Betting the Minimum Gaming in the U.S. and State Revenues 1 - - PowerPoint PPT Presentation

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Betting the Minimum Gaming in the U.S. and State Revenues 1 - - PowerPoint PPT Presentation

Oct 09, 2022 163 likes •471 views

Betting the Minimum Gaming in the U.S. and State Revenues 1 Oregon Office of Economic Analysis Overview Consumer Spending Reset Entertainment dollar stabilized, gaming too Regional and State Differences Increased competition

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Oregon Office of Economic Analysis

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Betting the Minimum

Gaming in the U.S. and State Revenues

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Oregon Office of Economic Analysis

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Overview

  • Consumer Spending Reset

– Entertainment dollar stabilized, gaming too

  • Regional and State Differences

– Increased competition driving growth – Underlying demand for gaming lower

  • Public Revenues
  • Outlook
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Oregon Office of Economic Analysis

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Methodological Notes

  • Publicly available data

– Thus incomplete coverage within states and across states

  • See Excel file for documentation
  • Focus primarily on slots
  • Focus on net revenues, or casino win

– Gross sales minus prizes, effectively

  • Focus on revenues as share of local personal

income

– Misses wealth impact

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Oregon Office of Economic Analysis

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Entertainment Dollar Stable, But Down

3% 4% 5% 6% 1985 1995 2005 2015

Entertainment as Share of Income

Consumer Expenditure Survey, BLS Overall Middle 20%

  • 20%
  • 16%
  • 12%
  • 8%
  • 4%

0% Bottom 20% 2nd Quintile Middle 20% 4th Quintile Top 20%

Entertainment Expenditures 2008-2013

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Oregon Office of Economic Analysis

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U.S. Gaming Stabilizing as Well

  • Resetting of

gaming expenditures post recession

  • Stabilized since

mid-2010

  • Different patterns

across games and across country

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1960 1970 1980 1990 2000 2010

U.S. Gambling Expenditures as Share of Disposable Personal Income

BEA, Tables 2.1, 2.4.5U Pari-Mutuels Lotteries Casinos

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Oregon Office of Economic Analysis

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Spending Primarily at Casinos

Lotteries Flat

Peaked as share of income in mid-

  • 1990s. Traditional lottery sales

generally flat.

Casinos Keep Some Gains

Exceptional growth ‘90s thru housing

  • bubble. Keeping 40% of housing

bubble gains even after recession.

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 1960 1970 1980 1990 2000 2010

Lotteries as Share of Disposable Income

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 1960 1970 1980 1990 2000 2010

Casinos as Share of Disposable Income

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Oregon Office of Economic Analysis

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U.S. Gaming Data

Northeast Midwest + Ohio, Michigan Gulf Southwest Data Available

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Oregon Office of Economic Analysis

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Vegas, Baby.

  • Visitors are back…

… and spending money…

74% 76% 78% 80% 82% 84% 86% 88% 90% 92% 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000

1990 1995 2000 2005 2010 2015

Las Vegas Visitor Statistics

Source: Las Vegas Convention and Visitors Authority

Visitors, lhs Hotel Occupancy Rate, rhs

$7.0 $7.5 $8.0 $8.5 $9.0 $9.5 $10.0 FY2005 FY2007 FY2009 FY2011 FY2013 Billions

Leisure and Hospitality Taxable Sales

Clark County, NV, Inflation-adjusted 2013$

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Oregon Office of Economic Analysis

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  • 30%
  • 25%
  • 20%
  • 15%
  • 10%
  • 5%

0% 2007 2009 2011 2013 2015

Nevada Slots and the Great Recession

Slot Machine Win, 4 Qtr Average Reno Las Vegas Strip Downtown Vegas Other NV

…on everything except gaming

Vegas, Maybe?

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Oregon Office of Economic Analysis

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Northeast

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2000 2002 2004 2006 2008 2010 2012 2014

New Casinos Cannibalize Existing

Northeast Slot Revenue by State

Connecticut Delaware New Jersey New York Pennsylvania Rhode Island Maryland

0.18% 0.21% 0.24% 0.27% 0.30% 0.33% 0.36% $4 $5 $6 $7 $8 $9 $10 2000 2002 2004 2006 2008 2010 2012 2014 Billions

Northeast Slot Revenue

Sum of CT, DE, MD, MA, NH, NJ, NY, PA, RI, VT Slot Revenue Share of Personal Income

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Oregon Office of Economic Analysis

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Where Do Mature Markets Land?

