Record Revenues Reflect Strength of U.S. Casino Industry

The U.S. commercial casino industry generated record revenues in 2017 with a more than 3.4% year-over-year improvement, per the American Gaming Association (AGA). In fact, out of 24 casino states, that operate commercially, 20 witnessed a year-over-year increase in revenues in 2017. Out of all the commercial casinos, strong tax revenues also contributed to this stupendous performance.

Additionally, the U.S. casino industry witnessed steady job growth, per Oxford Economics. Along with strong job creation, favorable operating conditions and solid macroeconomic trends resulted in record revenue growth in the casino industry, despite increased competition in some of the states.

Casino Industry Collected $40.28B in 2017

According to AGA, total revenue generated by the U.S. casino industry in 2017 was $40.28 billion, up 3.4% from 2016. Additionally, 11 of all the gaming states registered record revenues last year. Moreover, from the United States’ 460 casino places tax revenues from direct revenues were $9.23 billion.

The casino gaming industry witnessed significant revenue growth in 2017, after several major commercial casino American states came up with new policies. Pennsylvania underwent an important policy development last year. Also, states such as New Jersey, Nevada, Oklahoma, Maryland and Louisiana took actions in order to remove hidden restrictions that limit growth and to boost the implementation of new technologies.

In 2017, the U.S. Supreme Court called the Professional and Amateur Sports Protection Act (PASPA), authored by the former U.S. Senator Dennis DeConcini of Arizona, unconstitutional. In fact, the court lifted the ban and made way for the states so that they can control sports betting within their jurisdiction.

Following the Supreme Court’s judgment, AGA president and CEO Geoff Freeman said that this judgement will make “it possible for states and sovereign tribal nations” to carry out “an open, transparent, and responsible market for sports betting.”

Strong Job Growth, Solid Macro Trends Boost Revenues

According to Oxford Economics, aglobal forecasting and quantitative analysis firm, the casino industry had at least 361,000 new employees in 2017. Total earnings, including wages, benefits and tips, for all employees in the industry was $17 billion last year.

Additionally, unlike commercial casino gaming, which is operational in 24 states, tribal gaming is present in 28 states. According to the National Indian Gaming Commission (NIGC), revenues from tribal gaming touched a record high of $32.4 billion last year, higher than 2016’s figure by 3.9%.

Moreover, the United States casino industry is poised to grow even further in 2018, as evident from the fact when the industry adopted the Responsible Gaming Collaborative. Per the collaborative, the current gaming regulations and policies will be reviewed comprehensively and will identify those programs that work and the ones that fail.

Given this scenario, gaming companies like MGM Resorts International MGM, Eldorado Resorts, Inc. ERI, Golden Entertainment, Inc. GDEN, Las Vegas Sands Corp. LVS and Penn National Gaming, Inc. PENN are expected to gain. Golden Entertainment, Las Vegas Sands and Penn National Gaming have gained 25.8%, 9.6% and 67.2%, respectively, in the past one year.

Las Vegas Sands carries a Zacks Rank #3 (Hold), while Penn National Gaming has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In Zacks Gaming, 16 out of 20 companies have reported earnings in the second-quarter reporting cycle. Of these, only six delivered an earnings beat.

Summing Up

Undoubtedly, the casino gaming industry has registered extraordinary performance in terms of revenues. Although, increasing competition in the industry is a headwind, it is expected to boost growth in the long term. Moreover, strong job growth, favorable macroeconomic trends last year, the Supreme Court’s ruling in favor of the industry and the adoption of the Responsible Gaming Collaborative are expected to boost the commercial casino industry in the months to come.

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