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

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 driving growth – Underlying demand for gaming lower • Public Revenues • Outlook 2 Oregon Office of Economic Analysis

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 3 Oregon Office of Economic Analysis

Entertainment Dollar Stable, But Down Entertainment Expenditures 2008-2013 Entertainment as Share of Income Consumer Expenditure Survey, BLS Bottom 2nd Middle 4th Top 20% Quintile 20% Quintile 20% 6% 0% -4% 5% Middle 20% -8% 4% -12% Overall -16% 3% 1985 1995 2005 2015 -20% 4 Oregon Office of Economic Analysis

U.S. Gaming Stabilizing as Well • Resetting of U.S. Gambling Expenditures as Share of Disposable gaming Personal Income BEA, Tables 2.1, 2.4.5U expenditures post 1.2% recession 1.0% • Stabilized since 0.8% mid-2010 Casinos 0.6% • Different patterns 0.4% across games 0.2% Lotteries and across Pari-Mutuels 0.0% 1960 1970 1980 1990 2000 2010 country 5 Oregon Office of Economic Analysis

Spending Primarily at Casinos Lotteries Flat Casinos Keep Some Gains Lotteries as Share of Disposable Income Casinos as Share of Disposable Income 0.9% 0.9% 0.8% 0.8% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% 0.4% 0.4% 0.3% 0.3% 0.2% 0.2% 0.1% 0.1% 0.0% 0.0% 1960 1970 1980 1990 2000 2010 1960 1970 1980 1990 2000 2010 Exceptional growth ‘90s thru housing Peaked as share of income in mid- 1990s. Traditional lottery sales bubble. Keeping 40% of housing generally flat. bubble gains even after recession. 6 Oregon Office of Economic Analysis

U.S. Gaming Data Northeast Midwest + Ohio, Michigan Southwest Gulf Data Available 7 Oregon Office of Economic Analysis

Vegas, Baby. Las Vegas Visitor Statistics Leisure and Hospitality Taxable Sales Source: Las Vegas Convention and Visitors Authority Clark County, NV, Inflation-adjusted 2013$ $10.0 45,000,000 92% Billions 90% $9.5 40,000,000 88% 86% $9.0 35,000,000 84% 82% $8.5 30,000,000 80% $8.0 78% 25,000,000 76% $7.5 20,000,000 74% 1990 1995 2000 2005 2010 2015 $7.0 FY2005 FY2007 FY2009 FY2011 FY2013 Visitors, lhs Hotel Occupancy Rate, rhs • Visitors are back… … and spending money… 8 Oregon Office of Economic Analysis

Vegas, Maybe? Nevada Slots and the Great Recession Slot Machine Win, 4 Qtr Average 0% -5% -10% -15% Las Vegas Strip Downtown Vegas -20% Other NV -25% Reno -30% 2007 2009 2011 2013 2015 …on everything except gaming 9 Oregon Office of Economic Analysis

Northeast Northeast Slot Revenue New Casinos Cannibalize Existing Sum of CT, DE, MD, MA, NH, NJ, NY, PA, RI, VT Northeast Slot Revenue by State Maryland $10 0.36% 100% Billions Rhode Island 90% $9 0.33% Slot Revenue 80% Pennsylvania 70% $8 0.30% 60% New York $7 0.27% 50% 40% Share of Personal Income $6 0.24% New Jersey 30% Delaware 20% $5 0.21% 10% Connecticut $4 0.18% 0% 2000 2002 2004 2006 2008 2010 2012 2014 2000 2002 2004 2006 2008 2010 2012 2014 10 Oregon Office of Economic Analysis

Where Do Mature Markets Land? Mature Gaming Destinations Suffer Slot Machine Win $4.0 Billions $3.5 State Peak Peak Slot 2014 % Year Revenues Slots $3.0 (Net) New Jersey CT 2007 $1.722 b $1.096 b -36% $2.5 $2.0 DE 2006 $0.652b $0.354 b -46% $1.5 NJ 2006 $3.804 b $1.921 b -50% Connecticut $1.0 $0.5 $0.0 2000 2004 2008 2012 11 Oregon Office of Economic Analysis

Even Pennsylvania Slowing Pennsylvania Gross Terminal Revenue -6.3% past 2 years $2.5 0.5% Billions $2.0 0.4% $1.5 0.3% $1.0 0.2% $0.5 0.1% $0.0 0.0% FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Initial 7 Casinos Newer Casinos (5 total) Share of Income, rhs 12 Oregon Office of Economic Analysis

And Here Comes Massachusetts • MA accounts for ~12% of 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/ 13 Oregon Office of Economic Analysis

Midwest • Most of region avoided Midwest Slot Revenues big recessionary Revenue as Share of Personal Income Illinois, Indiana, Iowa, Missouri, Wisconsin losses, but sales as 0.7% share of income 0.6% continue to fall 0.5% • Illinois the exception 0.4% with large declines 0.3% 0.2% • Indiana and Missouri 0.1% seeing large declines in 0.0% 2013 and 2014 (Ohio 2000 2002 2004 2006 2008 2010 2012 2014 impact?) 14 Oregon Office of Economic Analysis

