Rise of Casino Capitalism
Background of Casino Industry in United States
In the United States, especially in Las Vegas, it was widely considered that the casino industry was recession-proof until the recession of 2007 began. As a result of the faltering economy, it appeared to be one of the few tourism sectors that was unaffected. From 2008 through mid-2010, U.S. casinos reported steadily declining revenues. Revenues from commercial casinos nationwide decreased from $34.1 billion in 2007 to $32.5 billion in 2008 and $30.7 billion in 2009. For the 22nd straight month, Las Vegas revenues declined to their lowest monthly total in six years in October 2009. The first quarter of 2010 revenues in Atlantic City, NJ, continued to decline compared to the first quarter of 2009 . In contrast, some analysts predict that the casino market bottomed out in the first half of 2010. As the casino industry specifically and tourism generally rely on consumers’ discretionary spending, what was once considered a stable and ever-growing industry has been shown to have just as unstable foundation as most other industries.
The construction and improvement of casino resorts has always relied on borrowing money. Nevada and many other states have seen Las Vegas-based companies take on unprecedented levels of debt since 1999. In the period between 2005 and 2009, the debt load of casino operators grew, and, though it has since leveled off, it has left them more leveraged than ever. Due to their high debt levels, companies with high levels of debt have high interest payments, which makes it harder for them to invest capital; it makes them also more susceptible to default, should revenues decline (as they did from 2008 onwards). A casino’s financial performance and viability as a going concern may be affected by extreme leverage, which may warrant regulator attention.
Legalization of Commercial Casino Industry in United States
Americans’ attitudes toward gambling and their gambling behavior were studied by the US Commission on the Review of the National Policy toward Gambling in the early 1970s. According to the commission, 80% of Americans approve of gambling and 67% gamble. It recommended state governments considering legalizing gambling in its final report, Gambling in America (1976), concluding that states should determine their gambling policies independently from federal interference, unless conflicts between states or infiltration of organized crime led to problems.
Atlantic City, New Jersey, became the first state outside of Nevada to have a legal casino in 1978. Casino gambling had been legalized in nine additional states by the mid-1990s: Colorado (1990), Illinois (1990), Indiana (1993), Iowa (1989), Louisiana (1991), Michigan (1996), Mississippi (1990), Missouri (1993), and South Dakota (1989).In the United States, the casino industry is one of the largest tourism and entertainment industries. The following table shows the legalization and opening dates for commercial casinos in the US prior to the recession operating in each state, their total revenues, and the taxes they paid to state governments.
|Legalized Year (Opening Date)||States|
|1976 (1978)||New Jersey|
|1989 (April 1991)||Lowa|
|1989 (November 1989)||South Dakota|
|1990 (September 1992)||Illinois|
|1990 (October 1991)||Colorado|
|1990 (August 1992)||Mississippi|
|1991 (October 1993)||Louisiana|
|1993 (December 1995)||Indiana|
|1993 (May 1994)||Missouri|
|1996 (July 1999)||Michigan|
Source: AGA (2008) and Calcagno, Walker, and Jackson (2010).
Rise in Casino Industry
Casinos have grown significantly over the past few decades. Licensed casinos have expanded to new markets and generated record-breaking revenue figures as a result of the legalization of gambling-related activities worldwide and the growth of the experience economy. Globally, the casino and online gambling industry generated 231 billion U.S. dollars in 2021. Due to the rise of online gambling and the Coronavirus (COVID-19) pandemic, the brick-and-mortar casino industry has faced significant challenges. The U.S. casino industry is still expected to grow year over year, for example, revenue from 2021 to 2024 was predicted to increase.
It is estimated that there will be 466 commercial casinos and 515 tribal casinos operating in the U.S. by 2021, which remains relatively constant from previous years. Many of the world’s leading casino companies are based in the U.S., including Las Vegas, Nevada, perhaps the most popular gambling destination. Casinos offer a wide variety of hotel and restaurant services, live shows, and entertainment options for visitors. Each year, millions of people visit the famous Las Vegas Strip to try their luck at poker tables and slot machines. Historically, Nevada has had the highest gross gaming casino revenue in the country due to its influx of U.S. and international tourists (before COVID-19).
States in United States that have no Casinos
- South Carolina
- New Hampshire
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