The U.S. casino industry has seen an overall decline in revenue, jobs and taxes in 2009, states a report released by the American Gaming Association last Thursday. Out of the 13 states that have legalized gambling and casinos, the markets that have seen the steepest decline are the biggest players – Atlantic City and Las Vegas.
According to the report, the U.S. 2009 gaming revenue dropped 5.5% to $30.74 billion. The report does not include casinos owned by Indian reservations, however.
Atlantic City experienced the hardest hit, with a record drop of 13.3% in revenue to $3.9 billion and their casino tax revenues dropped by 18.6% to $347.6 million. “Atlantic City, perhaps more than any other gaming site in the country, took it on the chin… It’s a real cause of concern, what’s happened to that city”, said Frank J. Fahrenkopf Jr., the AGA’s President and CEO.
Atlantic City has been affected by several changes simultaneously that have contributed to the sharp decline. The major contributing factors are the economic crisis, a new wave of casino development that didn’t get off the ground and the introduction of legalized gambling in the neighboring state of Pennsylvania.
Unlike Atlantic City and the overall U.S. market, the relatively new Pennsylvania market is going strong. In 2009, PA casinos posted an increase in revenue of 21.6% to $1.96 billion and casino employment nearly doubled due to the opening of new casinos. There appears to be a direct correlation given that revenues in Atlantic City have dropped consistently since slots were legalized in Pennsylvania in 2006. Table games have been introduced recently at PA casinos and Philadelphia’s first casino is slated to open late this year, which should have an even greater impact on the Atlantic City market. Philadelphia residents have historically been a large part of the Atlantic City market but these changes could mean much lighter traffic on the Atlantic City Expressway from Philly.
Atlantic City didn’t bear all of the biggest losses, however. The largest U.S. gambling market of Nevada had the biggest decline in employment with a drop of 12.3% (as opposed to 5.7% in Atlantic City). Nevada also shows the second-biggest decline in revenue with a 10.4% drop.
On the up side, the report states that the percentage of people visiting casinos is still relatively high, particularly in counties where casinos are located. People have less disposable income for traveling to gambling destinations, so they are sticking close to home to go to casinos, as shown by the report. The U.S. is also seeing a reallocation of casino spending away from big casino resort destinations like Atlantic City and Las Vegas as more ‘local’ casinos are opened in new markets throughout the U.S., like Pennsylvania. Also, although people are visiting casinos, they are much more tight on their spending which impacts the drop in revenue. It’s an interesting time in the U.S. market and only time will tell how the chips will fall.
