ECONOMICS
Critical Trends in the Indian Gaming Industry
by Daniel Holmes
T
he overall United States gaming
industry generated $68.7 billion in
2014 – an impressive 41 percent of
which was generated by Indian gaming
operations.
In 2014, the Indian gaming industry
generated an estimated $28.1 billion,
growing at an annual rate of 0.2 percent.
The industry’s expansion is primarily
attributed to the opening of new
gaming operations in new markets.
In the last five years, 30 new Indian
gaming casinos have opened. The new
gaming operations have allowed more
tribal nations to access the economic
benefits produced by gaming. During
this five-year period, Oklahoma has
been the region with greatest growth as
more than 15 new casinos have opened.
Beyond the opening of new casinos,
tribal nations continue to reinvest in
their existing facilities to build more
destination resort facilities. The development of resorts has been most
prevalent in the upper northwest,
where tribes have added luxury hotels,
spas, golf courses, and other entertainment options to their existing
casinos.
The region’s continued development of the existing casinos has
contributed to the region experiencing
the most consistent growth rate.
Over the last five years, the region
has benefited from annual growth of
4 percent.
While growth in Indian gaming
continues, there are numerous challenges facing existing Indian gaming
operators. The most notable challenges
include:
• Expansion of Indian Gaming:
With growth in the overall Indian
gaming industry, comes increased
competition. The expansion of the
60 Indian Gaming
April 2015
Note: 2014 Revenues are a projection based on a sample of individual and state-wide casino data.
The official total will not be released until the summer of 2015.
Gaming Revenues by Region
overall industry has resulted in an
overall decline in existing casino
revenues. Since 2008, the overall
industry has seen revenue increase
by over $1.3 billion; however, the
average casino operation has
experienced a five percent decline in
revenues.
• Expansion of Commercial Gaming:
Since 2008, tribes in Connecticut,
Kansas, New York, New Mexico,
and Oklahoma have endured the
negative impacts of increased competition from commercial gaming
expansion. The expansion of state
gaming has reduced tribal gaming
revenues which are used to further
the economic development of tribal
communities.
• Compact Negotiations: State
governments are placing greater
pressures on tribal governments
"While challenges continue to face the Indian gaming industry, tribal nations have
remained focused on protecting their interests, educating the surrounding communities
on the positive impacts of tribal gaming, and expansion beyond the casino operations.”
through the renewal of tribal-state gaming compacts.
The challenges are centered around states seeking
more revenue sharing with tribal nations. As Indian
gaming continues to prosper and provide for tribal
nations, state governments are looking for new revenue
sources to overcome budget shortfalls. This has resulted
in state governments using the compact renewal process
as leverage in an attempt to gain a higher revenue
share percentage.
While challenges continue to face the Indian gaming
industry, tribal nations have remained focused on protecting their interests, educating the surrounding communities
on the positive impacts of tribal gaming, and expansion
beyond the casino operations. Specifically in Arizona, under
the leadership of the Arizona Indian Gaming Association,
tribes have been able to educate the surrounding community
of the positive economic benefits provided by Indian
gaming.
The effort has focused on highlighting how the Indian
gaming industry has become Arizona’s third largest employer,
providing more than 15,000 jobs, contributing over $1 billion
to the state government, and providing an avenue for tribes to
become self-sufficient. This effort has provided more favorable
recognition from the state legislature and highlighted the need
to continue to support the Indian gaming industry.
Similar to tribal nations in Arizona, the Comanche Nation,
located in Southwestern Oklahoma, has focused on the
education of the surrounding community. In 2014, the nation
significantly increased its marketing of the Comanche Nation
Fair through television, radio, print, and social media
campaigns. The efforts made the fair the largest event in
southwestern Oklahoma and further educated the public on
the history and traditions of the Comanche Nation. Most
notably, the increased attendance also brought an increase
in revenue for the nation’s business enterprises.
Expansion beyond the gaming operation is also becoming
more prevalent throughout tribal nations. The success of
tribal gaming has resulted in millions of patrons visiting
tribal lands each year. Tribal nations continue to focus
on economic developments projects that compliment their
destination resorts and casinos. The most common developments have included shopping centers, entertainment venues,
and cultural centers.
Looking forward, the overall Indian gaming industry will
continue to grow through expansion. However, existing
operators will need to focus on remaining ahead of the
competition, protect their gaming interest through the
education of the surrounding communities and the expansion
of the business enterprise activities to further compliment the
gaming operation. ®
Daniel Holmes is a National Practice Leader for RubinBrown’s
Gaming Services Group. He can be reached by calling
(314) 290-3346 or email [email protected].
April 2015
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