Does America have a casino saturation problem?

20 November 2014

A November 18 article in The New Yorker suggests that the huge expansion of state-sponsored casinos in recent years may have saturated the gaming market and left many states scrambling to cover budget holes created by declining casino revenues.

The article, by writer John Wolfson, points to the explosion of state-authorized casinos and racinos in recent years. He writes, “Eager for new jobs and new revenues that don’t require raising taxes, states from coast to coast have turned to gambling: in 1978, only Nevada and New Jersey had commercial casinos; today, twenty-four states do.”

Wolfson says market saturation is a serious problem for states that have grown to depend on gambling revenues. “This isn’t an entirely free-market enterprise, and the casino operators aren’t the only ones bearing the risk,” he notes. “Each state that has licensed a commercial casino has become a partner in that business…The trouble starts when they become dependent on gambling revenues to pay their bills.”

A case in point is Delaware, Wolfson explains. “In Delaware, gambling taxes have accounted for eight per cent of the state budget. That left the state vulnerable when the owners of its three aging racetrack casinos began demanding financial concesssions in order to preserve jobs. The legislature voted to split eight million dollars among the casinos. This year, the operators came back, seeking more money and a new deal.” The state legislature voted to give the casinos $10 million this year, $11 million in 2015, and $12 million in 2016.

MIGA Executive Director John McCarthy said the New Yorker article reinforces the experience of Minnesota’s tribal casinos. “We’ve been saying for several years that the Minnesota gaming market is pretty well saturated,” he said. “Casino revenues have been level after slight declines during the recession. We’re not seeing any meaningful expansion of casino facilities; most tribes have focused on adding or expanding ancillary facilities such as hotels, golf courses and other visitor attractions.”