US Commercial Casinos Win Record $40.28BN in 2017

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Thursday, August 23rd, 2018 | Written by Stephen Smith

The USA’s commercial casino industry continues to go from strength to strength, and last year generated a massive $40.28 billion in revenue, marking an all time high for the country. Furthermore, five-sixths of all US casino states posted year-on-year revenue growth in 2017, according to the annual report released on Wednesday by the American Gaming Association (AGA).

The USA continues to be the world’s biggest casino market, with the revenue it produced last year comparing favorably to that of the Chinese island of Macau, the world’s biggest gambling resort, which collected $32.87 billion over the same period, according to current exchange rates.

State of the States Report

Each year, the AGA releases its “State of the States” report which focuses on the country’s commercial casino market. Last year, revenues subsequently topped $40 billion for the first time ever, with the latest result also representing a 3.4% improvement compared to the previous year. From the huge amount, state governments collected $9.2 billion by way of taxes, or 3.1% more than in 2016. Commenting upon the hugely positive findings, AGA CEO Stacy Papadopoulos said:

“This year’s report demonstrates the commercial gaming industry’s role as a job creator and revenue generator in states across the country, and we’re proud of the industry’s steady growth over the past few years.”

In total, the US commercial casino industry provides employment for more than 361k people, who last year received a combined $17.4 billion in wages, benefits and tips.

24 Commercial Casino States

There are 24 states with regulated commercial casino markets in the US, rising to 28 when Indian gaming operations are included. While the AGA report does not cover tribal casinos, the National Indian Gaming Commission released its own version of the report in June showing that its own revenues also hit a record $32.4 billion last year, up by 3.9% versus 2016.

Drawing on the information, the AGA subsequently commented that there are currently almost 1,000 commercial and Indian casinos nationwide, as well as a further 300 card rooms and 18,000 “electronic gaming device locations,” which generated combined revenues of $72.6 billion in 2017.

Market Analysis

This year, the AGA report covered 460 individual casinos, down from the 515 surveyed in 2016, with Nevada responsible for much of the decline after its casino count fell from 273 to 215. Twenty states then posted year-on-year growth in 2017, twelve of which hit new revenue records, with Maryland reporting the largest increase (34.6%), thanks to the $1.4 billion MGM National Harbor Resort which opened in November 2016.

Meanwhile, West Virginia led the four states that suffered negative growth, with MGM’s National Harbor also largely responsible for its 4.6% revenue fall after siphoning off customers located near to the Maryland border. The other states experiencing declines included Illinois, Mississippi, and New Mexico.

In terms of revenue, the following states rounded off the top five casino markets in the US:

1: Nevada with $11.6bn (+2.8%)
2: Pennsylvania with $3.2bn (+0.4%)
3: New Jersey with $2.66bn (+2.1%)
4: New York with $2.35bn (+16.4%)
5: Indiana with $2.2bn (+1.1%)

Commenting upon Nevada’s market prospects going forward, the AGA report mentioned the Resorts World Las Vegas project being planned by Malaysia’s Genting group, as well as the unfinished Fontainebleau project on the Las Vegas Strip, stating:

“Although various non-gaming entertainment amenities are under development in Las Vegas, the competitive environment for operators is expected to remain largely stable until 2020. That is the year two major resort casinos on the north end of the Strip – the US$4 billion Asian-themed Resorts World Las Vegas and the long-stalled Fontainebleau project – could be completed.”

Sports Betting Potential

In May, the U.S. Supreme Court struck down PASPA, in the process opening up a whole new world of potential for the country’s casino gambling market. After all, Americans are believed to wager around $150 billion each year on sports, just 3% of which are placed through legal channels. Nevada has been the main legal market up until now, and in 2017 received around $5 billion of that handle, with its resulting 5.2% in hold generating $258.6 million in revenue.

The segment’s future size naturally depends upon how many states decide to regulate legal sports wagering within their borders going forward. To date, 20 states have indicated their intention to adopt sports betting legislation, with Pennsylvania, New York and New Jersey having already passed the required bills. According to a forecast by Deutsche Bank Securities analyst Carlo Santarelli, there will be 13 active sports betting markets by 2023 which will generate around $4 billion in annual revenue. Research firm Eilers & Krejcik Gaming, on the other hand, predicts an even more optimistic landscape with 32 states having launched sports betting in 2023, resulting in a $6 billion market.

If all 50 states eventually approve sports betting, however, that figure could then rise to $15.8 billion, or according to Oxford Economics even as much as $26.6 billion per annum once its economic impact is included.