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Future casino tax yields: what recent trends in casino wagering and attendance suggest.
This article considers and investigates the future growth potential of the state's wagering taxes. Gaming markets in many states that legalized casino gaming in the 1990s have matured, so the days of extremely robust annual revenue growth may be on the wane. Revenue growth looms large in Indiana as the wagering tax has become a major source of funding for the state's property tax relief program. In 2008, about $486.3 million in revenue from the riverboat wagering tax was directed to property tax relief. What's more, all revenue from the separate racetrack casino wagering tax is dedicated to property tax relief. Note that all years referenced in this article are fiscal years unless otherwise noted. (1)
We first examine the historical growth patterns in attendance and wagering at Indiana's riverboat casinos. By analyzing the win--the base for the wagering tax--instead of wagering tax revenue, we eliminate problems with measuring tax rates and the impact of changes in tax rates over time. (2) Analyzing casino attendance helps to delineate growth in the win that's attributable to income growth versus growth attributable to capacity expansion and market share growth. This is critical because if the markets in Indiana have matured, the annual growth in the wagering tax base will come from the underlying growth in the average win per gambling patron.
[FIGURE 1 OMITTED]
In addition, this article examines the response of the wagering tax base to economic change and how casino gaming in bordering states could affect business at Indiana casinos. Both are critical issues in and of themselves relating to the future growth in gaming revenue.
Recent Patterns in Casino Win and Attendance
During 2008, 26.2 million people gambled at Indiana's eleven riverboat casinos, generating about $2.6 billion in win. The 2008 attendance and win levels are a long way from the first, albeit partial year of casino operations in 1996 when roughly 944,000 gamblers generated a win total of about $71.9 million. Figure 1 reports annual attendance and win totals for the riverboat casinos.
Annual attendance and win grew dramatically in the 1990s, exhibiting a year-to-year pattern similar to the growth patterns for electronic gaming devices (EGDs) and table games discussed in the previous article ("The Two-Sided Coin: Casino Gaming and Casino Tax Revenue in Indiana"). While lagging the supply trends, the trajectory of the attendance and win series also exhibits a rapid leveling off in recent years. From 1997 to 2008, the casinos registered average annual growth for attendance and win of 9.2 percent and 11.9 percent, respectively. However, the annual growth rates for particular years vary significantly around these averages. The leveling in the attendance series and the win series is quite discernible beginning in 2004 once the impact of dockside gaming had registered fully.
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Source: HighBeam Research, Future casino tax yields: what recent trends in casino wagering and...