As our regular readers know, the theme of this column is "Indian gaming," implying an emphasis on gaming operations conducted by federally recognized Indian tribes. Because Indian gaming comprises only about 10 percent (by revenue) of the entire gaming industry, it might be useful to step back and take a look at the other sectors of the industry, the "competition" if you will. Today, let's shift gears and take a broad look at both the commercial casino industry and those who patronize casinos.
The American Gaming Association, a Washington D.C.-based trade group representing commercial gaming companies, recently released its fourth annual report entitled "State of the States: The AGA Survey of Casino Entertainment." While the commercial casino industry operates largely outside the sphere of Indian gaming, this survey reveals interesting information about the state of the commercial casino industry, its economic impact, its customers and attitudes on gaming in general.
"The AGA is dedicated to its mission of providing the facts about our business and its positive impact on our nation's economy to the general public, policy-makers and the media," said Frank J. Fahrenkopf Jr., AGA President, in the preface to the survey. "In the case of casino gambling, there has been remarkable consistency year-to-year in Americans' responses to questions involving their participation in gambling activities, as well as their views of the industry's acceptability, economic benefits and entertainment value."
Part of the survey examines various sectors of commercial gaming in the states where it is legal, and provides economic data on commercial gaming in the various states. Polls of both random adults and casino (including commercial, riverboat, racetrack and Indian-owned) patrons, conducted by Peter D. Hart Research Associates Inc. and the Luntz Research Companies, "compare the lifestyles of the overall U.S. population to those Americans who choose to gamble," Fahrenkopf said. "The results contradict a stereotype perpetuated by gambling opponents that people who gamble are not representative of the population as a whole."
Commercial gaming enterprises took in revenues of $25.7 billion during 2001, compared to $24.5 billion the previous year. AGA attributed this five-percent increase in part to "new gambling opportunities, as seen in Michigan and Missouri, while in other states, customer-friendly regulatory changes spurred industry growth, most notably the increase in the maximum bet allowed in South Dakota." By comparison, Americans spent $41 billion on basic cable television, $24.7 billion on golf, and $8.4 billion at movie theater box offices.
A total of 434 casinos in 11 states comprised the commercial segment of the gaming industry in 2001. These casinos employed over 364,000 people with an aggregate payroll of $11.5 billion. The casinos reported paying $3.6 billion in taxes to local and state governments. By far and away, Nevada dominates the commercial sector with 247 casinos and gross revenues of $9.5 billion.
"The commercial casino industry pays some of the highest corporate tax rates in the country ? up to 35 percent of gross gaming revenue," AGA said. Tax payments in Nevada and Louisiana declined while the other nine states, Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, Missouri, New Jersey and South Dakota, all saw increases. Tax rates on gross gaming revenues range from 6.25 percent in Nevada to 35 percent in Illinois.
Racetrack casinos were "one of the largest growth areas" in gaming, the survey said. Such facilities are defined as pari-mutuel operations, which include horse and dog tracks and jai alai frontons that also have slot machines on-site. During 2001, racetrack casinos, or "racinos" as they are sometimes known, enjoyed revenues of $2.1 billion, employed almost 8,000 people and paid $577.9 million in state and local taxes. Racinos can be found in Delaware, Iowa, Louisiana, New Mexico, Rhode Island and West Virginia.
The commercial casinos in Colorado and South Dakota are known as "limited-stakes" casinos. This is because both states mandate betting limits for all games at all casinos. In Colorado, that limit is $5; in South Dakota, the limit was raised last year to $100 per bet.
Riverboat, or dockside, casinos legally operate in Illinois, Indiana, Iowa, Louisiana and Missouri. Because land-based casino operators also run these aquatic gaming establishments, separate figures for them are unavailable, according to Naomi Greer, AGA's communications director. Some states actually require the boats to travel on the rivers, while others allow them to be permanently moored barges, hence the "dockside" moniker.
