NORTH AMERICAN GAMING MACHINE REPORT
The gaming machine phenomenon that has swept across North America over the past several years appears to be losing steam, at least until the next round of “me-too” legalizations that are no doubt on the horizon.
Seen as a way to generate quick cash for governments, to counter a problem with gray-market machines or to prop up an ailing racing industry, gaming machines outside traditional casino environments have spread to 17 states and currently number almost 152,000 across the United States. They generated almost $9.2 billion in gross revenue in 2009, a 2 percent increase over the previous year’s total of $9 billion.
But as competition increases, especially in the Mid-Atlantic region, what once were purely machine havens are now full-fledged casinos, adding table games as a way to one-up the competition. Now, Delaware, West Virginia and Pennsylvania all offer table games, so there are clear challenges ahead in a region already flooded with more than 52,000 machines and counting.
Across the country, mature markets have certainly felt the toll of the recession. Iowa, Louisiana, Montana, New Mexico, Oregon and South Dakota all saw revenues decline year over year. Delaware and West Virginia also face significant impacts from Pennsylvania and now Maryland, which opened its first slot facility last September. Of the older jurisdictions, only Rhode Island managed an increase in revenues in 2009-2010, although just marginally.
The bright spots, of course, are the newest jurisdictions, places like Arkansas, Florida, Indiana and Pennsylvania, where in some cases new facilities were added during the year. Other fairly recent start-ups such as Maine, New York and Oklahoma also grew revenues.
Speaking of New York, the long-awaited, but much-delayed, Aqueduct racino is finally back on track, with new licensee Genting New York planning to open for business in the spring.
Also on the horizon is Ohio, which is still in a holding pattern with respect to slots at racetracks - the Lottery Commission there is still seeking legal clarity on the issue before moving forward with implementation plans.
Massachusetts came close with legislation in 2010 but couldn’t quite seal the deal, and Kentucky tried again as well, to no avail.
The 152,000 active gaming machines counted for this report represent an increase of about 2,000 over 2009. There were actually declines in machine numbers in several locations as market adjustments took place due either to economic conditions or increasing competition. But new facilities in Florida, Maryland and Pennsylvania more than offset those reductions.
Pennsylvania still leads the pack with almost 27,000 machines currently in operation at 11 racetracks and stand-alone slot parlors, although with the recent addition of table games these are now full-fledged casinos. Louisiana is a distant second with more than 19,000 machines - slots at racetracks and video poker around the state. Montana and West Virginia are next with about 18,000 each.
In Canada, the gaming machine market is made up predominantly of VLTs at bars and clubs, with about 35,000 of these machines spread across Alberta, Manitoba, Quebec, Saskatchewan and the Atlantic Provinces. The balance of Canada’s 46,000-plus gaming machines are slots at racetracks, most of them in Ontario. There, almost 11,000 machines at 17 tracks represent the largest single component of machine gaming revenue of any Canadian province, generating almost C$1.7 billion in fiscal 2010, about 37 percent of the entire country’s gaming machine revenues.
Still, Ontario’s revenues were down slightly in fiscal 2010, as were revenues across Canada, to about C$4.5 billion from C$4.7 billion the previous year.
Note on the ReportThis report summarizes machine gaming in 18 U.S. states and all major Canadian provinces. These could be video lottery terminals, video poker, slot machines, Class II gaming devices and electronic games of skill above and beyond video poker. In the past it was easy to call these devices “non-casino gaming machines,” but the word “non-casino” isn’t easy to define anymore. Some racetracks have added table games, others have poker rooms. They might also have resort hotels and other amenities at their properties. In fact, they might not be much different from casinos you’ll find in Las Vegas, at least in terms of gaming products offered. Still, this report includes machines in locations such as racetracks, bars and clubs and stand-alone slot machine parlors - anywhere other than traditional commercial, tribal or riverboat/dockside casino locations.
All revenue figures cited are referred to as gross revenue, defined as total amount played less prizes won. In varying jurisdictions these figures might also be called “win, net machine income, net revenue” or a host of other terms. They all mean the same thing, so the standardized term “gross revenue” is used here.
References to FY2010 data should be considered preliminary for all jurisdictions reporting fiscal years. Also note that all Canadian figures are in Canadian dollars.
In the revenue history charts for each jurisdiction the number of machines indicated may represent either the number in use at the end of each year or an average number during the year.
In addition to the states and provinces detailed in this report, there are other types of video games currently being played at some of America’s racetracks. Class II video bingo machines are popular at Alabama’s tracks, where hundreds are available. They are authorized at the county level, and the tracks pay some of the revenues to charities, which are licensed by the county sheriff departments.
Another type of gaming proving popular at some tracks is Instant Racing: video terminals that use historical races played at random. They are considered an extension of pari-mutuel wagering by those that offer them, and while they are quite successful in Arkansas they have been slow to catch on elsewhere. They are currently being evaluated in Kentucky.