Gaming is a seasonal industry. Winter and summer have slower revenue months than spring and autumn. Many extenuating circumstances, such as hurricanes, floods, recessions, and pandemics, can change traditional patterns, but those are anomalies. Because of the seasonality of gaming revenue, it is rarely meaningful to compare one month to the previous month. November nearly always produces less revenue than October, for example. Official comparisons are always year over year and not month over month. When Louisiana, Missouri, New Jersey, Nevada, or Pennsylvania report monthly revenue, the comparisons are year over year, not month over month.
In public companies, financial reporting also uses a year-over-year comparison. In fact, it is common wisdom that when a company tries to change the comparisons, it is attempting to obscure some less-than-favorable facts. When there is a special occasion, such as a recession, pandemic, or hurricane, a footnote might use other comparisons. During the recent pandemic, comparisons other than year over year were used. As casinos reopened and later reduced the restrictions, comparing to the previous month was significant in demonstrating the improvements ensuing from those changes. It was such an unusual period of time that for most of 2021, comparisons were made to 2019 instead of 2020. The logic was simple: 2019 was the last normal year, so instead of comparisons to the disrupted and unique year of 2020, using 2019 made more sense. Even some gaming regulatory agencies added an additional column to include 2019 figures.
It quickly became apparent that 2021 was going to be an exceptional year, dwarfing 2020 and even surpassing 2019. That narrative eclipsed all other storylines. Until 2021, 2019 had been the best year the gaming industry had ever had. Gaming revenue for all of 2021 was $52.9 billion, an increase of 73 percent over 2020 and 18 percent over the previous record of $44.9 billion in 2019. It was a very big story. By the end of 2021, most reporting agencies and gaming companies had returned to the normal year-over-year comparisons. That is certainly the case in 2022. However, it has not always been the case with the media; sports wagering is at least partially responsible.
Sports betting is relatively new as a national industry. Beginning in May 2018, sports betting began expanding dramatically. From three states reporting sports-betting revenue in June 2018, the industry grew to 27 states reporting in May 2022. Several more states have legalized sports betting and are in the process of developing the structure. The year-over-year improvement in the handle and revenue probably has at least two more years to go; new states are being added, more states are adding mobile wagering, and sports fans are growing more familiar with the possibilities. Eventually, the comparisons will be apples to apples and not distorted by expanded options.
The introduction of sports betting has increased the number of media outlets covering gaming and sports. Hundreds of outlets now report on sports wagering and most of the coverage comes from sports reporters, not business reporters, a phenomenon that has also occurred in coverage of other forms of gaming. Newspapers have been cutting staff and coverage for years. As a result, much of the gaming coverage is no longer done by experienced gaming or business reporters. Reporters have been repurposed from other subjects and bring a very different perspective from business writers.
Those changes have resulted in a new standard, comparing month over month, instead of year over year. In New York, in fact, it has become common to compare week over week, a truly unusual point of view. Month-over-month comparisons have led to many false assumptions. One major assumption concerns the impacts of the war in Ukraine, inflation, and a pending recession on revenues. Month after month in 2022, there have been stories of the decline in sports betting. It is said to be due to war, inflation, or competition from other states. The facts are something different. Sports betting is even more seasonal than casino gambling. It has one major season, football, and several minor ones, such as basketball, baseball, and national-championship competitions.
Football season begins with the resumption of the NFL in September and ends with the Super Bowl in February. Betting picks up in September and continues to grow until the Super Bowl. After that, wagering on sports begins to decline and continues to decline until September. Reporting on the decline in wagering in April as compared to March is equivalent to reporting on the sun rising in the morning earlier in April than in March.
The real story is the year-over-year growth that has taken place in sports. It has continued into the middle of 2022, while casino-revenue growth has slowed or even stalled. The sports story is nuanced and includes the doubly significant mobile sports betting handle and win. Other forms of gaming revenue are also nuanced, influenced by freestanding VLTs, new casinos, and igaming. Igaming revenue is growing nearly as fast as sports revenue and is more consistent, showing a less pronounced seasonal pattern. In the long run, it will settle into a season pattern like that of casinos, horse racing, and even bingo.
Looking at year-over-year comparisons can illuminate the changes being brought by sports, igaming, new casinos, and new casino competition. It is essential in analyzing long-term trends.
