It is not surprising that many mature gaming markets – defined here as those that began casino-style gaming before 2004 – have seen revenues erode in recent years. After all, they’ve been around a long time, and unless there is something new and different, it’s a challenge to continue growth. That is particularly true during economic downturns – especially the recent recession from December 2007 through June 2009. In addition, several of the markets have lost their regional exclusivity and that has had devastating effects in some cases.
In 2011, total gaming revenue in mature markets was just shy of $31.5 billion, down 14.8 percent from 2007. That’s the bad news. The good news is that revenues actually increased slightly from 2010 to 2011, up 0.2 percent, the only annual increase during the analysis period.
Racetrack casinos were the stars of this age group, with combined revenues in the six jurisdictions up 1.1 percent from 2007 to 2011, reaching $3.1 billion. And Rhode Island had the most statewide revenue growth of any mature market, up 15.5 percent during that time.
A word of explanation. Defining “mature” versus “new” is subject to some interpretation – one could easily argue that if gaming began in 2004, the market is no longer new. But in reviewing the waves of legalization, there was a long stretch between 1999 and 2004 when no new jurisdictions came into play. With new states added almost annually after 2004, it just made sense to make that the dividing line.
Also for the purposes of this analysis, each type of gaming facility is considered individually – thus racetrack casinos in Indiana, which began in 2008, are defined as a new market even though dockside casinos in the state started in 1995. Similarly, racetrack gaming in West Virginia is considered to be mature, while gaming at the Greenbrier, a resort hotel, is classified as new.
The following summarizes some of the key developments in each jurisdiction from 2007 through 2011. See the complete underlying data.
Colorado: With 40 casinos across three mountain towns, Colorado ranks third in the U.S. in terms of the number of gaming properties, but many are small with under 200 slot machines and names like Billy’s Casino. A reduced gaming tax last year, combined with expanded limits and operating hours that took effect in mid-2009, have helped the industry recover somewhat from its 12 percent drop in 2008 during the depths of the recession.
Connecticut: The two tribal casinos have been hit by expanded regional competition, particularly from Southern New York. They also had the bad timing to open major expansions in 2008, only having to scale back the number of slots in 2009 as the recession continued. Combined, slot machine revenues have dropped 20 percent since 2007, with Foxwoods faring slightly better than Mohegan Sun.
Delaware: The three racetrack casinos in this tiny state enjoyed their central locations relative to the mid-Atlantic population for a dozen years before competitors came to Philadelphia and then to Maryland. Table games were added in mid-2010 and they certainly helped, but revenues slid back again in 2011. The tracks added sports books in 2009 to help differentiate themselves, but on a very limited basis (only about $4.5 million in revenue during the NFL season), and that revenue is not included in this analysis.
Illinois: Recent years have not been kind to the casino industry in Illinois, and only the long-awaited opening of the tenth casino last summer in Des Plaines could stem the downward tide. Even so, casino revenues in 2011 were off more than 25 percent from 2007 levels, with the steepest drop coming in 2008. The new casino is now by far the state’s largest in terms of gaming revenue, alone accounting for almost 25 percent of statewide receipts by the end of 2011. Of course, nearby casinos were impacted by the new facility; same-property revenues in 2011 were down 5.4 percent from 2010, compared to a 7.6 percent increase for the state.
Indiana: Revenue from dockside casinos has declined every year since 2007, a cumulative 13.7 percent loss.
Iowa: One of the few mature jurisdictions to grow gaming revenue from 2007 to 2011, with casino revenue up 7.6 percent over the period thanks to three new properties – one each in 2006, 2007 and 2011. Racetrack gaming, however, was down 1.7 percent from 2007 to 2011 due to a 2009 decline; revenue increased in other years. Combined, revenue from both types of facilities was up 4.5 percent from 2007 to 2011.
Louisiana: A busy gaming state, Louisiana has riverboat/dockside, land-based and racetrack casinos (along with video poker and tribal gaming, not included in this analysis). Revenue from riverboat and land-based casinos combined fell steadily throughout the period under analysis, for a cumulative decline of 9.8 percent. The New Orleans casino fared the worst, down every year with a much greater loss, while riverboats ended the period with a slight uptick. Racetrack casinos increased every year except 2010, and revenues were up 6.5 percent over the entire period. They were buoyed by the opening of Fair Grounds’ permanent casino in 2008.
Michigan: Detroit’s three casinos weathered the recession quite well, despite the presence of numerous tribal casinos throughout the state. Gaming revenues were up an impressive 6.7 percent over the period, with only one minor decline in 2009.
