This is the question Thomas Zitt, senior vice president, research, The Innovation Group, posed during a presentation of its “Consumer Behavior in the Gaming Industry and U.S. Gaming Revenue Trends” report last month, and it’s a good one.

“With the economy recovering, the gaming industry is left wondering, why not us? Why are gaming revenues continuing to struggle?” Zitt asked.

To answer this question, The Innovation Group started by looking at gaming revenues for the past five years, focusing on 2013, including all commercial casinos and most Native American states. The Las Vegas Strip was one bright spot in 2013 (however much of that rode on VIP baccarat money coming from China). Regionally, of course, the story was different.

Before summarizing those findings, here’s a quote from a story on middle class America that ran in the Washington Post last month in an article entitled, “Why America’s middle class is lost.” It sets things up nicely, if such a word can be used for the dreary facts contained therein:

“It used to be that when the U.S. economy grew, workers up and down the economic ladder saw their incomes increase, too,” the Post wrote. “But over the past 25 years, the economy has grown 83 percent, after adjusting for inflation—and the typical family’s income hasn’t budged. In that time, corporate profits doubled as a share of the economy. Workers today produce nearly twice as many goods and services per hour on the job as they did in 1989, but as a group, they get less of the nation’s economic pie. In 81 percent of America’s counties, the median income is lower today than it was 15 years ago.”

That’s a lot of geography, so it wasn’t surprising to hear the following 2013 gaming revenue findings from Zitt:

New England declined despite the first full year of Rhode Island table games and the first full year of the casino in Oxford, Maine.

Northern Great Plains decreased despite no new cannibalization from neighboring states.

Looking at the five regions that increased, new jurisdictions drove growth in two of those regions.

In the broad Atlantic coast region, which The Innovation Group defines as running from Rhode Island to Maryland and including West Virginia, we find a revenue increase of just 0.3 percent, despite the addition of more than 3,000 gaming positions in Maryland, Rhode Island and downstate New York, which equates to a 3 percent increase in regional supply.

Ohio, whose 11,400 slots and 409 tables counted for the full year for the first time in 2014, caused the Great Lakes region as a whole to increase, but adjacent markets were hit.

The Pacific region eked out small growth but revenue remains below pre-recession levels.

America’s income distribution problem was the first point cited by Zitt to help explain the results.

“Simply put, growth in GDP is not trickling down to consumers,” said Zitt. “Productivity is up, but household income remains flat. Real household income is below pre-recession levels and even below where it was in 1989.”

To be sure, there are other challenges. In terms of employment, the country has barely returned to pre-recession levels, even as the working age population has increased by approximately 6 percent, resulting in a gap of about 5.5 points. This surplus of labor has helped keep wages low. Adding to flat income trends are unfavorable age demographics, with virtually no growth in the gaming-friendly middle-aged group. Growth is strongest at the two ends, younger and older.

With the latter group, new forms of insecurity are hurting gaming. “The recession had a huge impact on housing values and retirement accounts,” said Zitt. “Third-party surveys have shown that 63 percent of workers aged 50 to 61 say they may need to postpone their expected retirement. Thirty-eight percent of adults said they were not too or not at all confident they would have enough income or assets for retirement. Moreover, it is an open question at this time whether Baby Boomers will gamble to the same extent as their parents. They appear to have a lot more active leisure pursuits.” 

 The conclusion? “While nationwide gaming revenues will grow as new geographies open, such as Massachusetts and New York, the days of 2.3 to 4.0 percent annual growth may be over for the foreseeable future,” said Zitt. “You may see some occasional spikes as suppressed demand is released, as we saw with some of last October’s numbers. However, long range will continue to be impacted by the fundamentals we have discussed here.  Careful long-range planning is advised.”