Global Gaming Business
President and CEO, American Gaming Association
More than 15 years ago, the American Gaming Association (AGA) commissioned two studies on the economic impact of the commercial casino industry. Those studies detailed the macro- and microeconomic impacts of the $25 billion commercial casino industry, which, at the time, directly employed 284,000 people. The statistic I still recall from one of those studies was that for every million dollars in revenue, 13 jobs were created. Using the information from those studies, the AGA was able to, for the first time, demonstrate to the media, elected officials and regulators the impact our member companies were having on their employees and the communities where they operated.
During that same time period, two AGA member companies (Harrah's – now Caesars Entertainment – and Grand Casinos) were honored at a White House event where President Bill Clinton launched his Welfare to Work Partnership. The commercial casino industry was specifically recognized by the President for its work in providing jobs to people on welfare. An AGA-commissioned study found that more than 8.5 percent of casino employees reported they were able to leave welfare as a result of their employment. Approximately 9 percent reported they no longer received food stamps because of their gaming industry employment, and 16 percent said they used their casino industry jobs to get off unemployment benefits.
The AGA has used the studies mentioned above and many other studies and white papers since to make the case that the commercial casino industry plays an important role in the nation's economy, and we have had great success. But now, as the result of a just-released report, we have even more concrete data to show just how important casinos are to communities across the country.
The study, entitled “Beyond the Casino Floor: Economic Impacts of the Commercial Casino Industry," was conducted by the Brattle Group, one of the country's top economic research firms, and shows that the revenue generated by and because of commercial casino industry activity represents nearly 1 percent of the $14.5 trillion U.S. GDP.
According to the report, the 566 commercial casinos in 22 states last year generated $49.5 billion in consumer spending and 400,000 direct jobs. In addition, the report estimates that another $75.6 billion and 475,000 jobs were created either indirectly (i.e. what casinos spend with suppliers) or were induced (i.e. individual spending by casino and casino supplier employees). Taken all together, the commercial casino industry supported about $125 billion in spending and 875,000 jobs in the U.S. in 2010. More than half of the indirect and induced consumer spending and jobs were created in counties and states where there are no casinos.
The study also compares our industry with others that are similar in size and scope. When just the gaming sector of our industry is compared with other industries that generate roughly the same revenues, you can see we generate far more jobs. For example, the gaming sector creates nearly twice the number of jobs as the coal mining industry and four times the jobs created by the soft drink/ice manufacturing industry.
Most of you reading this column will not find this surprising, but an incredible $15.2 billion of the $49.5 billion in total direct casino revenue was generated by average Americans' spending on non-gaming amenities such as food and beverage sales, hotel operations, retail, entertainment and meeting and conventions.
It also was interesting to see that, just as was the case with our studies done in the mid-nineties, casino wages and benefits, as compared to similar industries, are better. The average wages and benefits earned by employees in the commercial casino industry total about $41,500 annually. This compares quite favorably to other segments of the broader recreation sector–such as museums, historical sites, zoos, parks and spectator sports industries–where, taken all together, wages and benefits average about $37,000 per year. Average wages and benefits provided by the commercial casino industry also are higher than those paid by retail industries such as food and beverage, clothing and gasoline, where the average is about $29,000.
Other key findings from the study include:
- Based on data furnished by the Association of Gaming Equipment Manufacturers (AGEM) and supplemented by a survey and SEC filing data, it is estimated that the U.S. commercial casino industry supported approximately $2.5 billion in gaming equipment supplier industry sales (about half in services and the remaining half in equipment, hardware and software) in 2010.
- Casino employees and suppliers’ employees bring home regular paychecks and spend this income in any number of ways. This spending supports other businesses and activities in the communities where these employees reside and elsewhere throughout the country. In total, the induced effects of spending by commercial casino employees and suppliers’ employees generated additional economic activity of about $44.7 billion in the U.S. in 2010, one-third of which was generated in their local counties.
- On average, the taxes paid by the commercial casino industry and its employees across federal, state and local jurisdictions are 32 percent of industry revenues. This is higher than the national average all-in tax burden of 27 percent for other industries. A significant portion of commercial casinos’ total tax burden — about $7.6 billion, or more than 22 percent of gross gaming revenues in 2010 — was paid in gaming taxes. Taken all together, the commercial casino industry generated $8.9 billion in federal taxes and $8.4 billion in state and local taxes in 2010, for a total of $17.3 billion in non-gaming taxes. Including gaming taxes, the industry was responsible for a total of $24.9 billion in taxes in 2010.
- At the same time the casino industry shoulders a greater tax burden than most industries, it receives none of the subsidies or tax incentives that are frequently afforded to other types of businesses. In the case of non-gaming industries, state and local governments in the U.S. regularly pay as much as $9,000 or more per job in investment tax credits and other tax-based incentives associated with economic development projects. By contrast, the commercial casino industry pays an industry-specific tax to state and local governments of about $9,000 per year for every job it supports.
Our new study clearly demonstrates the commercial casino industry continues to be a major driver of the U.S. economy. The AGA will be working in the months ahead to share this compelling information with our stakeholders so they understand the significant economic contributions the industry makes not only in gaming jurisdictions but in areas and industries that many would not typically associate with gaming. We are quite certain that this data will be instrumental in helping strengthen our industry's existing relationships while helping us identify and form bonds with new allies.