WASHINGTON - State revenues from gambling show weakness despite an expansion in gambling, according to a report from the Nelson A. Rockefeller Institute of Government.
State gambling revenues grew 0.6% in fiscal 2014 over the previous year, but actually fell 0.8% after adjusting for inflation, Rockefeller found in its report, which was released on Monday.
Of the 47 states with gambling revenue, 27 reported declines over the year, with nine states reporting declines of more than 5%, Rockefeller reported.
The report examines four types of legalized gambling from which states earn revenues: lotteries, casinos, racinos (a combined race track and casino), and pari-mutuel (pooled) wagering. Lottery revenue, by far the largest revenue stream collectively, edged up 0.6% to $18.14 billion. Casino revenues, the second-largest contributor to state gambling money, fell 1.4% to $5.29 billion. Revenue collections from racino operations rose 1.5%, while revenue from pari-mutuel wagering dipped 3.5%.
Lottery revenues are most often funneled back into the state general fund or used to finance schools, but several states have used their lottery-revenues to back investment-grade munis.
"The growth is not evenly distributed among regions," the report notes. "States in the Mid-Atlantic, New England, Plains, and Rocky Mountain regions saw declines in revenues from gambling while states in the Far West, Great Lakes, Southeast, and Southwest saw growth in fiscal 2014 compared to fiscal 2013."
States have been expanding gaming operations in response to weak economic growth in the aftermath of the great recession, the report explains, with more than a dozen states taking some action to stimulate gambling activity. Maine, Maryland, Ohio, and West Virginia legalized casino gaming, while other states introduced new avenues for bettors such as video games, sports betting, card rooms, and internet gaming.
The Great Lakes region experienced the biggest growth at 3.1%, which Rockefeller said was mostly attributable to Illinois and Ohio. In Illinois, gambling revenues were boosted mostly by newly legalized video gaming operations. The growth in Ohio came from two new casinos and three new racinos, the report said.
"The recent geographic expansion of gambling created stiff competition for certain regions of the nation," Rockefeller said. "Therefore, the weakening of the growth in gambling revenues is also attributed to market saturation. Within certain regions, expansion of gambling means rivalry for the same pool of consumers. For example, Pennsylvania enjoyed strong growth in revenues from casino and racino operations until the opening of new casinos and racinos in the neighboring states of Maryland, New York City, and Ohio."
Hawaii and Utah do not collect revenue from gambling. In Alaska, gambling is legal only when sponsored by Native American tribes.