Mississippi: The state’s 30 properties make it the fourth-largest jurisdiction in terms of number of commercial casinos, but this troubled state has had it rough since Hurricane Katrina wiped out the Gulf coast in 2005. The industry rebuilt, but revenues have fallen off considerably, dropping it out of contention for the top-producing gaming states, where it used to rank third. For 2011, it ranked sixth, with revenue down 22.6 percent since 2007. The Gulf coast region was undoubtedly hurt by the Deepwater Horizon oil spill in 2010, and Tunica casinos were closed for a time in May 2011 due to river flooding.
Missouri: Gaming revenue grew by 13.4 percent from 2007 to 2011, the most of any mature jurisdiction with regular (non-racetrack) casinos. There’s a reason for that, of course, with the opening of two major casinos, one in late 2007 and one in 2010, and as a result total revenues grew every year. The state also lost a casino in 2010, but it was the smallest property with little overall impact.
Nevada: The state’s gaming industry was hit hard by the recession, losing almost 20 percent of its revenue from 2007 to 2009. To some degree, as casinos expanded into new markets, tight-fisted consumers saw no need to travel to Nevada’s playground to satisfy their gaming and entertainment needs. That said, the Las Vegas Strip, where the emphasis is more on entertainment than gambling, generally held up better than the rest of the state. Statewide, revenue dropped 16.7 percent from 2007 to 2011; the Strip experienced an 11.1 percent decline. Much more dramatic were plunges of up to 35 percent in border markets, such as Reno, South Lake Tahoe and Laughlin. Fortunately, the hemorrhaging nearly stopped in 2010, as statewide revenue increased by 0.1 percent over 2009; in 2011 revenue was up 2.8 percent over 2010. Again, the Strip performed best of all, with 2011 revenue up 5 percent over 2010; the border regions still declined, albeit only by small percentages.
New Jersey: Atlantic City, which reigned for 11 years as the only legal casino gambling outside of Nevada after its first property opened in 1978, was hit by the double whammy of the recession and the competition. It holds the dubious distinction of having the most precipitous drop of any jurisdiction from 2007 to 2011 – losing almost one-third of its revenue, or $1.6 billion. Total win in 2011 was $3.3 billion. Three new casinos opened in the greater Philadelphia area from 2007 to 2010. Gaming came to the greater New York City market in 2006 when the Empire City Casino at Yonkers opened; and Resorts World Casino New York opened at Aqueduct in late October 2011 to keep New Yorkers home with subway access.
New Mexico: Since 2007, gaming revenue at the five racetrack casinos has actually increased every year except 2009, when it dropped 5.5 percent. New Mexico laws do not allow for the release of individual track data.
Rhode Island: It would be difficult for the two pari-mutuel facilities here to have more divergent results. Twin River has been an unqualified success in terms of revenue generation, even if it underwent bankruptcy. VLT revenues at this former Greyhound track have increased some 30 percent since 2007 with 1,300 additional machines, despite the looming presence of the nearby tribal casinos in Connecticut. In contrast, revenues at the former jai-alai fronton Newport Grand have dropped by more than 30 percent, although its machine count has been relatively stable.
South Dakota: In 1989, the legalization of casinos in Deadwood marked the beginning of the casino expansion era. Some 140 locations offer gaming throughout the city, ranging from a few slot machines in a storefront to more substantial casinos. The unique nature of the market has left it somewhat immune from major changes, and revenues increased 2.7 percent from 2007 to 2011. But revenues were down 5 percent from 2010 to 2011 – the second-largest drop in its history. The decline was attributed to a smoking ban that took effect in late 2010; revenues were improving by the end 2011.
West Virginia: West Virginia pioneered racetrack gaming with a limited test that began in 1990; full adoption began in 1994. Revenues poured in during the early years, and in anticipation of competition from Pennsylvania, table games were legalized in 2007 to help stem the tide. And they did the trick, at least from a statewide perspective. Total revenue has actually increased by one percent from 2007 to 2011 after a strong 2011. Looking closer, it’s clear that Charles Town is the primary reason. Now accounting for almost 60 percent of total racetrack gaming revenue in the state, the track is more insulated from competition than Mountaineer and Wheeling and can draw from the greater Washington, D.C. area. Mardi Gras (formerly Tri-State) is also more favorably situated with respect to competition, but is a much smaller facility in a less populous area. Charles Town has really blossomed with table games – by the end of December, its table revenues accounted for about three-fourths of the state total and made up more than 28 percent of its own product mix. All told, Charles Town has increased its total revenue since 2007 by double digits, compared to double-digit declines for Mountaineer and Wheeling.
Coming Wednesday: A detailed look at newer gaming markets.