Foxwoods and Mohegan Sun Reported an 8% Decline in Revenues
Native American casinos in the United States have seen a decline in growth since 2008, when the recession affected most aspects of the US economy. While it would be hard to label all the Indian casinos in the country with one description, the overall trend shows that growth is slowly for the outlying gaming venues. Much of the decline stems from a couple of states: California and Connecticut.
Declining growth can be traced to two pivotal factors, namely a poor economy and increased competition from nearby gaming establishments. In many ways, the Native American casinos have more to fear from online gaming than Las Vegas Strip casinos.
Private US Casinos Operators
Many people, including big gaming executives, fear the advent of online gaming is going to hurt the casinos in Las Vegas and Atlantic City. These are gambling destinations with a national draw and scope. They draw specific kinds of gamblers, who want to get away from home on vacation and enjoy another place. The big Vegas casinos are in competition 24/7 with other glamorous, famous institutions. That means they must keep the house edge competitive, or risk having tourists go down the street to a better game.
Vegas and Boardwalk casinos are used to stiff competition, while they have assets few others can match. A famous Las Vegas or Atlantic City casino has advantages on the Internet unlike most of its potential competitors. It is going to be able to establish a brand name in online gaming quicker and better than most other gaming companies. Borgata Online is already a force after only 4 months in operation. Vegas Strip casinos will be the same, when more of them launch and begin to accept players.
Tribal Gaming Venues
Indian casinos, on the other hand, have trouble dealing with competition, because they are used to being the only show in town. An Indian casino tends to have a much higher house edge, because they don’t have to lower prices to stave off local competition. People in their state or region have a choice of driving to a place like the Winstar Casino or flying to Las Vegas for a gaming junket. Often, it’s still cheaper and easier to stay in the area.
If dozens of U.S. states legalize online gambling and license operations, this could have a negative impact on the tribal gaming entities. Suddenly, local gamblers have the ability to stay home and play with a higher expected return. Many of these players are likely to stay at home for a private online gaming session. The Indian casinos at first will be able to take advantage of a local monopoly on licenses, establishing their own gambling websites with few competitors in the local market. But if the interstate gaming compact signed by Nevada and Delaware’s governors in early March 2014 becomes a trend, this could make a huge impact.
Under terms of the Nevada/Delaware interstate iPoker compact, the two states are going to share player lists. A gambler in Delaware can play in a Las Vegas online card room. A player in Nevada can gamble at the website for Dover Downs or Delaware Park. Apply this concept to a couple of dozen states and suddenly the local Native American online poker sites will face competition from dozens of more famous competitors. Worse, their land-based casino operations will face the same competition. And if the iPoker compact works, then it would be only a matter of time before an online casino compact would be formed.
Economic Trends and Casino Growth
The trend can be overstated. Two-thirds of Native American casinos saw growth in 2012. In Alaska, the growth rate was 20%. Casinos in Montana, South Dakota, and Alabama also saw major revenue growth.
The bigger casinos had trouble, though. Foxwoods and Mohegan Sun in Connecticut saw an 8% decline in revenues. The dozens of Indian casinos in California combined for only a 1% growth rate.
Of course, these numbers can be a bit confusing. In places where little to no gaming has taken place traditionally, such as Alaska or Alabama, it’s natural to see a higher growth rate. Established economies are going to have smaller growth, even if their overall growth is much larger. 1% growth in California still represents a massive increase, while 20% in Alaska might still involve modest increases in cash, by Californian standards.
We’ve seen the same with the “Asian tigers” in the world economy. Hong Kong, Singapore, South Korea, and Taiwan have seen tremendous growth in their economies in the past 10 to 20 years, far surpassing the rate of economic growth in the United States. But the US economy is so massive, even a modest growth still means a great deal more wealth has been created than in one of those Asian economies.
