ST. LOUIS – Illinois and Missouri gaming revenue suffered dramatic drops in a new national gaming industry report that shows commercial and tribal casinos generated a combined $66.3 billion in revenues in 2013.
Commercial gaming alone expanded 1.3 percent in 2013, reaching $37.83 billion, in part because six states with commercial gaming operations built new or expanded existing gaming facilities this past year.
RubinBrown’s Commercial and Tribal Gaming Stats 2014, available at www.rubinbrown.com pools data from more than 1,000 commercial and tribal casinos in 39 states with legalized gambling. The data utilized within the report was obtained from the National Indian Gaming Commission and the various state gaming regulatory authorities.
The report was compiled and written by RubinBrown’s National Gaming Services Group Leaders – Daniel Holmes, CPA, and Brandon Loeschner, CPA.
Although national gaming revenue eclipsed the all-time high recorded in 2013, both the St. Louis region and the state of Missouri saw negative growth in 2013. St. Louis, a $1 billion market, dropped two spots to number seven in the top 15 U.S. commercial gaming markets. While the state of Missouri saw expansion in late 2012 with the opening of the Isle of Capri, Cape Girardeau, the overall statewide gaming revenue decreased 3.5 percent to $1.71 billion. However, the Kansas City market, including both Kansas and Missouri casinos, has held steady over the last two years, ranking 10th in the top 15 U.S. commercial gaming markets with $778.51 million revenue generated.
“The 2012 opening of Hollywood Casino at Kansas Speedway has cannibalized gaming revenues generated by the five Kansas City, Mo., casinos,” said Loeschner. “In 2013, the Hollywood Casino at Kansas Speedway generated $131.2 million, effectively generating 71.8 percent of its revenue through the cannibalization of Missouri gaming revenues, and only expanding the Kansas City market by $37 million.”
Illinois experienced a larger decrease in gaming revenue, dropping to $1.55 billion, although Chicago (both Illinois and Indiana) remained the third-largest commercial gaming market, bringing in $2.1 billion. Patron admissions in Illinois were also down more than 10 percent, according to Loeschner, because of the expansion of video lottery terminals at local bars and restaurants throughout the state. In 2013, over 10,000 video lottery terminals were brought online in the state of Illinois, effectively doubling the number of slot machines in the state.
“Missouri and Illinois are not the only states seeing declining revenues,” stated Holmes. “Revenue trends continue to follow market expansion efforts, with new gaming jurisdictions seeing rapid growth. The expansion of gaming into New York and Massachusetts will lead to continued industry wide gaming revenue gains. However, the growth will be limited, as declines in existing markets will continue to offset the growth produced by these new markets.”
Elsewhere across the nation, market saturation was most notable in Pennsylvania, which, despite opening its 12th casino, experienced its first year-over-year decline of 1.5 percent in gaming revenue since its first casino opened in 2006. Atlantic City again held the second top market spot, but revenue continues to decline, decreasing to $2.93 billion. The state of Ohio had the largest increase in gaming revenue at 149.1 percent, generating $1.07 billion, as the market benefitted in 2013 from the opening of three new “slot-only” racinos and one new full-service casino. Maryland was second to Ohio, with a 98.2 percent increase in revenue, due in part to the state’s legalization of gaming tables.
Meanwhile, Las Vegas experienced a small increase in revenue, hitting nearly $6.51 billion, as the Strip continues to reinvent itself.
Holmes noted three significant trends that will be the focus of the gaming industry in 2014: continued market expansion, partnerships between states, and diversification beyond the gaming floor. In particular, he believes casinos and gaming markets should take notes from the Las Vegas strip, which, although recording pre-recession gaming revenue levels, achieved a near-record visitation volume in 2013. He attributes this to the strip’s ability to transform itself from a gambling town into an entertainment and vacation destination.
“The target market for the traditional brick-and-mortar casino floors is aging, so now is a critical time for casino operators to identify ways to make their facilities more attractive as local entertainment destinations for the younger generations,” said Holmes.