With its reduction in consumer spending and freezing credit markets, the recession that began in late 2007 made 2008 a challenging year for the commercial casino industry, and nowhere is that more evident than in the 2009 edition of the AGA’s State of the States survey. It should not come as a shock that most of the major economic impact figures were down this year, and while nationwide gross gaming revenues at commercial casinos were still the second-highest ever, at $32.54 billion, they were 4.7 percent below 2007’s record level.
Results from our 2009 public opinion poll conducted by VP Communications, Inc. and national pollster Peter D. Hart confirm that reduced consumer spending is one of the key reasons for the drop in gaming revenues. The data bears out the fact consumers are cutting back on their casino gaming during these recessionary times, just as they are cutting back on other activities, like going out to restaurants and taking weekend trips.
Despite these tough times, however, the gaming industry has continued to be a major contributor to communities where it operates. The industry returned more than $5.7 billion to states and local communities through direct gaming taxes. Those tax contributions help fund vital public services, such as transportation and infrastructure, education and public safety programs. The industry also continued to be a major employer last year, as commercial casinos employed 357,314 people who earned a total of $14.1 billion in wages, benefits and tips.
It is no surprise that the recession has hit some markets and regions harder and differently than others. For example, the economic climate in Nevada coupled with a reduction in consumer spending on overnight travel spelled problems for the state’s revenues. New Jersey was forced to deal with the unfortunate trinity of lower consumer spending, a partial smoking ban and increased regional competition, and the smoking bans in Colorado and Illinois resulted in those states experiencing the largest percentage revenue declines.
Expanding markets saw growth despite the recession, as new properties in Pennsylvania, Missouri and Indiana resulted in subsequent boosts to gaming revenues in those states, with Pennsylvania experiencing the largest percentage increase.
One of the brightest spots in this year’s report is the racetrack casino sector. Even as the commercial casino industry as a whole faced declining revenues, the racetrack casino sector continued to grow, with three new properties and one new “racino state” - Indiana. Racetrack casinos experienced a 17.3 percent increase in gross gaming revenues compared to 2007, with revenues growing to $6.19 billion.
The racetrack casino sector also provided sorely needed tax revenues and jobs. Racetrack casinos’ contributions through direct gaming taxes grew to $2.74 billion, a 23.3 percent increase from 2007’s record levels. Employment at racetrack casinos also steadily increased, with 29,051 individuals employed during 2008, a 6.6 percent increase over 2007 figures.
For this year’s report, the AGA teamed up with the Association of Gaming Equipment Manufacturers (AGEM) to highlight the significant contributions the gaming equipment manufacturing sector makes to the overall economy. The data show that the sector has continued to grow during these challenging economic times. According to AGEM’s research, conducted by Applied Analysis, gaming equipment manufacturers produced a record $12.7 billion in economic output, or revenues, in 2008, a 6.7 percent increase over 2007 numbers. They also directly employed 29,600 people and paid salaries and wages of an estimated $2.0 billion.
AGEM’s research data also show that, like members of the commercial casino industry, gaming equipment manufacturers create spillover effects in the communities where they operate and provide substantial benefits, like employer-sponsored health care and retirement plans, to their employees.
The hard data prove that all segments of the commercial casino industry are valuable parts of the overall U.S. economy, and this year’s poll results are evidence of its importance to the U.S. travel and tourism industry. A recent national public opinion poll and a new survey of tourism industry professionals conducted for this year’s State of the States reveals that nearly two-thirds (65 percent) of Americans and a whopping 84 percent of travel professionals – those who know the industry best – agree that gaming is a valuable part of the overall U.S. tourism industry. In fact, 82 percent of travel professionals in gaming states say casinos have helped encourage leisure travel in their regions. They also think that casinos are an important component of their state’s travel and tourism industry and create a positive, spill-over effect from casino customers.
Even travel industry professionals from states without casinos see the value of partnering with the gaming industry, as nine out of 10 think their state would attract more leisure travelers from out-of-state if casinos were introduced.
The travel survey results also show that, despite being attacked recently by politicians and the media, business meetings and event travel are an important component of the overall U.S. travel and tourism industry, and more than three-quarters (79 percent) of surveyed travel professionals think that the recent criticisms of meetings and events have hurt business travel in the U.S. While casinos in particular have been labeled by some as inappropriate venues for business meetings, 76 percent of travel professionals disagree with that notion and three-quarters (75 percent) say casinos are a vital component of the business travel market.
As it has for the last decade, gaming acceptability remained high in this year’s polling, with 81 percent of Americans deeming casino gambling acceptable for themselves or other. This along with other positive polling results and past experience should make observers confident that the gaming industry will weather this storm and once the country’s economic fortunes turn around, gaming’s will too.