“The domestic regional gaming environment is often discussed as a flat to slightly positive growth market, as measured by gross gaming revenue,” wrote Deutsche Bank analyst Carlo Santarelli in a January 24 investor note. However, he continued, it is a misleading description.
What it doesn’t take into account, he contended, is the regionalized nature of gaming-revenue growth or contraction. Other factors to be considered are new competition, legislative action, and “incremental supply.”
Looking back over the previous 10 years, Santarelli and his Deutsche Bank boffins crunched the numbers on 80 regional casinos. Several additional criteria were employed.
First, the casinos had to have debuted prior to 2013. Also, they had to have experienced minimal impact from nearby brick-and-mortar rivals, regardless of whether those rivals were in the same state or just over the border.
The casinos in question could not have benefited or been impaired by changes in the law. Finally, they had to be in states that released detailed revenue breakdowns on a monthly basis.
Eighty casinos qualified, the most from Iowa (16), closely followed by Louisiana’s 14. Three each were cited from Michigan, Maryland, Kansas, and West Virginia. Only five Pennsylvania casinos made the cut, along with two from Maine. Other states represented were Missouri with 13 qualifying casinos, Indiana with seven, and Ohio with 11. None of the states with double-digit representation had seen significant enlargement of their casino base in recent years.
Of Santarelli’s subset, seven states had seen growth in terrestrial casinos since 2015. Four had experienced notable brick-and-mortar revenue declines.
Two states, Ohio and Maryland, “have experienced, far and away, the most meaningful growth from 2015 through 2024, and in fact are the only two markets that, on a same-store basis, have kept pace with or outperformed inflation over this period.”
Recent legalization also helped states outperform, as was the case with Maine, where casino revenue grew 25 percent between 2015 and 2024. Maryland, which opened casinos in 2010, was another recent mover, as was Ohio, which came on line in 2012.
States that had also seen varying degrees of revenue acceleration over the previous 10 years were Iowa (20 percent), Missouri (10 percent), and Indiana and Kansas with two percent each. Declines were registered in Louisiana (17 percent) and West Virginia (15 percent), as well as Pennsylvania (12 percent) and Michigan (seven percent).
In a period in which inflation ran at 32 percent, Ohio was the biggest outperformer, growing its gaming revenue by 46 percent. That alone represented 20 percent of the growth in Santarelli’s survey. Once Ohio’s 11 casinos and racinos were subtracted, the overall measure of gaming revenue flattened to negative 0.2 percent.
The analyst detected cannibalization from igaming, with 11 igaming-enabled states showing an 9.7 percent casino revenue decline across the past 10 years. Igaming was seen to have specifically impacted the Michigan, Pennsylvania, and West Virginia brick-and-mortar markets for the worse. Once Ohio (no igaming) and the three internet-casino states were left out, brick-and-mortar casinos rebounded by 4.5 percent.
