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Indian casinos nationwide generated 5 percent more gambling revenue in 2007 than the previous year in spite of an economic slowdown that began to take effect in the fourth quarter of last year, according to a report released today.
Regulatory restrictions did more to hamper revenue growth than the economic downturn, which was just getting started last year, said economist Alan Meister, author of Casino City's annual Indian Gaming Industry Report.
The biggest example is California, which accounts for 29 percent of tribal gambling revenue nationwide and has been gaining on Nevada.
After a two-year fight, four tribes in California this year won ballot measures allowing them to install up to 17,000 slot machines. Before the slowdown worsened, some of these tribes, which offer some of the region's largest and most lavish properties, were adding bingo machines in the meantime just to meet demand, Meister said.
California's tribal casinos generated $7.8 billion in gambling revenue last year versus Nevada's $12.8 billion.
Until 2007, gambling revenue from tribal casinos had grown by double digits every year since the federal government legalized tribal casinos in 1988. Tribal casinos generated gambling revenue of $26.5 billion last year.
That growth rate was still better than the nontribal casino industry, which grew by 2 percent to $32.2 billion. The commercial casino business is more mature than tribal gaming, which is still growing as tribes expand their casinos, Meister said.
Last year, both tribal casinos and nontribal casinos lost market share to racetrack casinos, which were accounted for separately in the report.
Racinos are still relatively new concepts, they face little competition in many markets and have been an easier political sell than other types of casinos because they are attached to pre-existing racetracks, where business has fallen off in recent years, Meister said.
Revenue at racinos, which have opened in several new markets including Pennsylvania, New York and Florida, grew 21 percent over the past decade. That compares with 14 percent for tribal gaming and 6 percent for commercial casinos. Revenue rose 43 percent to $5.2 billion last year.
Racinos' market share rose 2.2 percentage points to 8.2 percent while commercial casinos lost 1.9 percentage points to 50.4 percent. Tribal gaming claimed a 41.4 percent market share, down 0.3 percentage points.
Open your eyes Las Vegas; the Indians have learned the gaming business. Casinos are crying that high gas prices and a tough economy are hurting business, but the real reason is the increase in new out of state Indian owned casinos.
I know what I am talking about because I make my living visiting different casinos around the country and talking to gamblers. Gone are the small Indian casinos that specialized in bingo and slots. They have been replaced with large modern casinos that rival strip casinos. People that historically flew to Las Vegas four times or more a year are now down to one trip.
Unlike the economy, which will get better eventually, this is a long term threat. The “party city” image is unique to Las Vegas and it provides a mystique that attracts people. However, the games provide the profits, so management must answer the question “Why is it better to gamble in Las Vegas?”
There is an answer to this problem, but the casinos need to listen to their gambling guests and think out side the box.
Terry Mitchell
Our Favorite Casinos