SAN FRANCISCO – The Indian gaming industry experienced the slowest growth in its history in 2008.

But, despite decreases in the number of visitors, double-digit drops in gaming revenues, layoffs, and the postponement or cancellation of expansion projects, the $26.8 billion generated at Indian casinos was 1.5 percent more than 2007 revenues of $26.4 billion, according to the Indian Gaming Industry Report by Alan Meister, an economist with Nathan Associates Inc.

The 1.5 percent increase was the smallest since the Indian gaming industry was launched with the passage of the Indian Gaming Regulatory Act in 1988.

Gaming revenues declined from 20 percent in 2001 to 15 percent from 2002 through 2005, 10 percent in 2006 and 5 percent in 2007.

“While the slower growth in 2007 and 2008 can be attributed in part to the general slowdown in the U.S. economy, it cannot explain the slower growth in prior years, or the overall pattern of declining growth. These phenomena have been the result of public policies designed to restrict the supply of Indian gaming. These public policies have included proposed and enacted legislation and regulations, as well as tribal-state gaming compacts,” Meister said.

Non-gaming revenue at Indian casinos fared better in terms of growth rate. In 2008, $3.2 billion were generated in non-gaming revenue at Indian casinos, a 3 percent increase from the $3.1 billion in calendar year 2007.

Despite Indian gaming’s slower growth last year, it outperformed commercial gaming, which earned $30 billion – a drop of 7 percent from $32.2 billion in 2007, according to the report.

“In terms of absolute gaming revenue dollars, Indian gaming continued to close the gap on commercial casinos. In 2008, gaming revenue generated by Indian gaming was 89 percent of the commercial casino segment. This compares to 82 percent in 2007,” Meister said.

Meister reported that there continues to be “a great disparity” in the performance of Indian gaming operations largely because they are geographically dispersed across the country and market conditions vary widely.

Indian gaming is “fragmented,” Meister said. In 2008, there were 442 gaming facilities operated by 237 tribes in 28 states.

California, with its population concentrations, continued to generate the largest amount of Indian gaming revenue with $7.3 billion. That accounts for more than 27 percent of Indian gaming revenue. California and Oklahoma, the top two states, generated 38 percent of total Indian gaming revenue.

Last year, for the first time, Oklahoma, where 32 tribes operated 110 gaming facilities, outperformed Connecticut, where two tribes operate two facilities. Oklahoma generated $2.9 billion, becoming the second largest revenue generator.

Connecticut has the two largest casinos in the U.S. – Foxwoods Resort Casino and the Mohegan Sun. The two casinos’ combined revenue last year was approximately $2.4 billion, down approximately five percent from $2.5 billion in 2007.

The top five states – California, Oklahoma, Connecticut, Arizona and Florida – accounted for 61 percent of all the Indian gaming revenue generated last year, but when you add the next five top states – Washington, Minnesota, Wisconsin, Michigan and New York – together they generated 86 percent of gaming revenue last year.

In addition to fulfilling the Indian Gaming Regulatory Act’s intent “to provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments,” Indian gaming continues to make significant contributions to the U.S. economy, according to Meister.

“Indian gaming facilities, including their non-gaming operations, directly generated approximately $30.3 billion in output and supported about 352,000 jobs and $11.9 billion in wages in calendar year 2008. Indian gaming also stimulated output, created jobs, and provided wages outside of Indian gaming facilities and off tribal reservations,” he said.

Meister estimated that in 2008 Indian gaming led directly and indirectly to:

  • $84.9 billion in output;
  • 712,000 jobs;
  • $27.0 billion in wages;
  • $10.8 billion in federal, state and local tax revenue;
  • $16.6 billion in direct payments to federal, state and local governments.

The future for Indian gaming looks good, Meister said, even though the industry continues to struggle in 2009 because of the economy. He expects minimal growth in the near future, but an improved economy in the long run.

“The economy will improve in time, bringing back consumer confidence, disposable income, spending on casino gambling, and financing for future casino developments,” Meister said.

But he advises tribes to move forward with caution on future development, “given the aftermath of the recession.”

Indian Gaming Industry Report is published by Casino City Press.