The good news: Indiana still ranks third in the U.S. in gaming tax revenue, and several of its casinos are investing in capital improvements.
The bad news: Over the past six months, casino tax revenues plunged $50 million, nearly 15 percent, compared to the previous year. In addition, according to the Indiana Gaming Commission’s recently released year-end report, combined wagering and admissions taxes in 2013 fell 9 percent, or $752.4 million, the lowest level in eight years. Total win was nearly $2.5 billion, a 7.6 percent decrease from 2013. Admissions were down 11 percent. And casino employment at 12,900 workers was the lowest since 1998.
In regard to the casino taxes collected in 2013, Ernest Yelton, gaming commission executive director, said, “Three quarters of a billion dollars is still a handsome sum.” He called that figure “a new normal” for Indiana due to increased competition from neighboring states and decreased admissions due to the slowly recovering economy.
Yelton added certain casino observers say 2014 will be a stabilizing year–but gaming analyst Ed Feigenbaum, editor of Indiana Gaming Insight, is not among them. While competition has had a “tremendous effect,” Feigenbaum agrees that competition has had a “tremendous effect” but added, “It’s more complicated than that. People don’t have as much disposable income, they don’t have as much money they can spend. They used to choose between going to a high school basketball game or the casino. Now, it’s between going to the casino or paying their mortgage.”
Feigenbaum noted Illinois still presents too many variables that could affect Indiana’s casino industry. For example, he said, “We still haven’t seen the full effect of video lottery terminals in Illinois. For people looking to spend a little bit of money at Indiana casinos on penny slot machines, this may be an alternative to them that’s closer to home.” Other variables, Feigenbaum said, could include a casino smoking ban, expanded horseracing and additional casinos in the South Suburbs and Chicago, which could directly impact casinos in northwest Indiana.
Feigenbaum also said some jobs never will return, due to technology, not competition or the economy. “Casinos no longer have slot attendants. That’s a significant number of people,” he stated.
Mike Smith, president of the Casino Association of Indiana, noted, “I think ever since we had the major recession, it’s just taking a lot longer for us to get back to where we were.” But Indiana is not alone in this situation, Feigenbaum noted. “Every other market in the country has seen the same thing happen,” Feigenbaum said.
Still, in the past few years, Indiana’s casino industry has pleaded with state legislators to provide some sort of economic protection from increasing out-of-state competition. Last year some lawmakers said they were ready to let the casinos try to survive on their own. And this year, the only bills submitted related to gambling involve charity games, not casinos.
Feigenbaum advised casinos to consider their demographics and target a specific audience in order to stand out among the competition. “It could be entertainment, restaurants, sports bars or a hotel that you could focus on,” he said, giving the example that casinos with hotels were able to stay open during recent snowstorms, while Horseshoe in Hammond, the sole casino without a hotel, had to close for a day.
Matt Schuffert, vice president and general manager of Ameristar Casino in East Chicago, one of the Indiana casinos making capital improvements, said the closing of the Cline Avenue bridge has had as much impact on Ameristar as the economy. On a positive note, however, he said he expects Indiana’s casino industry to improve in 2014. One sign is that Ameristar hopes to hire 40 more employees.
