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    Jackpot! Gambling’s impact on the US economy

    October 2, 2014

    Las Vegas is rebounding. Atlantic City struggles. Casino companies have been vying for licenses in Massachusetts. Native American operations are expanding.

    There are a lot of moving pieces in the U.S. gambling industries, and it has been hard to know whether the house is winning.

    For the first time, the American Gaming Association commissioned an economic impact report on the industry’s importance to the U.S. economy. The numbers are big:

    • Direct employment of 570,000 people, with total jobs impact of 1.7 million (including nearly 200,000 government jobs);
    • Revenues of $81 billion in 2013, including $30 billion from Native American casinos;
    • $38 billion in taxes paid;
    • $102 billion in direct economic impact, and when you throw in all the spending done by employees in the general economy, the total impact is $240 billion (this does not include spending on casino construction).

    “It’s actually larger than the airline industry” in terms of total jobs, according to Sara Rayme, senior vice president of public affairs for the American Gaming Association. “As competition has intensified around the country, especially in the northeast corridor, you’re really seeing states look at their policies and figure out ways that they can continue to remain competitive.”

    While this year’s report represents the first benchmark, the association says that industry labor income has now surpassed its prerecession peak, hitting $25.5 billion. Consumer spending on gambling has hit an all-time high of $67 billion.

    Rayme said one of the biggest challenges is working with regulators to allow manufacturers of gaming equipment to move their products across state lines: “If you look at all of the different regulations that are in place, there are a million different regulations that manufacturers have to adhere to as they move their equipment around the country.”

    At the same time, makers of slot machines are seeing casino floors shrink in Las Vegas as Sin City increasingly relies on non-gambling ways of generating profits. MGM Resorts has partnered with AEG to build a $375 million arena that could eventually host an NBA team. There’s a $130 million park next to it right on the Las Vegas Strip.

    “Where we always wanted people to stay within the casino, here we’re encouraging you to stay outside in this beautiful environment and really socialize,” said Don Thrasher, who is overseeing the project for MGM Resorts’ Park Holdings. “It’s a different experience than has ever been done here.”

    That’s a dilemma for companies that make slot machines at table systems. Consolidation is happening, as >Bally Technologies is being acquired byScientific Games. At this week’s Global Gaming Expo, companies are debuting new slot machines with brands such as “Mad Men,” “Duck Dynasty,” “The Flintstones” or “Austin Powers.” Slot machines have gotten more complex.

    “We have one new thing called ‘Learn to Play,’ ” said Brad Rose, who creates slot games for WMS, part of Scientific Games. “You can sit down at the machine and say, ‘How do I play this game?,’ hit the button, and it will kind of give you a tutorial of the game. That’s something that’s been missing from the industry.”

    What’s also missing is that many millennials don’t play slots; they play video games. Bally Technologies CEO Richard Haddrill said regulators are reluctant to allow machines to incorporate skills-based gaming like you see in video games into slots, other than poker.

    “Pretty much, regulator bodies want us to have random number generators to determine the outcome,” he said. However, his company is evolving to meet changing tastes by making slot and table games more social. “We find that slot players really like to have a community experience, so we’ve developed some games where they share in a bonus. In our ‘Dragon Spin’ game, a dragon goes between various machines and selects one of five players in that bank to get a bonus.”

    Mobile technology will also allow a player to move a game onto a tablet and continue playing elsewhere on the property. “We even have a product where if you’re losing a lot, the casino can come and give you a nice reward to make you feel a little bit better before you go home.”

    “Our job is to make sure we entertain you,” said WMS’ Brad Rose. “How do I get you to sit down, forget your worries for the next 20-30 minutes, and enjoy what you see?”

    To read the original article on CNBC, click here.

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