Indian gaming revenue in the U.S. hit an all-time high of $31.5 billion in calendar year 2016, but the development of non-gaming revenue at tribal casinos grew at a higher percentage rate, which a California economist said was a natural progression for the industry.
Alan Meister, who authors the annual Indian Gaming Industry Report for Casino City, said in the study being released Wednesday that non-gaming revenue – hotel rooms, restaurants, retail and other entertainment – reached a nationwide record of $4.2 billion in 2016, an increase of 8.2 percent.
The $31.5 billion gaming revenue figure was a 3.9 percent increase over 2015 and the seventh straight annual jump for the nation’s tribal casino industry, which has expanded significantly since passage of the 1988 Indian Gaming Regulatory Act. The only decline in gaming revenue came in 2009 during the heart of the recession.
Meister, CEO of Meister Economic Consulting, spends more than a year compiling revenue and statistical data from Indian gaming states. The report covered information from 500 Indian casinos in 28 states – six more casinos than in 2015. The tribes operated nearly 359,000 gaming machines and 7,700 table games.
California continued to dominate the Indian gaming market in 2016. The state’s 74 casinos – two more than in 2015 – collected a record $8.4 billion in gaming revenue, a 6.3 percent increase. The state accounted for 27 percent of the total gaming revenue nationwide. Oklahoma’s casino industry was second in the nation with $4.3 billion in gaming revenue, an increase of 5 percent. Combined, the two states accounted for 41 percent of the overall total.
Florida was No. 3 with $2.56 billion, an increase of less than 1 percent.
Revenue from non-gaming amenities are still small in comparison to most commercial markets. Las Vegas casinos, for example, collect 65 percent of their revenue from non-gaming sources. Meister said Indian gaming now has access to financing to develop non-gaming amenities that attract a younger demographic who might not be interested in gambling.
“Tribal gaming started on a much smaller scale, maybe just bingo and card rooms,” Meister said. “As we have watched Indian gaming expand, this is just a continuing evolution and a way for the industry to grow and become more diversified.”
California reported $956.9 million in non-gaming revenue, a 6.3 percent increase from 2015 and the highest total in the nation. Meister expects California’s non-gaming revenue figure to top $1 billion when 2017’s numbers are released.
California shows no sign slowing. The Graton Resort north of San Francisco opened a 200-room hotel in 2016 and the Federated Indians of Graton Rancheria said in 2017 it was exploring an additional hotel expansion. In the Sacramento area, Hard Rock International, Caesars Entertainment and Boyd Gaming are in partnership with three tribes on casino projects valued at more than $1 billion. The developments are expected to include a healthy collection on non-gaming offerings.
In Southern California this year, the Pechanga resort in Temecula (Riverside County, north of San Diego) spent $300 million to double the hotel capacity to almost 1,100 rooms and suites while adding a luxury spa, events center, and a tropical pool complex that includes a restaurant. The San Manuel Casino in San Bernardino County (near Los Angeles) said it will spend $500 million to build a hotel, 3,000-entertainment venue, pool complex and restaurants.
“Some Indian casino markets are at a disadvantage for locations, but there are some tribes that can emulate what has been done in the commercial casino industry,” Meister said.
Washington State remained the No. 4 Indian gaming market during 2016 with $2.5 billion in revenue, an increase of 56 percent. Arizona held onto to the fifth spot with $1.9 billion but saw a slight decline of less than 1 percent.
Arizona was one of four Indian gaming states to report a decline in 2016 but Meister said he pleased that Indian casinos in New York and Connecticut reported increases. For New York’s 12 Indian casinos, the increase was the first in five years. Connecticut’s two casinos snapped a nine-year losing streak.
“Those are markets that have seen increased competition from commercial casinos in the Northeast and Indian casinos in other states,” Meister said.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
