The ADG’s Courtney Coolidge Says the Economy Will Have to Improve for Revenues to Reach Peak Numbers
Arizona’s Indian casinos are starting to recover from the lost revenues during the Global Recession. The recovery process has been slow, but steady, with the numbers steadily increasing every year between 2010 and 2014. The problem was, the crash of 2009 was so big that it left the Arizona gaming industry in a big hole.
The 2014 Fiscal Year numbers have surpassed $1.8 billion, which is the first time since 2009 those numbers have been reached. In the peak years of 2007 and 2008, the gross revenues figures were in the $2 billion range.
Arizona Department of Gaming Comments
Courtney Coolidge, a legislative and policy analyst for the Arizona Department of Gaming, told the EA Courier, “The contributions to the state began recovering after the recession, but for the last three fiscal years have remained stagnant, increasing at a rate of less than half of a percent.”
Despite the recovery, officials and industry leaders have little hope that the numbers will reach a peak anytime in the next few years. A recent report showed that the annual revenue collected by the state is $20 million less than in 2009, when the recession was already happening.
National Economy Needs to Improve
Officials say the economic conditions for the average American need to improve in a real way, if the casinos ever hope to increase revenues at a faster pace. When the middle class feels like it’s losing ground (or actually is losing ground), then the first item cut from the family budget is entertainment expenses. Casino gambling falls into that category, so worker conditions have to improve before the casinos will reach the $2 billion plateau again.
Coolidge added, “The revenues to the state have not come back to pre-recession revenues, and there is no indication this will take place anytime in the near future. We (ADG) don’t see anything on the horizon that would make revenues increase significantly. Although the economy has been improving, reports suggest that wages are not, and thus neither is individuals’ disposable income….Gambling is similar to other forms of entertainment, the same way people with more disposable income might choose to go out to dinner or the theater more often, individuals who gamble may also do so more frequently.”
Proposition 202
The state currently has 23 Class III casinos in operation, which are owned by 16 different tribes. The state has 22 federally-recognized tribes, along with the ability to license up to 29 Indian casinos. Presumably, the remaining 6 casinos would go to the 6 tribes which have no gaming operation at the moment.
Arizona passed the “Indian Gaming Preservation and Self-Reliance Act” in 2002, better known as Proposition 202, which was meant to regulate the Arizona gaming industry. Shortly after, the state formed the Arizona Department of Gaming, meant to oversee the distribution and maintenance of the Class III casinos. Native American casinos cannot have Class II slot machines like Las Vegas has, but they offer similar Class III games which are based on a bingo game mechanic. They look the same to the untrained eye, but as the reels are spinning, one can also see a bingo card fill up somewhere else on the screen.
The industry saw steady growth from 2003 to 2009, and everyone assumed the industry would be healthy for the foreseeable future. Then the American real estate market crashed. This led to a crash on the New York Stock Exchange, along with other financial markets around the globe. Eventually, the American and international banking industry collapsed, so that few people or institutions could find the credit they needed to maintain their standard operations. In late 2008 and throughout 2009, the world faced a deepening recession.
State Gaming Money Allocation
Under Proposition 202, the tribes share between 1% and 8% of their gaming revenue with the state, under specific protocols for determining that contribution. 88% of that money goes to the Arizona Benefits Fund, which is controlled by the Arizona Department of Gaming. That money, which has averaged about $80 million a year since its inception, is allocated in specific ways by the ADG.
56% goes to educational programs and other school-related needs. 28% funds emergency services and trauma centers across the state. 7% funds wildlife and habitat conservation projects, while another 7% is used for the promotion of tourism for the state. The final 2% is earmarked for problem gambling issues. This money supports the education of citizens on the dangers of compulsive gambling, while offering resources for the prevention gaming addictions and the treatment of addicts.
