(MENAFNEditorial)
March 23 2015
For Immediate Release
Contact:
Robert Bullock
Deputy Director for Operations
518-443-5837
or by email at robert.bullock@rockinst.suny.edu
State Revenues from Gambling Show Weakness
Despite Gambling Expansion
Lucy Dadayan
NOTE: This report covers tax and fee revenues collected from major types of gambling activities for fiscal years 2013 and 2014. We will release a more detailed analysis of the trends observed before and after the Great Recession in the forthcoming "Blinken Report."
This Data Alert examines four types of legalized gambling from which states earn significant revenues — lotteries casinos racinos and pari-mutuel wagering. We also provide an overview of revenues from video gaming in states for which we were able to obtain data. In this Data Alert we define revenues as money collected from various taxes and fees transferred to state and local governments.
State-sanctioned and operated gambling has expanded in recent years. Currently 43 states operate lotteries 17 states operate commercial casinos 13 states operate racinos and over 40 states have pari-mutuel wagering. Among the states with casino and racino operations seven states operate both types of facilities: Indiana Iowa Louisiana Maryland Ohio Pennsylvania and West Virginia.
All states except Hawaii and Utah collect revenue from one or more types of gambling. In Alaska legal gambling occurs only where sponsored by Native American tribes.
States derive the bulk of gambling-related revenues from three major sources — lotteries casinos and racinos. While casinos experienced dramatic growth during the 1990s that trend shifted downward over the past decade. In recent years much of the growth has shifted to racinos — hybrids of casinos and racetracks — as more states have approved such facilities. Pari-mutuel betting once the major source of gambling revenue for states now represents less than 1.0 percent of such revenue.
When tax revenue weakens during economic downturns states often consider expanded gambling operations among other options for balancing budgets. That has been no exception during the Great Recession and its aftermath. Since the recession began in December 2007 over a dozen states have enacted various measures to expand gambling. For example states introduced new forms of gambling such as video games sports betting card rooms and iGaming. Four states — including Maine Maryland Ohio and West Virginia — legalized casino operations. Several states — including Delaware Maine Maryland Pennsylvania and Rhode Island ---- legalized poker and other table game operations at their casinos and racinos. New York and nine other states entered into an agreement to create a new multistate lottery game. In New Hampshire a 10 percent tax was put on gambling winnings greater than $600 annually. Internet gambling or the so-called iGaming appears to be the next target for many states. Currently internet gambling is legal only in three states — Delaware Nevada and New Jersey.
Table 1 shows state-by-state revenue collections in major gambling revenue for fiscal years 2013 and 2014. Table 2 shows the percent change in gambling revenues from fiscal year 2013 to 2014.
In fiscal year 2014 gambling revenue has weakened. States' revenues from the gambling showed soft growth at 0.6 percent in fiscal 2014 compared to fiscal 2013. After adjusting for inflation revenues from gambling declined by 0.8 percent in fiscal 2014. Revenues from gambling showed a mixed picture in fiscal 2014. Revenue from lottery operation the most significant source of all gambling revenue showed a 0.6 percent growth for the nation in fiscal 2014. Revenues from casino operations the second largest source of all gambling revenue declined by 1.4 percent. Revenue collections from racino operations increased by 1.5 percent while revenues from pari-mutuel wagering declined by 3.5 percent. Tables 1 and 2 also show revenues collected from video gaming activities in five states. In fiscal 2014 revenues from video gaming showed 19 percent growth. The large growth in video gaming revenues comes largely from Illinois where video gaming operations were legalized only recently in July of 2009.
The growth is not evenly distributed among regions. States in the Mid-Atlantic New England Plains and Rocky Mountain regions saw declines in revenues from gambling while states in the Far West Great Lakes Southeast and Southwest saw growth in fiscal 2014 compared to fiscal 2013. The largest growth was recorded in the Great Lakes region at 3.1 percent while the largest decline was reported in the Plains region at 3.9 percent. Growth in the Great Lakes region is mostly attributable to two states Illinois and Ohio. In Illinois gambling revenues were boosted mostly by newly legalized video gaming operations. The growth in Ohio came from two new casinos and three new racinos.
Of the 47 states with gambling revenue 27 states reported declines over the year with nine states reporting declines of more than 5 percent.
The recent geographic expansion of gambling created stiff competition for certain regions of the nation. Therefore the weakening of the growth in gambling revenues is also attributably to market saturation. Within certain regions expansion of gambling means rivalry for the same pool of consumers. For example Pennsylvania enjoyed strong growth in revenues from casino and racino operations until the opening of new casinos and racinos in the neighboring states of Maryland New York City and Ohio.
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