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 2000 2004 2008 2012 Billions

Mature Gaming Destinations Suffer

Slot Machine Win

New Jersey Connecticut

State Peak Year Peak Slot Revenues (Net) 2014 Slots % CT 2007 $1.722 b $1.096 b

  • 36%

DE 2006 $0.652b $0.354 b

  • 46%

NJ 2006 $3.804 b $1.921 b

  • 50%
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Oregon Office of Economic Analysis

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Even Pennsylvania Slowing

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

Billions

Pennsylvania Gross Terminal Revenue

Initial 7 Casinos Newer Casinos (5 total) Share of Income, rhs

  • 6.3% past

2 years

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Oregon Office of Economic Analysis

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And Here Comes Massachusetts

  • MA accounts for ~12%
  • f regional personal

income & population

  • 3 casinos on the way
  • How much will the

market grow compared with cannibalization?

– Rhode Island Study

  • MA casinos lower FY17

revenues by 30-42%

http://massgaming.com/about/expanded-gaming-act/

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Oregon Office of Economic Analysis

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Midwest

  • Most of region avoided

big recessionary losses, but sales as share of income continue to fall

  • Illinois the exception

with large declines

  • Indiana and Missouri

seeing large declines in 2013 and 2014 (Ohio impact?)

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 2000 2002 2004 2006 2008 2010 2012 2014

Midwest Slot Revenues

Revenue as Share of Personal Income Illinois, Indiana, Iowa, Missouri, Wisconsin

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Oregon Office of Economic Analysis

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Buckeyes Rising, Wolverines Slowing

  • Detroit’s commercial

casinos were doing relatively well

– Windsor helping

  • Ohio voters

approved casinos in 2009, opened in 2012

– Likely to grow further

0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 0.45% 2000 2002 2004 2006 2008 2010 2012 2014

Ohio and Michigan Casinos

Share of Personal Income

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Oregon Office of Economic Analysis

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West Virginia Squeezed

Country Roads Don’t Take You Home

West Virginia Casino Atlantic City New Casinos & Racinos

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Oregon Office of Economic Analysis

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West Virginia Feeling the Impact

$800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Millions

West Virginia Video Lottery (Gross Sales)

  • 18% from

peak Now -23% Neighboring Casinos Opened: PA MD OH

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Oregon Office of Economic Analysis

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Gulf Coast

  • Louisiana sales

eroding as share of sales

  • Mississippi seeing

larger declines

  • Florida racinos in

2007 added some regional competition

0% 1% 2% 3% 4% 5% 2000 2002 2004 2006 2008 2010 2012 2014

Gulf Coast Revenues

Share of Personal Income Mississippi Louisiana (Riverboats, Casino, Racinos)

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Oregon Office of Economic Analysis

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Southwest

  • Colorado’s mining

town casino’s seeing slow erosion

  • Arizona’s boom and

bust not limited to housing

  • New Mexico

performing relatively well…

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 2000 2002 2004 2006 2008 2010 2012 2014

Southwest Revenues

Share of Personal Income New Mexico Arizona Colorado

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Oregon Office of Economic Analysis

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…But Even New Mexico is Flat

  • For mature

market, New Mexico is a success

  • Casino win is

effectively flat for 7 years

  • Growth driven

by new casinos

– Take market share

$0 $50 $100 $150 $200 2003 2005 2007 2009 2011 2013

New Mexico Tribal Casino Net Win

Millions of Inflation-adjusted 2013$, 4 Qtr MA 11 Tribal Compacts in Place in 2003 Jicarilla Apache, Ohkay Owingeh, Pueblos of Acoma, Isleta, Laguna, Sandia, San Felipe, Santa Ana, Santa Clara, Taos, Tesque Mescalero Apache & Pueblo of Pojoaque Navajo Nation

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Oregon Office of Economic Analysis

