After a year of unprecedented revenue growth, it might seem like the gaming industry is due for a regression.
But American Gaming Association Bill Miller thinks the industry, after meeting the challenges of the COVID-19 pandemic better than anyone could expect, still has room to grow.
“The last two years have really upended the way people work and play and live their lives,” Miller said Monday during a phone interview with CDC Gaming ahead of the AGA’s State of the Industry report. “It was kind of this existential threat that morphed into, frankly, the best year in the history of the gaming industry. And I think that there are still tailwinds associated with that historic level of growth in 2021 that will go well into the next couple of years.”
By way of its Commercial Gaming Revenue Tracker, the AGA Tuesday reported revenue of $53 billion for 2021, the highest-grossing year on record. The total smashed by 21% the previous revenue record of $43.65 billion set in 2019.
The fourth quarter of 2021 also was a quarterly record, the $14.31 billion generated a 2.7% increase over the previous record of $13.93 billion set in the third quarter of 2021. Revenue was boosted by the opening of four new commercial gaming markets opened in 2021: Arizona, Connecticut, Virginia, and Wyoming.
Last year, revenue records were set in 23 of the 34 operational gaming jurisdictions. Nevada ($13.4 billion), Pennsylvania ($4.8 billion) and New Jersey ($4.7 billion) were the top revenue generators. The Las Vegas Strip was the top U.S. commercial gaming market at $7.05 billion, followed by Atlantic City with $2.57 billion, and Chicagoland (Illinois and Indiana) generating $2.01 billion.
Every commercial gaming vertical also set new annual revenue records, with the country’s 466 traditional brick-and-mortar casinos bringing in $44.94 billion from combined slot and table game revenue. Brick-and-mortar casinos generated 85% of commercial gaming revenue last year.
The handle for sports betting increased 165% to $57.2 billion year over year, and revenue from sports betting was $4.29 billion, a 177% increase over 2020. Sports betting revenue was aided by the launch of seven new markets: Arizona, Connecticut, Louisiana, Maryland, South Dakota, Virginia and Wyoming. Sports betting is now legal in 33 states and the District of Columbia, including Florida, Nebraska, and Ohio where sports betting is legal but not yet operational.
Igaming reached $3.71 billion in 2021, with two new markets, Connecticut and Michigan opening.
And while not included in the report, AGA Senior Director, Research, David Forman said preliminary figures indicated that Tribal gaming was on pace for record revenue in 2021.
“There’s every indication that Tribal gaming is also had a strong recovery nationwide 2021,” said Forman, noting that tribal gaming revenue figures won’t be available for several months. “But revenue sharing numbers from Oklahoma are more than 20% above 2019 levels, which would put that in line with commercial revenue.”
While the pace might be slower, Miller thinks there are areas where gaming revenue can continue to grow. He cited increases in business and international travel, and the return of conferences and tradeshows in 2022, as reasons for optimism.
“We brought new and more features into the industry, to the public sports betting and igaming,” Miller said. “And brick-and-mortar has come back exceptionally well. I don’t know if there will be records set every year, but I definitely would imagine that we’re going to have a very strong 2022 and certainly 2023.”
Another significant development last year was the drop in average of casino goers, from 49- to 44-years old. Forman added that in states that allow tracking, the spend per visitor has also increased about 2019 levels. The return of patrons aged 55 and older, many of whom avoided brick-and-mortar casinos due to health concerns associated with the pandemic, also could be a postive outcome in 2022.
Miller cited accelerated innovation as another positive indicator noting that “over the past year suppliers and operators found new ways to strengthen customer engagement; 2021 was a breakout moment for omnichannel gaming,” he said. “The pandemic drove a shift in player behavior and it fueled a truly integrated experience, one that enables a player to engage how, where and when they want to play. New digital verticals, combined with digital payments. are providing a seamless experience for customers.”
There are reasons to be cautious. Miller cites the continued presence of illegal offshore operators who offer sports betting but have no consumer protections, don’t pay taxes and are not regulated as one of the industry’s biggest threats. He also mentioned slot machine-style electronic games, or “gray machines,” as an area of concern.
