As IGRA approaches its 30-year anniversary, the tribal gaming industry has grown 300-fold from the $121 million it generated in 1988, to $28.9 billion in 2014. That was among the many telling data points presented by Dr. Alan Meister, principal economist, Nathan Associates, in the presentation of his fourteenth edition of his annual Indian gaming study at last month’s National Indian Gaming Association (NIGA) show in Phoenix, Ariz.
In and of itself, the growth of Indian gaming is a stunning economic success story. When one adds the innumerable benefits that Indian gaming has brought to so many tribes across the country, IGRA must rank as one of the most significant public policy success stories of modern times. Still, as Meister noted, revenues are highly concentrated and intra-industry competition continues to intensify, particularly in the northeast, where numerous tribes have seen revenues erode in recent years. “Indian gaming has come a long way, but you can see growth topping off a bit in recent years,” said Meister.
Here are some of the major takeaways from this year’s report:
Tribal gaming is basically on par with commercial gaming: Tribal gaming grew 2 percent in 2014, the fifth straight year of growth after a one-time decline in 2009. Some 243 tribes operate 489 gaming facilities in 28 states. The rate of growth increased from 2013 to 2014, following the national and state economies. Tribes operate 352,000 gaming machines (Class II and Class III) and approximately 7,800 tables. Commercial casino revenues again declined in 2014, falling 2 percent in 2014; while racinos were up 4 percent. With the continued growth of Indian gaming, the gap between the two segments has almost been entirely closed. Indian gaming is now 43.5 percent of total casino gaming revenue and commercial casinos are only slightly higher at 44.2 percent. “That’s the closest the gap has ever been,” said Meister.
Non-gaming revenues are small, but growing at a faster rate: Total casino revenue was just under $33 billion; $28.9 billion of that was gaming revenue and $3.8 billion non-gaming (i.e. hotel, F&B, retail). Non-gaming revenues grew 5 percent in 2014, or more than twice the rate of gaming revenue, continuing a trend that has been in place over the last number of years.
Ups and downs: Out of the 28 states in Indian gaming, 20 experienced growth while eight declined. Three states had double-digit growth. The highest rate of growth was in the small Wyoming market at 13 percent; Alabama and South Dakota also experienced double-digit growth. Idaho had the greatest decline at 9 percent growth. New York and Connecticut experienced declines owing to the overall expansion of gaming in the northeast.
A top-heavy industry: The top five states are led by California, which generated revenues of $7.3 billion in 2014, or about 25 percent of the total Indian gaming market. Oklahoma had revenues of about $4 billion (and, combined with California, that’s about 39 percent of all gaming revenue). Florida, Washington and Arizona round out the top five. The top five states account for 62 percent of the total. The top ten states (the five jurisdictions mentioned above plus Connecticut, Minnesota, Michigan, Wisconsin and New York) account for 85 percent of all gaming revenue.
Concentration of revenue by facility:Facilities that generate $250 million or more represent only about 6 percent of all Indian gaming facilities, but they generate about 40 percent of the gaming revenue in the sector. About 28 percent of the facilities fall into the $50 million or more in annual revenue category, and they generate 84 percent of all the gaming revenue. Some 36 percent of all tribal gaming facilities generate $10 million or less in annual revenue; these facilities generate only 2 percent of the total gaming revenue. “I get approached a lot by the media and these are numbers that I feel are important to point out. Some tribes are not as fortunate as others and, for some, it’s not about the revenue, it’s about creating jobs for tribal members,” said Meister.