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Oregon Is No Exception

$8 $9 $10 $11 $12 $13 $14 $15 $16 $17 $18 Jan-01 Jan-05 Jan-09 Jan-13 Millions

Oregon Video Lottery Sales

Weekly Net Sales, 52 Week Moving Average

Line Games Introduced Great Recession + Smoking Ban

0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 2000 2005 2010 2015

Oregon Video Lottery

Share of Personal Income, 4 Qtr Avg

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Oregon Office of Economic Analysis

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Northern Plains

  • Even states that

have

  • utperformed

economically see losses and/or slower growth

  • Montana has

regained about half of losses

  • South Dakota at
  • r near all-time

high, but flat past 7 years

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 2000 2002 2004 2006 2008 2010 2012 2014

Sales as Share of Personal Income

Montana Video Gambling Machines South Dakota Slot Revenues

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Oregon Office of Economic Analysis

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Public Revenues

$0 $1 $2 $3 $4 $5 $6 $7 $8 $9 1950 1960 1970 1980 1990 2000 2010 Billions

States' Reliance on Gaming

Tax Collections, 2013$, 1951-2013, U.S. Census Pari-Mutuels Amusements 0.0% 0.5% 1.0% 1.5% 2.0% 1950 1960 1970 1980 1990 2000 2010

States' Reliance on Gaming

Share of All States Total Tax Collections, U.S. Census

Pari-Mutuels Amusements

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Commercial Casino Taxes

$0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 1999 2002 2005 2008 2011

Commercial Casino Tax Revenues Millions of inflation adjusted dollars, $2012 American Gaming Association: State of the States

Existing States in 1999 CO, IA, IL, IN, LA, MI, MO, MS, NJ, NV, SD New States DE, FL, KS, ME, MD, NM, NY, OH, OK, PA, RI, WV

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Oregon Office of Economic Analysis

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Gambling Revenue as Share of State’s Own-Source Revenue, FY09

> 5% 3.5 – 4.9% 2 – 3.4% < 1% 1 – 1.9%

Source: Rockefeller Institute

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Outlook, General

  • Stagnant incomes
  • Consumer preferences

– Gaming vs other entertainment – Table vs Slot

  • Slow gaming pop growth
  • Intensity to fall with aging pop
  • More of an upper bound due to

possible generational trends

$50,000 $70,000 $90,000 $110,000 $130,000 $150,000 1985 1995 2005 2015

Median Family Struggling

Inflation-adjusted 2013$, Census, Federal Reserve Income Net Worth 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 20.5 21.0 21.5 22.0 22.5 23.0 1970 1980 1990 2000 2010 2020 2030 2040

Demographic Impact on Gaming Intensity

Barnes et al (2011) and U.S. Census Bureau Average Lottery Gaming Days per Year Lottery Gaming Population Growth

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Oregon Office of Economic Analysis

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Outlook, Scenarios

  • Scenario 1: Optimistic
  • Stronger economy results in more broad-based gains.

Consumers are confident, increase discretionary

  • spending. Return to previous growth path.
  • Scenario 2: Some Improvements
  • As consumer budgets repaired, increase spending on

entertainment and gaming. Growth rates pick up, however remain below gains in income.

  • Scenario 3: Slow Growth
  • No acceleration in gaming growth rates. Increase more

in-line with the adult population than macroeconomic variables like jobs or income.

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Oregon Office of Economic Analysis

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Outlook, Oregon

  • No real increase in establishments or video lottery

terminals since 2008

  • Video lottery sales as share of income back to pre-

line game period

  • Previous forecasts more in-line with Scenario 2.

Some growth rate improvement, but still below income gains

  • Possible forecast change to Scenario 3. Tie sales
  • utlook to growth in adult population and/or recent

years’ sales.

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Oregon Office of Economic Analysis

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Summary

  • Increased competition drives sales higher

– Final shakeout in market share unknown

  • Masks underlying industry trends
  • Key factors

– Stagnant incomes – Consumer preferences – Demographics

  • Tax revenue outlook follows sales
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Oregon Office of Economic Analysis

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Contact Information

www.OregonEconomicAnalysis.com @OR_EconAnalysis Josh Lehner, Economist joshua.lehner@oregon.gov (503) 378 - 4052