Many casinos boost spending in nearby businesses

October 12, 2014

Ken and Diane Glozer visit a casino about once a month, gassing up the car for the two-hour drive, eating a couple of meals out and staying overnight in a hotel.

Carl King of Mt. Pleasant, who turned 90 on Oct. 11, recalls frequent trips to Meadows Casino in Washington County with his brother, now deceased. A meal out was usually part of the itinerary.

Other gamblers routinely take bus trips, see shows and combine a casino visit with stops at other businesses in the neighborhood, such as shopping at high-end stores or nearby outlet malls. Some players throw in limo rides, concerts, weddings and other memory-making events.

Nationwide, gamblers spent $14.4 billion last year on side trips and other ancillary expenses associated with their casino visits, according to a first-of-its-kind study by Oxford Economics.

The study, done for the American Gaming Association, which represents commercial casinos, says gamblers spent $81.2 billion at commercial and Native American casinos — including gambling losses and expenses such as food, hotel or on-site entertainment — and that casinos spend $6 billion a year on gaming equipment.

That puts casinos’ total direct economic impact at $101.6 billion a year, says Oxford Economics, an offshoot of Oxford University in England. With “indirect” and “induced” spending associated with casinos, the industry’s total economic impact was $240 billion in 2013, the study says. Indirect spending, which the study says totaled $51 billion, includes hiring a third-party service, such as food and equipment delivery, cleaning or marketing. The $67 billion in “induced” spending comes from casino industry employees spending their wages, such as for rent, transportation, food and entertainment.

The numbers paint an image of a mainstream American industry: 570,000 direct employees, $73.5 billion in salaries and $38 billion a year in local, state and national taxes. The $101.6 billion total does not include money spent on building casinos.

“These numbers are bigger than even we anticipated,”Gaming Association president and CEO Geoff Freeman says.

The study, released Sept. 30 for the kickoff of the annual Global Gaming Expo in Las Vegas, is part of the association’s “Get to Know Gaming” project, which aims to fight outdated stereotypes of the industry and expand gambling’s reach.

Frank Gamrat, senior research associate at the Allegheny Institute for Public Policy in Castle Shannon, says Pennsylvania casinos are unlikely to generate as much ancillary spending as those in destination locations such as Las Vegas and Atlantic City.

“Most of our casinos are shorter day trips,” he says. “That is especially true with casinos popping up in Ohio and Maryland. They are mostly entertainment options for locals who are less than two hours away.

In particular, the North Shore location of Rivers Casino precludes much in ancillary spending because of the scarcity of restaurants and retail establishments outside the casino.

“Most people who visit the casino will dine inside and, thus, the casino will capture this spending” unless a restaurant is owned by an outside party, Gamrat says.

Local casinos spend locally on items such as restaurant supplies, furniture and carpeting, but the lack of game manufacturers limits the multiplier effect, he adds.

Adam Sacks, founder and president of Oxford Economics’ Tourism Economics division, says state-by-state breakdowns of casinos’ economic impact will be released in about a month.

Among other national findings: Casinos’ tax bills last year included $10 billion in gaming taxes, $11 billion in state and local taxes and $17 billion in federal taxes, with $7 billion of that going to Social Security (Pennsylvania casinos paid a total of $1.39 billion in gaming taxes in the 2013-14 fiscal year, the Gaming Control Board says).

Casinos and game manufacturers provide more jobs than airlines (554,000) but fewer than home improvement centers (676,000)

Consumers spent more last year on casinos ($81 billion) than on spectator sports admissions ($64 billion) or games, toys and hobbies ($61 billion). Consumers spent $100 billion on computers, software and accessories.

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Christopher Browne