Global Gaming Business
Frank J. Fahrenkopf
This time of year always is a period of reflection at the American Gaming Association (AGA) as it coincides with the publication of State of the States, our annual survey of casino entertainment. Now in its eighth year of publication, we have certainly learned a lot about our industry and our country from the economic data and public polling information captured in the survey each year.
A look back at 2005 shows a year both of triumph and of tragedy for the U.S. gaming entertainment industry. When the twin disasters of Hurricanes Katrina and Rita swept through the Gulf Coast late last summer, they virtually destroyed what had been the seventh largest gaming market in the country. Yet, in spite of these devastating events, this year’s State of the States shows that the U.S. commercial casino industry not only weathered the storm, but in fact surpassed its previous economic strength and contributions to the communities where we operate.
Last year, the commercial casino industry reached a new milestone, with gross gaming revenues of the 449 commercial casinos in the U.S. climbing nearly 5 percent over the previous year to top $30 billion for the first time. Individual gaming markets also witnessed landmark success in 2005, with Las Vegas revenues surpassing $6 billion and Atlantic City revenues climbing above $5 billion for the first time.
As the survey indicates, the industry also continued to be an important source of employment and wages in the 11 states where we operate, providing more than 354,000 people with wages totaling more than $12.6 billion. The state and local tax contributions made by commercial casinos grew as well, totaling $4.92 billion, an increase of just under 5 percent from 2004 totals.
The nation’s racetrack casinos, known commonly as racinos, echoed this continued growth. Racinos have been a burgeoning sector of the industry over the past few years, and with every racino state experiencing a healthy increase in gross gaming revenues in 2005, it looks as if that trend will continue. 2005 witnessed the first full year of operations for racetrack casinos in New York, as well as the advent of racetrack casinos in Maine and Oklahoma. The 29 racinos in nine states nationwide generated $3.12 billion in gross gaming revenues in 2005, a more than 9 percent increase over 2004 totals. Racinos also distributed $1.28 billion in direct gaming taxes to state and local governments, an increase of more than 19 percent, and employed more than 17,000 people.
While the annual survey provides an important snapshot of where we are, it also acts as a compass that points to where the future of gaming entertainment may be headed. As much as it has revolutionized other industries and forms of entertainment, the Internet also has started to impact the way Americans gamble. That’s why this year, for the first time, State of the States includes an in-depth survey of individuals who gamble online.
While AGA member companies currently are not involved in the online gaming market, there is no doubt that Internet gambling has captured the attention of the news media, members of Congress and the American public. Conducted by Peter D. Hart Research Associates, the survey takes a closer look at the small but growing percentage of Americans (4 percent) who participate in online gambling and gives us some insight into who they are, how and why they gamble online, and their attitudes about the activity. The results show that, as a group, online gamblers are younger, more highly educated and have larger annual household incomes than both the general public and the patrons of bricks-and-mortar casinos. Additionally, they are very active on the Internet, using it to perform a number of day-to-day tasks.
Interestingly, the data indicates that only half of online gamblers realize – or are willing to admit – that online gambling is currently illegal in the United States. And though they regularly gamble online, many are concerned about the integrity of the games and of their fellow players. More than half (55 percent) report they are at least somewhat concerned that online casinos find a way to cheat players, and 46 percent believe other players who gamble online find ways to cheat.
Despite this confusion and concern, the survey shows that online gambling truly is an emerging phenomenon. Fully 38 percent of online gamblers indicated they just started the activity within the last year, and 70 percent said they began to gamble online in the last two years. The future growth of online gambling is yet to be determined, but in this Internet age, it seems certain that online gambling will be a sector to watch in the years to come.
The 2006 State of the States survey details other industry trends in 2005, including the continued poker boom, which began in 2004 and still is going strong, with nearly one in five American adults (18 percent) again reporting they played poker last year. Spending time with friends and family and the skill and strategy involved in the game once again topped the list of reasons why people play poker. And in Nevada and New Jersey, the only commercial casino states that track poker revenue, Americans spent more than $207 million on organized poker last year, an amazing 37 percent increase over 2004 totals.
It’s clear that the growing economic success of the industry is bolstered by the continued high level of overall acceptability of casino gambling. Over the years, we’ve learned that the vast majority of Americans believe casino gambling is acceptable for themselves or others, and with nearly 80 percent again echoing that belief, this year is no different. Americans also continue to overwhelmingly view gambling as a question of personal choice (83 percent) and see casinos as a valuable part of a community’s entertainment and tourism options (72 percent).
So, in spite of some significant obstacles, the 2006 survey clearly indicates both the enduring economic vitality of casino gaming in America and a continued high level of acceptance from the American public. As commercial casinos carry on with their rebuilding efforts on the Gulf Coast and the overall industry continues to grow, it’s safe to say our industry has weathered the storm and is looking forward to a bright future beyond the horizon.