U.S. Gambling Expansion Undeterred By Pandemic, Report Finds

Gaming revenue reached a record $13.6 billion in 2Q 2021, with new gambling options cushioning the blow from ongoing retail challenges
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The rise in mobile sports betting and online casino gambling in the U.S. enabled the commercial gaming industry to reach a record $13.6 billion in revenue in the second quarter of 2021, crushing the old mark of $11.1 billion set in the third quarter of 2019.

A report released Tuesday by the American Gaming Association showed that revenue was up more than six-fold for both new mobile options compared to the second quarter of 2019, while slot machine revenue was up 16.7% vs. that period. (We’re setting aside 2020 due to the COVID-19 pandemic.) Table game revenue managed a modest 0.8% gain in spite of limitations on the number of players per table and other pandemic-related changes.

“The gaming industry is clearly on its way back,” AGA CEO Bill Miller said during a media conference call. “There are still a few missing pieces of the puzzle. We’re not there yet.”

Casinos also rely on entertainment, dining, hotel bookings, meetings, and conventions — all of which have suffered during the pandemic.

“But these first half [gambling] results are truly remarkable,” Miller added. “It is even more impressive when you consider commercial gaming revenue was at its lowest point ever just a year ago.”

Miller said that a glance at a Las Vegas airport flight list shows very few international flights, particularly hampering that market.

Record year likely

With third-quarter numbers that will include much of summer tourism travel and with sports betting numbers headed north in the fourth quarter with football season, a record revenue figure for 2021 seems almost foreordained.

The $24.8 billion generated in the first half of 2021 is more than halfway to the industry’s record-holding figure of $43.6 billion set in 2019. Also, 15 states still limited casino capacity to 50% or lower as the second quarter began, though all had fully reopened by the close of the quarter.

The AGA found that sports betting — 84% of which takes place online — and online casino gaming now account for 13% of the total revenue for the industry, a figure that likely will grow as more states come aboard.

The “biggest challenge to our growth,” Miler said, continues to be an illegal gambling market that is estimated to be perhaps 10 times the magnitude of the legal version.

“We need more enforcement, so that the legal market can be more competitive,” Miller said.

Many state health agencies banned smoking in casinos during the height of COVID-19, and a vigorous debate is now being held in a number of states about whether to make those changes permanent. Miller, while saying “that is a business decision that individual operators have to make,” added that “a number of operators worry that if they take smoking away, it will negatively impact the bottom line. But it’s not necessarily true.”

Rising tide lifted all but three boats

Seventeen out of 25 states set all-time revenue records in the most recent quarter, and only three saw declines from 2Q 2019:  Kansas (down 0.5%), Maine (down 2.6%), and Rhode Island, where a recent opening of a casino in Massachusetts helped drive revenue down 14.7%.

Even some of the more mature gaming states, such as Pennsylvania and New Jersey, were up nearly 45% and 36%, respectively, compared to two years ago.

Online casino gaming — so far available in only six states — reached $901 million, a boost of nearly 15% from the first quarter of 2021. In fact, a quieter second quarter of sports activity dropped sports betting revenue below online casinos’ take for the first time, to $889 million.

Both new forms of gambling already have generated more revenue in the first half of 2021 than they did in all of 2020.

“Last year was a tough year in many ways,” Miller said. “But we’re excited about where we’re going. The industry has shown unbelievable strength.”

Photo: Michael Karas/NorthJersey.com

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