Indian casinos revenue up a bit in 2011

Tribes posted gains despite weak consumer spending

HARTFORD, Conn. – Native American casinos brushed off weak consumer spending in a sluggish U.S. economic recovery to post a modest increase in revenue in 2011, an industry study reported last week.

Not only did revenue rise 3 percent, to $27.4 billion, but Indian casinos are holding on to their share of total casino gambling revenue, competing closely with commercial casinos, according to the report, “Casino City’s Indian Gaming Industry Report.”

The revenue increase is the second in as many years after a first-ever drop in Indian casino revenue in 2009 as the worst recession in decades took its toll on consumer spending. The back-to-back increases in revenue are encouraging, the report said.

“The question is how much further can Indian gaming grow?” said author Alan Meister.

Indian gambling was slowing before the start of the recession in late 2007 because of legislation, regulations and court decisions that restricted the types of games offered by Indian casinos, the number of states where gambling is permitted and other limits, he said.

The outlook for Indian gambling now appears healthy because the economy is expected to continue improving, restoring consumer spending, Meister said. In addition, many tribes are upgrading, expanding and replacing casinos.

Indian-run casinos such as those in Alabama and Nebraska, he said, enjoy the advantage of being closer to consumers than many commercial casinos. “They’re a good alternative to Vegas that’s closer to home,” he said.

But the long-term outlook for Indian gambling is uncertain, Meister said. Potential threats include continuing legal challenges – such as a land dispute court case in Michigan that Meister said increases the likelihood of other legal challenges to gambling projects – and state regulations that restrict Indian casinos and limit expansion. Indian casinos face “a lot more” restrictions than their commercial counterparts, he said.

“That, in some ways, holds back Indian gaming from what it could potentially be,” Meister said.

Other potential challenges include increasingly saturated markets, rising competition and Internet gambling.

Indian gambling generated about 43 percent of U.S. casino gambling revenue in 2011, the report said. Revenue at commercial casinos was 45 percent and revenue from “racinos” – casinos that operate at race tracks – accounted for the remaining 12 percent. That’s unchanged from 2010, but represents a huge gain from the Indian casino share of less than 20 percent in 1993.