
Nevada remains the nation’s number one gambling destination by a wide margin, thanks to a steady growth in gaming revenue over the last year. The Nevada Gaming Control Board recently released revenue figures that show a 5.7 percent year-over-year increase in February, as the state took in a total of $932.2 million.
Furthermore, Las Vegas is expected to break the all-time visitor volume record of 39 million this year, also set in 2007. Overall, Nevada took in over $10.4 billion in 2011 which accounted for a 2.8 percent increase over 2010, a jump not seen since 2007.
This number, however, accounts for a surprising increase in gaming revenue throughout the entire Silver State, specifically in Reno, South Lake Tahoe, the Boulder Strip and downtown Las Vegas, as the Strip continues to stay flat. Caesars Entertainment, which operates 10 Strip properties, has diversified interests throughout the country.
The other major players, Wynn Resorts, Las Vegas Sands and MGM Resorts International, have their fates more closely tied to their properties in Macau, a city which continues to reign as the top gambling destination in the world. Industry insiders expect Macau to continue its record-setting growth with a 20-30 percent increase in revenue for 2012 to as high as $38-$40 billion, roughly four times more than Nevada.
Pennsylvania
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By generating $3.66 billion in gaming revenue last year, Pennsylvania is now the top dog in the north east. The state now does approximately 9 percent more business than New Jersey’s Atlantic City. Originally propped up by their table games numbers, the six-year-old Pennsylvania market has surged in recent months thanks to its gross slot machine revenue, which has grown by 8.5 percent over the past year.
The Pennsylvania Gaming Control Board, formed in 2004, is responsible for issuing the state’s 14 various casino licenses which are designated for stand-alone properties, racinos and resorts. All but one of those licenses is spoken for, the last being caught up in a legal dispute in the state Supreme Court. One more resort license will be awarded in 2017.
Pennsylvania is led by properties such as Parx Casino, Sands Bethlehem and Harrah’s Chester. Valley Forge Casino, which only recently just opened on April 1st, brought in $500,000 in revenue in a span of just three days. Thanks to the state’s 55 percent tax on slot machine revenue and 16 percent tax on table games revenue, Pennsylvania has created a system that gives back to the state while also capitalizing on a gambling-friendly population.
New Jersey
Though in the midst of a six-year recession, Atlantic City continues to hold onto the number three spot in the United States. State gaming officials are hoping that the addition of Revel, a new $2.4 billion mega resort that overlooks the Atlantic City coast, will help boost a market that has seen gaming revenue fall 36 percent from $5.217 billion in 2006 to just $3.317 billion in 2011.
The city’s 12 casinos saw slot machine and table games revenue fall an additional 5 percent in March to $266.3 million. Those numbers would have been worse if it weren’t for Revel and the city’s other top performers, who continue to claim an increasing share of the market. The Borgata, The Trump Taj Mahal, The Golden Nugget and The Tropicana all posted moderate gains, but the numbers weren’t enough to salvage the losses incurred by the rest of the boardwalk.
Officials point to the increase in competition from nearby states, which have become more aggressive in allowing for full table gaming. Atlantic City lost an average of 6 million visitors between 2006 and 2010, drawing less than 30 million each year. Even worse, those visitors were unlikely to stay for any considerable length of time, averaging just 16 hours in the city before leaving, according to Crain’s New York. In an effort to keep tourists overnight, the city has launched a $20 million marketing campaign aimed at drawing in non-gamblers who will make better use of the hotels, restaurants and shopping outlets the city has to offer.
Other Large Markets
Casinos in the South have been more affected by natural disasters than by an increase in competition. Rebuilding efforts from flooding and hurricane damage are more or less complete, allowing properties in Louisiana, Missouri and Mississippi to regain some sense of normalcy in their numbers.
Missouri takes in just shy of $1.8 billion each year with its 12 riverboat casinos. Mississippi’s 30 casinos bring in $2.39 billion annually thanks to strong rebound numbers from Tunica, Gulfport and Biloxi. Louisiana, with a total of 18 riverboats, racinos and land-based casinos, performs similarly with $2.37 billion in gross gaming revenue.
