RubinBrown Gaming Stats 2014

States with Commercial Gaming

2013 COMMERCIAL CASINO REVENUES

ME

$37.83B

1.3%

NY

SD

RI

MI

PA

IA

OH

NJ

IN

IL

NV

WV

CO

MO

DE

KS

MD

OK

NM

MS

LA

FL

Positive Growth and No Significant Expansion in 2012 or 2013

Negative Growth and No Significant Expansion in 2012 or 2013

Positive Growth with Significant Expansion in 2012 or 2013

small resort casino); however, the overall market experienced its first year-over-year decline (-1.5 percent) in gaming revenue since the first casino opened in November 2006. States cannibalizing neighboring jurisdictions gaming revenues is most evident in the Kansas City market. In 2011, the Kansas City gaming industry generated $741.50 million in revenue and encompassed five Missouri casinos. In 2012, the Kansas City, Kansas based Hollywood Casino at Kansas Speedway entered the market. The addition of a sixth casino has resulted in the market’s overall gaming revenue increasing by $36.81 million, as the market generated $778.51 million in 2013. However, the expansion of gaming in Kansas has come at a cost to the original five Missouri casinos. In 2013, the new Kansas casino generated $131.17 million in revenue. Assuming the five Missouri-based casinos would have experienced flat revenue growth during 2012 and 2013, the new Kansas casino effectively generated 71.8 percent of its revenue through the cannibalization of Missouri gaming revenues. Looking Forward Overall, the United States commercial gaming industry will continue to grow through the emergence of new markets such as Massachusetts and New York; however, the growth will be mitigated through continued declines in existing markets. With regional casinos facing declining revenues, there are three significant trends to observe going forward in 2014: continued market expansion, partnerships between states, and diversification beyond the gaming floor. Market expansion will be a key area to observe throughout 2014 as state legislatures still view gaming as an industry that can aid in overcoming budgetary gaps. Most notably, the legislative decisions in Illinois and Pennsylvania will be critical for existing operators. Each state is already facing market saturation, but

Negative Growth with Significant Expansion in 2012 or 2013

both legislatures continue to contemplate expansion through new casinos or video lottery terminals in local bars. Meanwhile, Massachusetts and New York will continue to garner attention as the reality of gaming expansion comes closer throughout the respective casino selection processes. Partnerships between states will become more and more prominent, as states work to lobby for the overall growth of the gaming industry. The first example of such partnerships will likely emerge between South Dakota and New Jersey, as the two states are working to link wide-area progressives. The agreement will increase the jackpot dollar amounts, leading to an increase in wagering. The continued legalization of online (interactive) gaming on a state-by-state basis will lead to inter-state compacts. Delaware and Nevada will likely lead the industry, as these states have already agreed to a compact in principal and will continue to work out the technical details in 2014. Diversification beyond the gaming floor will remain critical for regional markets, as the traditional brick-and-mortar industry continues to face an aging demographic. Regional operators will need to learn from the story of the Las Vegas Strip. In 2013, the Las Vegas Strip achieved near-record visitation volume (down 0.1 percent from the record set in 2012), but continued to remain well below pre-recession gaming revenue records ($6.5 billion in 2013 compared to $6.8 billion record set in 2007). The ability for Las Vegas to achieve record visitation volume is attributed to its ability to transform from a gambling town to an entertainment and vacation destination for all generations. As the casino floor target market continues to age, regional operators must identify ways to make their facilities local entertainment destinations that attract the millennial generation.

2014 Commercial & Tribal Gaming Stats | 3