By way of comparison, tribal governments garnered approximately $10.6 billion in gaming revenues in 2000, an amount representing less than 10 percent of the entire class III gaming industry's nationwide revenues. Only 212 of the 562 federally recognized tribes run class III casinos; such casinos currently operate in 29 states under a total of 249 separate gaming compacts. These figures for 2001were provided by the National Indian Gaming Association.
Citing 1999 figures, the survey said that Indian casinos provided 205,000 jobs in 23 states. According to NIGA's figures for 2001, Indian-owned casinos employed 250,000 in 29 states.
Over 52.3 million people patronized casinos in 2001, making a total of 303 million visits, which the survey said was roughly the same as the aggregate turnstile count of the country's theme and amusement parks.
"Casino customers are everyday Americans ? filing their taxes on time, donating money to charities, exercising and eating dinner at home with their families," the survey said. "In some cases, casino customers are even more likely to be involved in intellectual, civic or patriotic activities ? contradicting the negative stereotypes gambling opponents perpetuate about people who gamble."
The poll found that casino customers, on the average, enjoyed a slightly higher median annual income than the U.S. populace as a whole, $49,700 versus $41,300. Casino patrons' median age was 46, topping the national median by a year.
The Hart/Luntz poll also solicited responses to a variety of statements regarding gambling, with some interesting results. Twenty-eight percent and 21 percent of respondents strongly and somewhat agreed, respectively, to the statement "I would favor the introduction of casino gaming in my local community because of its benefits to the local economy." Thirteen percent somewhat disagreed, 27 percent strongly disagreed while 11 percent didn't know or didn't answer. An overwhelming 73 percent indicated that a casino could be an important community asset in regard to entertainment and tourism; twenty-two percent disagreed. Sixty-two percent of those polled believe that casinos "bring widespread economic benefits to other [local] industries and businesses," versus 29 percent who disagreed.
Casino patronage ranked second to lotteries as the gambling form of choice among Americans. The poll found that during 2001, 48 percent of Americans played a lottery, while 28 percent gambled at a casino, 20 percent participated in a sports betting pool, eight percent bet on horse or dog races and three percent wagered over the Internet.
Regarding responsible gaming, an overwhelming 58 percent of those surveyed said that adult gamblers themselves should be responsible for dealing with compulsive gambling problems. When underage gamblers exhibit compulsivity, however, 36 percent believe responsibility lies with gaming facility owners to address the problem. When asked if the casino gaming industry has done "a good job" in combating illegal gambling by minors, 22 percent said "very good" while 32 percent said "fairly good."
In the first paragraph of this week's column, commercial casinos are referred to as the "competition." While this is generally true, Indian-owned gaming establishments only compete head-to-head with their commercial counterparts in a few areas of the country. Both Indian and land-based commercial gaming establishments are legal in Nevada, Colorado, South Dakota, Michigan, Iowa, Mississippi and Louisiana. Indian-owned establishments are the only form of casinos allowed in New York, Connecticut, North Carolina, Wisconsin, Minnesota, North Dakota, Montana, Idaho, Washington State, Oregon, California, Arizona, Nebraska, Kansas and Oklahoma. In New Mexico, Indian-owned casinos compete with private racetrack casinos. In Louisiana, competition for the tribes includes land and riverboat casinos as well as racinos, while in Iowa, riverboat and racetrack operations provide the competition. Gaming tribes in Mississippi compete with commercial dockside casinos.
Of course, this is not to say that political boundaries rigidly define gaming markets. For example, the two Indian-owned casinos in Connecticut have certainly drawn thousands of northeastern gamblers away from Atlantic City's commercial casinos. The state of New York is also looking to keep the Big Apple's gamblers in-state by proposing three new Indian casinos for the Catskill Mountain region, within easy driving distance of metropolitan New York City. Three more Indian casinos in the western part of the state are aimed at keeping American gamblers from wagering at Canadian casinos in Ontario.
The survey can be viewed at AGA's web site, www.americangaming.org.