Florida is an interesting case due to existing tribal compacts with both Seminole and Miccosukee Indians. The state has seen a surge in revenue after a July 2010 law change allowed pari-mutuel racinos and jai-alai frontons to offer big buy-in poker. In exchange for this allowance, the tribal casinos were allowed to offer Las Vegas-style gambling. The end result was a 51.9 percent increase in gross gaming revenue for the state’s five casinos, generating a total of $329 million, a number which doesn’t account for 28 horse racing tracks, greyhound tracks and card rooms.
Here They Come
While Pennsylvania and New Jersey continue to fight over potential customers, competition will increase as more and more states in the North East expand or alter existing gambling laws to capture a chunk of the market. Perhaps the biggest threat to these regions and other existing casino properties in Connecticut, Maryland and New York, as well as racetracks in Delaware, Maine and Rhode Island, is the promising state of Massachusetts.
Massachusetts, which, in 2011 approved a bill to allow three full-scale casinos and one slot parlor, had previously been limited to a state lottery and horse racing wagers. Gov. Deval Patrick signed the bill into law in an effort to create jobs, but the state will undoubtedly benefit from a 25 percent tax on casino revenue and 49 percent tax on slot revenue, as well as an $85 million per applicant licensing fee that should cut into the state’s $102 billion debt.
A new gaming commission was created to award the licenses, which have generated interest from MGM Resorts International, Wynn Resorts and Ameristar Casinos in cities such as Boston, Foxborough, Brimfield and Springfield. The first Massachusetts casino is expected to open sometime in 2017.
In the Midwest, the existing 41 properties in the Chicagoland area, which the American Gaming Association (AGA) defines as Indiana, Illinois and south Michigan, are sweating new casinos in the state of Ohio. Voters approved a 2009 measure that will allow four casinos in that state, the first of which is set to open in mid-May 2012 in Cleveland. An additional casino will open in Toledo in June and 2013 will see resorts open in Cincinnati and Columbus.
Cleveland Cavaliers team owner Dan Gilbert has since struck a deal with Gov. John Kasich to amend the bill to include a second phase for the Cleveland site which would be a joint venture between his company Rock Ohio and Caesars Entertainment.
In total, the Buckeye state’s four new casinos will create about 7,500 permanent jobs. Projections show that the state will collect somewhere in the neighborhood of $600 million in revenue each year from a 33 percent tax on gross revenue. That’s great news for Ohio residents, but not so great for adjacent states.
The Indiana Casino Association has already warned their 13 casinos to expect somewhere between $200 and $300 million in losses.
An Overall Look
More and more states are looking for additional revenue sources and gaming offers a lucrative solution. An estimated 45 states will operate with a budget shortfall of some kind in 2012. Of those states, 22 will have a shortfall over $1 billion.
There has been some resistance in some of the more conservative states, however. Casino expansion bills in New Hampshire, Florida, South Carolina, Maine and Maryland have hit major roadblocks, due to existing tribal compacts or governors unwilling to budge from anti-gambling stances.
Gov. John Lynch of New Hampshire, for example, has repeatedly promised to veto any bill that crosses his desk, despite any stamp of approval given to it by the House and Senate. Lynch, much like South Carolina Gov. Nikki Haley, is worried about his state’s budget shortfall, claiming that his constituents would become increasingly susceptible to gambling lobbyists if the state became too dependent on casino tax revenue.
Of course, those states unwilling to gamble on gambling expansion will continue to lose out to their neighbors. For example, according to Businessweek, in 2011, Maine residents spent $34.3 million at Connecticut’s two tribal casinos, or more than one-third of the total amount spent in the state overall. New Hampshire and Vermont reported similar numbers and the problem is only expected to get worse once Massachusetts unveils their new casinos.
When you factor in state debt and the pressure on lawmakers to create new jobs, it’s easy to see why the United States is in a golden age of casino expansion, however, only time will tell if it’s the right move to bolster a struggling economy.