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FALLS VILLAGE, Conn. - Indian gaming revenues reached an all-time high in 2007 at the same time that the industry;s annual growth rate was the slowest in 20 years.

According to Casino City's latest Indian Gaming Industry Report by Alan Meister, an economist with Analysis Group in Los Angeles, Indian gaming generated $26.5 billion in revenues in 2007, a 4.9 percent increase over the $25.3 billion generated in 2006. It was the third consecutive year of slower growth in gaming revenue since 1988 when the Indian Gaming Regulatory Act was passed.

In 2006, the growth rate was 10.2 percent. In 2005, $22.9 billion in revenues represented 14.6 percent over the previous year's increase.

''This is not to say that Indian gaming has performed poorly. It has just not performed as well as it has in the past. In fact the 5 percent growth rate in 2007 is still quite respectable, especially considering the state of the economy and the nationwide performance of commercial casinos [about 2 percent growth in 2007],'' Meister said.

In addition to the sagging economy, Meister said that Indian gaming's historical growth pattern fits what is known about markets: that they grow more rapidly in their infancy than when they mature.

But in addition, Meister said, the slowdown in Indian gaming growth is the result of ''something much more pervasive - namely existing and proposed legislation, regulations and tribal state gaming compacts intended to artificially restrict the supply of Indian gaming.''

In recent years, tribal-state compacts have restricted Indian gaming either by the number of facilities and/or the number of machines in various states. Tribes in California, Arizona, Washington, South Dakota and Montana, for example, had enough consumer demand before the slowdown in the economy to expand their gaming facilities, but their state compacts restricted them from doing so.

Despite the slower growth, the Indian gaming industry is still seeing increases, Meister said.

Class III gaming continues to generate the lion's share of gaming revenues at Indian casinos across the nation. In 2007, Class III gaming generated $22.7 billion, or 86 percent, of total gaming revenue.

Class II games generated an estimated $3.8 billion or 14 percent of total gaming revenue and of this amount 42 percent, or $1.6 billion, was generated in Florida.

Indian gaming outpaced the growth in the commercial gaming sector by more than double the rate. Commercial gaming revenue grew around 2 percent from $31.7 billion in 2006 to $32.2 billion in 2007. Indian gaming's revenue was 82 percent of the commercial casino sector, up 2 percent from a year earlier.

Indian gaming continues to make a significant contribution to the U.S. economy, Meister said. Nongaming revenues generated by the casinos in 2007 rose 9 percent to $3.1 billion from $2.9 billion. Also, in 2007 Indian gaming directly or indirectly provided $85.8 billion in output; 732,000 jobs; $29.4 billion in wages; and $13.5 billion in federal, state and local tax revenue. Those numbers are significantly higher than estimated contributions 2006, which included $79.7 billion in output; 710,000 jobs; $27.3 billion in wages; and $12.8 billion in tax revenue.

There were 230 tribal governments in 28 states operating 424 gaming facilities in 2007, the report says.

California and Connecticut continue to be the top two Indian gaming revenue-generators.

In California in 2007, 57 tribes operating 60 gaming facilities pulled in $7.8 billion, accounting for just over 29 percent of total Indian gaming revenue. The casinos had 66,115 gaming machines and 2,066 table games - more than any other Indian

gaming state.

California tribes saw a revenue increase of 1.6 percent from around $7.6 billion in 2006, much lower than the 9.2 percent and 19.5 percent growth rates in 2006 and 2005, respectively. Meister attributed the slowdown to the weak economy and also to artificial restrictions set by the limitations on the number of machines allowed in the 1999 gaming compacts with the state.

This may not be the most auspicious time for the California casinos to expand, Meister said, but when the economy improves, ''There should be ample room for growth.''

Connecticut's Foxwoods Resort & Casino, owned by the Mashantucket Pequot Tribal Nation, and the Mohegan Sun, are the two highest revenue generating casinos in the country. In 2007, they together generated around $2.5 billion, a 1.6 percent increase from approximately $2.4 billion in 2006.

Last year's slowdown was part of a continuing pattern, Meister said, attributing the decline to increased competition in the northeast gaming market in New York, Atlantic City, Pennsylvania, Rhode Island and Maine.

Both Foxwoods and Mohegan Sun are spending almost $1 billion each on expansions to diversify into more elaborate resort destinations with celebrity chefs, high-end retail outlets, and big name celebrity musical performances. MGM Grand at Foxwoods opened in May, and the first phase of Mohegan's Project Horizon expansion is scheduled to open later this summer. Both tribes also have projects elsewhere in the country on their own or with other tribes.

The two casinos represent almost 10 percent of the total gaming revenues in the country.

Oklahoma saw the biggest increase in growth rate of all the Indian gaming states in the country, generating almost $2.5 billion, a 22.3 percent growth rate over revenues of $2 billion in 2006.

''Tribes not only continued to increase the supply of gaming, they also increased the quality and types of offerings at existing facilities, including more Class III devices and non-gaming amenities,'' Meister said, predicting that the Oklahoma market will continue to grow.

Meister has an optimistic outlook for the future of Indian gaming.

''The economy will improve in time, bringing consumer confidence, disposable income, and spending on casino gaming. In the meantime, there is an abundance of new gaming facilities being expanded, and new casinos being proposed and planned. These gaming developments will help keep Indian gaming competitive and prepare it for when the economy

does recover.''