Will Inflation Hit the Casino Industry in the USA?

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Casinos in Canada.
Casinos in Canada. Source: Shutterstock

Quite a few things hit the American economy during the past two or so years, not the least of which was the rising inflation. The big question everyone in the gambling industry is asking is whether the rippling effects of the crisis will extend to casinos. Interestingly, the data we have on our hands paints a picture that few are expecting. Casinos in the USA seem to be thriving in the face of disaster. Record revenue is being bragged about, and the legal emancipation of gambling continues – Kansas being one of the latest shining examples. What exactly is happening?

The Numbers Tell a Compelling Story

Revenue from US casinos keeps getting progressively higher – a report by The American Gaming Association (AGA) says. A new revenue record was set in March of this year, which was a wondrous month in terms of gambling activity. The last record month was in the middle of 2021 – July – when the revenue meter hit the $4.92 billion mark. It can be speculated that great gaming companies such as the casino game developer NetEnt had something to do with that. It gets even better, though. 

 

Remember how we said that profit increases incrementally? US casinos having their best first quarter in terms of earnings corroborates that statement. We are talking about a $14.35bn gross yield for casinos in the USA as a whole, with three states marking their all-time highs in the first quarter of a year. 

What About Tribal Casinos? 

Tribal casinos are not lagging behind, either. AGA’s report for fiscal 2021 is, again, off the charts. Native American casino gross gaming revenue went through the roof that year with a record-breaking $39 billion. That influx comes in spite of the close-downs due to COVID-19 that started in early 2020.

 

 It’s hard to imagine what could have been if no closures were mandated. In any case, the tribes did what they did with a view of keeping everyone safe. To paint the picture of the last two years in broad brush strokes, 2021 was 40% better than 2020 and 12.9% better than before COVID-19 struck. The recession doesn’t seem to affect tribal casinos that much.

Worst Performers

While we can firmly say March of 2022 was US casinos’ best month ever, there are some states where the revenue leap is not as pronounced. In fact, casinos in Atlantic City are fighting to reach the same revenue heights as before the pandemic. AGA’s CEO Bill Miller is positive that the demand for gaming services is experiencing unprecedented growth. 

 

Maybe recession hit Atlantic City after all since its iconic in-person gambling experience is not enough of an incentive for consumers to reach pre-pandemic levels of gaming activity. Or in fact, the fast-paced development of the online casino industry is causing a retraction from the traditional form of gambling that is brick-and-mortar casinos. Licensed online casinos with games verified by eCOGRA are very sought after these days. 

The Casinos’ Perspective

What gaming facilities are experiencing is nothing short of a miracle. We have to keep in mind their revenue is heavily taxed, and recession is breathing down their neck. About the former – 2021 saw commercial casinos pay $11.69 in taxes to the state they operate in and local governments. That’s 75% more than 2020. 

 

That number doesn’t even account for the other taxes and expenses land-based casinos incur on a daily and monthly basis. It’s not easy maintaining such a business in conditions of recession. It’s understandable why not that many new operators are willing to get involved. Only the big players are capable of playing the game during times of crisis. 

Who Earned the Most in 2021 

Among other things, AGA ranked casino-saturated areas in descending order, comparing how much each of them has earned in fiscal 2021. The Las Vegas Strip is sitting pretty with $7.05bn revenue, head and shoulders above the runner-up Atlantic City with $2.57bn. Chicago area and Baltimore-Washington DC are hovering just above the $2bn mark. According to the AGA, those are the most active markets, and for the most part, they aren’t showing signs of slowing down due to the recession. 

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