Buckeyes Rising, Wolverines Slowing • Detroit’s commercial Ohio and Michigan Casinos Share of Personal Income casinos were doing 0.45% relatively well 0.40% 0.35% – Windsor helping 0.30% • Ohio voters 0.25% 0.20% approved casinos in 0.15% 2009, opened in 0.10% 2012 0.05% 0.00% – Likely to grow further 2000 2002 2004 2006 2008 2010 2012 2014 15 Oregon Office of Economic Analysis

West Virginia Squeezed Country Roads Don’t Take You Home West Virginia Casino Atlantic City New Casinos & Racinos 16 Oregon Office of Economic Analysis

West Virginia Feeling the Impact West Virginia Video Lottery (Gross Sales) $1,400 Millions $1,300 -18% from peak Now -23% $1,200 $1,100 $1,000 $900 $800 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Neighboring Casinos Opened: PA MD OH 17 Oregon Office of Economic Analysis

Gulf Coast • Louisiana sales Gulf Coast Revenues eroding as share of Share of Personal Income 5% sales Mississippi 4% • Mississippi seeing 3% larger declines • Florida racinos in 2% Louisiana 2007 added some 1% (Riverboats, Casino, Racinos) regional competition 0% 2000 2002 2004 2006 2008 2010 2012 2014 18 Oregon Office of Economic Analysis

Southwest • Colorado’s mining Southwest Revenues town casino’s seeing Share of Personal Income 1.2% slow erosion New Mexico 1.0% • Arizona’s boom and 0.8% bust not limited to Arizona housing 0.6% • New Mexico 0.4% Colorado performing relatively 0.2% well… 0.0% 2000 2002 2004 2006 2008 2010 2012 2014 19 Oregon Office of Economic Analysis

…But Even New Mexico is Flat • For mature New Mexico Tribal Casino Net Win Millions of Inflation-adjusted 2013$, 4 Qtr MA market, New $200 Mexico is a Navajo Nation success Mescalero Apache & Pueblo of Pojoaque $150 • Casino win is effectively flat for $100 11 Tribal Compacts in Place in 2003 7 years Jicarilla Apache, Ohkay Owingeh, Pueblos of Acoma, Isleta, Laguna, Sandia, San Felipe, $50 Santa Ana, Santa Clara, Taos, Tesque • Growth driven by new casinos $0 – Take market share 2003 2005 2007 2009 2011 2013 20 Oregon Office of Economic Analysis

Oregon Is No Exception Oregon Video Lottery Oregon Video Lottery Sales Share of Personal Income, 4 Qtr Avg Weekly Net Sales, 52 Week Moving Average 0.8% $18 Millions $17 0.7% $16 $15 0.6% $14 Line Games 0.5% $13 Introduced $12 0.4% $11 $10 0.3% Great Recession $9 + Smoking Ban $8 0.2% Jan-01 Jan-05 Jan-09 Jan-13 2000 2005 2010 2015 21 Oregon Office of Economic Analysis

Northern Plains • Even states that Sales as Share of Personal Income have 1.4% outperformed economically see 1.2% Montana losses and/or Video Gambling Machines 1.0% slower growth 0.8% • Montana has 0.6% regained about half of losses South Dakota 0.4% Slot Revenues • South Dakota at 0.2% or near all-time 0.0% high, but flat past 2000 2002 2004 2006 2008 2010 2012 2014 7 years 22 Oregon Office of Economic Analysis

Public Revenues States' Reliance on Gaming States' Reliance on Gaming Tax Collections, 2013$, 1951-2013, U.S. Census Share of All States Total Tax Collections, U.S. Census $9 2.0% Billions $8 Pari-Mutuels $7 1.5% $6 $5 Amusements 1.0% $4 $3 Amusements 0.5% $2 Pari-Mutuels $1 $0 0.0% 1950 1960 1970 1980 1990 2000 2010 1950 1960 1970 1980 1990 2000 2010 23 Oregon Office of Economic Analysis

Commercial Casino Taxes Commercial Casino Tax Revenues Millions of inflation adjusted dollars, $2012 American Gaming Association: State of the States $10 $9 $8 New States $7 DE, FL, KS, ME, MD, NM, NY, OH, $6 OK, PA, RI, WV $5 $4 $3 Existing States in 1999 $2 CO, IA, IL, IN, LA, MI, MO, MS, NJ, NV, SD $1 $0 1999 2002 2005 2008 2011 24 Oregon Office of Economic Analysis

Gambling Revenue as Share of State’s Own -Source Revenue, FY09 > 5% 3.5 – 4.9% 2 – 3.4% 1 – 1.9% < 1% Source: Rockefeller Institute 25 Oregon Office of Economic Analysis