A Period of Adjustment Oops! That huge hissing sound is the sound of a balloon that had been growing over the years, slowly losing air. It hasn't been a flood that has brought down the whole ship however, as the gaming industry's emerging and growing jurisdictions saw a significant increase in the year 2008. Overall both the racetrack and commercial casinos (excluding Indian gaming), saw a 3.5 percent decline in gaming revenues in 2008, generating a total in the region of $36.2 billion, which was down by 800 million from 2007. It was the Racino sector which has tempered the decline, as they saw a rise of almost $1.5 billion during the year, expanding the market of the Commercial sector decrease to $1.8 billion which is 6.7 percent. Nevada was the biggest losser in 2008, losing by nearly $1.3 billion, which was more than half of which came from that Las Vegas Strip segment. Hunkering Down Most of the time, casinos were unaware of the magnitude of the 2008 revenue downturn, as it was only during the 3rd and 4th quarters that it began to drop. Riding the crest of annual market growth across the nation and the abundance of capital and equity new construction and expansions exploded in recent years. Now, by the reality of declining, or at best low demand, many construction projects in the United States are now considered to be too leveraged and/or large. This is why a lot of gaming firms are trying to refinance their debts that is made more difficult by lower valuations while paring down operational costs. The latter has become a very problematic conundrum when dealing with the competitive เล่นสล็อต landscape, particularly in areas that are competing for market share with emerging casinos in nearby regions. The subject is discussed more extensively in the Analysis section of State by State in this book. Due to these conditions the gaming industry landscape is now littered with imminent fatalities. The most prominent troubled companies include Station Casinos, Empire Resorts, Harrah's Entertainment, Greektown Holdings, Legends Gaming, Tropicana Entertainment, Herbst Gaming; and the list keeps growing each week. "How long will these economic conditions persist, and are we at the bottom yet?" These are all questions no one seems to be answering yet. The one thing that is certain is that gaming jurisdictions in general will have to learn how to handle smaller portions of the pie. Note: This analysis is based on only gaming revenues of licensed casinos as well as pari-mutuel stores that offer casino games, however, it does not include Indian gambling operations or card rooms or even small slot locations. The entire article, with revenue tables , is accessible on our website. Input/Output Model A key aspect that seems to have emerged out of the chaos of the current trend is that many casinos were simply too large to support themselves. The input, in terms of investment dollars, was not proportional to output, as measured by net profits after debt service when compared to the previous results. Greater and/or more expansive is not always better. In the wake of the increase in the non-gaming revenues at Las Vegas Strip resorts Las Vegas Strip resorts, led to the establishment of more extensive services in many other states. The flaw in this strategy however is that the costs that are associated with expanding market penetration and occasioned use, are much more expensive than the costs incurred in order to draw the base market. As daytripper markets become more competitive, casino venues will be forced to rely to a greater extent on hotel patrons in-house, and scale their properties (and expectations) accordingly. Even though Steve Wynn started a major trend in creating up-market mega-destinations, there simply was not enough demand for the Strip to justify the multitude of other similar projects that followed that aimed at the same segment. The trick is to find an acceptable balance in project configurations; which of course require less of a'seat in the pants' approach, and one that is more researched. A shameless plug for development consultants like ourselves. Other Gaming Activities Although there is no specific figures on American Indian gaming revenues, reports from the field suggest that this segment is as hard-hit as the commercial sector. The two Connecticut Indian gaming installations report slot revenue at $1.6 billion during 2008 the loss of around 7 percent or nearly $114 million. That's more than doubling the 3.5 percent decline the year before. This market is apparently still in shock from the ripple-effects of a casino expansion Rhode Island, and the establishment of slot facilities at New York and Pennsylvania. The Arizona Department of Gaming reports that gaming contributions based on an income formula for gaming from Arizona's 23 Indian gaming casinos, have decreased every quarter of 2008 when compared to the prior year. declining .8 percent in the first quarter, 7.5 percent during the 2nd quarter. 9.5 percent in the third quarter, in the fourth quarter, and 16.1 percent for the fourth quarter. Certain SEC report Indian gaming establishments report similar declines. Seneca Gaming, which operates three Class III casinos in upstate New York, reports that while calendar year 2008 showed an almost 2-percent growth of gaming revenues However, the property experienced an 8.7 percent decrease during the third quarter and an almost 10-percent decline for the final quarter of 2008, in comparison to the 2007. The gaming revenue trends in close by Niagara Falls, Ontario were lower by 1.5 percentage in 2008 as compared to 2007. There's been mixed results for lottery systems across the country. According to the North American Association of State & Provincial Lotteries reports the U.S. lotteries generated a total of $60.6 billion in sales during the fiscal year 2008, which was up by 3 percent over the previous year; yet some jurisdictions reported decreases, most notably California where there was an increase of 8 percent. As a result, since several of these states are on various fiscal year ends, it would seem that the numbers do not reflect the impact of third or final quarter figures. According to data provided by Equibase the horse racing pari-mutuel revenues continue their downward spiral, falling 7.7% to $13.7 billion for 2008, versus $14.7 billion in 2007. Planned & Proposed New Expansions As we've mentioned it's been the emergence of new gaming jurisdictions that have spawned significant growth in the annual revenue of racinos and casinos throughout the years and their effect is apt to continue into the near future. Florida Miami Dade voters approved a ballot question that allows three pari-mutuels each to operate a casino of up to 220 slot machines. In addition, the Flagler Dog Track and Miami Jai-Alai are reportedly planning opening either in late 2009 or 2010 while The Calder project within Miami Gardens has yet to announce its plans. There are a variety of other ideas being considered that could further increase the number of casinos across the state.