While casino executives are legitimately concerned about courting their next generation of customers, the present isn’t so bad.
“Two years ago there was concern about declining revenues in gaming,’” said Daniel Holmes, a CPA with RubinBrown. “But if you look especially at the regional markets, there is now sustained growth. In 2015 there were nine regional gaming markets with more than 5 percent growth.”
Holmes notes that it’s not the growth casinos saw a decade ago, but revenues are still outpacing the overall U.S. economy.
RubinBrown, with its home base in St. Louis, performs accounting, tax compliance, and best practice recommendations for all sorts of industries, so it’s in a position to evaluate gaming revenues within the context of the rest of the economy. “A year ago casino people were talking about millennials, but if you look at it, the industry is still doing well,” Holmes said. “And there’s more avenues out there, so there’ll be continued growth nationwide.”
The company’s one caveat, though, is the issue of continued economic uncertainty, which they say could bring a slowdown in job creation and growth.
RubinBrown officials, who issue an annual revenue report for the industry, note that in the pre-recession year of 2007, revenues were $66.1 billion; in 2015 they were $71.1 billion, some $5 billion higher. During those years, more than 90 new casinos opened.
And more growth is on the way. For example, Georgia is considering allowing casinos, and Biloxi, Mississippi, has recovered from natural disasters, said Brandon Loeschner, partner and gaming practices leader for RubinBrown.
There also are growing revenues for gambling operations beyond casinos, Loeschner said. Illinois, which in 2012 began allowing a maximum of five slot machines in bars and other establishments, is experiencing “huge” growth. Last year, that “limited gaming” market collected $913 million in revenues for the operators (about $4,000 per machine), 30% of which was then collected as taxes.
“With the bars, Illinois revenue has surpassed the previous peak in 2007,” Loeschner said. “It’s been good for the state but it’s taken away from the traditional riverboats. They’re all down revenue-wise but as a state it’s up.” Meanwhile, land-based companies such as Penn National Gaming and Delaware North have entered the VLT market, making large sales in that market, and are reaching consumers with multiple touch points. “Penn is a national company with property on the Las Vegas strip, but it also owns slot machines in your local tavern and bar,” Loeschner said.
Next up, as casino executives know, is a push for sports and online gaming, as well as daily fantasy sports. Loeschner said that the large national corporations are involved in all facets of those endeavors, while also making inroads with lotteries. Lotteries are looking to go online for instant tickets, but the timing is uncertain. That would negatively impact regional casinos, but with so much else potentially changing, long-term trends are almost impossible to accurately predict.
