Industry

Key Takeaways From The Commercial Casino Industry’s Annual ‘State Of The States’ Report

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The U.S. commercial casino industry is humming along, posting another strong calendar year. The American Gaming Association, based out of Washington, D.C., on Tuesday released its annual “State of the States” survey, the most comprehensive study of the industry you can find.

Working alongside GamblingCompliance, the AGA found that the casinos had a record-breaking year in terms of gaming revenue (the report doesn’t include non-gaming revenue). Sports betting was in the mix like never before, thanks to the U.S. Supreme Court in May 2018 allowing states to go ahead and legalize the activity.

“Year after year, the commercial casino industry has reaffirmed its role as an economic powerhouse in the United States,” Bill Miller, president and CEO of the American Gaming Association, said in a statement. “More people than ever are experiencing the economic and social benefits of gaming in their communities, due in part to the expansion of legal sports betting across the country.”

Key findings, according to US Bets

The entire 116-page report is worth reading closely, but here we’ll give you some of the major takeaways from another impressive year for legal and regulated gaming in the United States.

  • Commercial casino gaming revenue grew 3.46% in 2018 to $41.68 billion, according to the AGA. It marks a new record high, beating last year’s mark. The tribal casino industry generates more than $31 billion annually, making casino gaming in the U.S. a more than $70 billion market. The 3.46% percent gain over 2017 was about the same as 2017’s uptick over 2016.
  • Sports betting contributed $430.2 mm to the total, about 1.03% of the total commercial casino win. A mere seven states had active sports betting markets by the end of 2018, a number that will continue to expand rapidly in the years ahead. Sports betting has the potential to generate billions in additional revenue for the industry, a market that depends greatly on how states decide to implement their respective industries. Sports betting has a much higher ceiling than 1% of total casino revenue. In Nevada, it’s about 2.7% these days, per the Nevada Gaming Control Board.
  • Last year marked legal commercial casino gaming reaching half of U.S. states, with Arkansas voters approving a constitutional amendment for Las Vegas-style casino gambling. If you include tribal gaming, casinos are now legal in 41 states. How many of the 41 legalize/regulate sports betting remains an open question. It’s worth noting that Tennessee, which isn’t home to any casinos, legalized online/mobile sports betting this spring.
  • Despite adding sports betting, West Virginia gaming revenue fell 0.14% in 2018 to $623,764,685. It was the seventh straight year of declining revenues for the Mountaineer State commercial casino industry. The silver lining is that the market appears to be stabilized. Illinois was the only other state to see a gaming revenue decline in 2018. Win fell 2.45% to $1.37 billion. State lawmakers recently approved a massive gambling expansion package that includes sports betting and six new casinos, as well as expanding gaming for the racetracks. “The steepest decline came in Illinois, where commercial casinos continue to face stiff competition from electronic gaming devices in bars and truck stops,” the AGA said of the Illinois market in its report. While Illinois and West Virginia had a tough time, half of the commercial casino states saw record revenue in 2018.
  • If you look at commercial casino markets on a regional level and not based on state lines, the Poconos region in Northern PA encountered the greatest decline, with revenue down 4.8% to $943 mm. The Las Vegas Strip area remained king with $6.58 billion, up nearly 2%. The Baltimore-Washington region saw the greatest increase with revenue growing 6.4% in 2018 to $1.88 billion.
  • A whopping 35% of Americans adults say they visited a casino in the past 12 months, with nearly 90% agreeing that casinos are a socially acceptable form of entertainment. The 35%, while very strong, does provide further evidence that online/mobile sports betting regulation is the best way to create a robust market, capturing dollars that are wagered via illicit channels. Prior to PASPA’s demise in May 2018, the AGA found that Americans were betting $150 billion each year on sports, with about $5 billion coming legally through Nevada and Delaware (parlays only before PASPA’s repeal). Side note: The 35% would translate to in the ballpark of 87 mm people. There are 979 commercial/tribal casinos nationwide, meaning that the casinos averaged in the neighborhood of 90k unique visitors over the aforementioned time frame.
  • The commercial casino industry paid $9.71 billion in direct state and local taxes in 2018, up 3.05% over 2017. All but six states saw more tax revenue from commercial casino gaming last year than they did the previous year. Taxes paid can decrease even when total gaming revenue increases because some states tax casino games differently. The industry provides/supports more than 730k direct, indirect, or induced jobs, generating $34.34 billion in wages, benefits, and tips. NV accounts for about 55% of those jobs. Another figure that’s noteworthy: Pennsylvania accounts for under 8% of nationwide commercial casino gaming revenue, but PA casinos account for more than 15% of the nationwide tax total. PA sportsbooks are subjected to a whopping 36% effective tax rate.
  • There are about 900k electronic gaming machines in commercial and tribal casinos across the country, as well as at locations such as bars, taverns, and truck stops. Those are only the legal machines, as many states fight battles against underground video gambling establishments. It’s also worth noting that the 900k figure doesn’t include the so-called Instant Racing machines in Kentucky and Arkansas. Nevada leads the way with more than 160k machines, followed by California and Oklahoma, whose tribal gaming industries have about 74k apiece.

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