United States

An Examination of sports betting in America

On December 4, 2017, the Supreme Court of the United States (“SCOTUS”) will hear New Jersey’s case to have the Professional and Amateur Sports Protection Act (“PASPA”) overturned. This review of PASPA, which effectively limits legal sports betting to only the state of Nevada, and to a lesser extent Delaware, Montana, and Oregon, has the potential to be a landmark states’ rights decision. To the gaming and hospitality industry, it has the potential to allow for another source of gaming entertainment and improve profit levels for operators. To government authorities, it has the potential to reduce illegal gaming activities and increase tax revenues.

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Research Brief: Sports Betting & Recent U.S. State Legislative Action

As the calendar reaches the midpoint, many state legislatures are adjourning for the summer or finalizing their budgets prior to the start of the fiscal year. The end of June is also the time when the Supreme Court of the United States’ (SCOTUS) term comes to an end, decisions are rendered, and announcements made for cases to be taken up in the next term that begins in October. GMA provides the following summary of relevant legislative happenings across the United States.

Last week, SCOTUS changed the dialogue within the United States gaming landscape when it announced that it would hear the New Jersey sports betting case (Christie Vs. NCAA) in its next term. Currently, only Nevada, Delaware, Montana, and Oregon allow some form of sports betting. The American Gaming Association (AGA) estimates that the illegal, unregulated sports betting market is a $150 billion-a-year industry. Many estimate that number to be far greater. While most in the industry see this as an opportunity on sports betting, a ruling by SCOTUS in this case has far more to do with states’ rights than wagering on sports.

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Research Brief: The 2016 US Election

The United States’ Election Day is upon us and by this time tomorrow the U.S. will know who has won one of the most divisive races in the nation’s history. As world awaits the results of the election, GMA has provided the following snapshot of some key items the gaming and hospitality industry should watch for as the evening unfolds.

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Strategies to Grow International Tourism into Las Vegas and Stimulate Economic Activity

Few would argue that sustained growth in air passenger volume into Las Vegas is a critical factor in the health and vibrancy of the Southern Nevada tourism industry. While McCarran International Airport (“LAS”) continues to enjoy steady growth in domestic passenger volume, growth in international traffic has experienced a far higher rate in the last five years, fueled by the opening of the new international terminal and marketing initiatives by the Clark County Department of Aviation. International visitation grew from 14% of total visitor volume in 2009 to 20% in 2013.1 International tourism continues to represent the greatest opportunity for new market growth, particularly visitors from Asian countries.

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Urban Alliances: The unique challenges of building casinos in a city

Casinos located in cities have long had an uneasy alliance with their host communities.

Local municipalities have enjoyed the tax revenues and jobs that casinos brought and civic leaders have recognized the charitable contributions casino leadership have made to their communities, as well as their greater economic contributions. Yet, cities have long treated casinos with a certain degree of disdain, relegating them to locations that would be unappealing to any hotel developer.

At the same time, many city governments have showered developers of sports venues, hotels and convention centers with a wealth of benefits including tax abatements, generous land leases, municipal bond funding and sales tax rebates in the hope that those developments would somehow lead to a revitalization of their urban cores.

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Casinos and the City – A White Paper

Casinos and the places where they can be found have increased dramatically over the last twenty five years. Where at one time there were only a few places on the planet where one could go to participate in legal gambling activities, today casinos are a fairly common enterprise. In the United States alone, there are over 900 commercial and Indian gaming establishments. Casinos can be found not only in North America but also throughout Europe, Central and South America, Oceana and Asia.

Since the passage of the Casino Control Act in 1976, legalizing casino gaming in Atlantic City, NJ, casinos have been narrowly viewed as a tool for urban redevelopment, providing tax revenues to state and local governments and jobs to its citizens. Their success in providing those benefits cannot be disputed. Collectively, the casinos in Atlantic City, the riverboat and barge casinos in the Midwest and southeast United States, Indian casinos, and the land-based commercial casinos in a number of US cities as well as those on the Macau Peninsula and Singapore have contributed billions of dollars to government coffers and created hundreds of thousands of jobs. However, their success as a tool for stimulating commercial activity within the neighborhoods that they are located in has produced less dramatic results.

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The Tipping Point: Rising slot hold percentages are driving players away, and revenue down

Gaming revenues, and in particular slot revenues, continue to decline in most U.S. gaming jurisdictions. This pattern of decline began at the onset of the recession and has continued even as the economy improved.

Casino operators often cite increases in gaming supply in adjacent states and a slow economic recovery in their markets as reasons for this decline. While the recession certainly affected discretionary spending during the height of the recession, hitting casino gambling hard, the U.S. economy has largely recovered. Gaming revenues, though, have not.

Key macro-economic indexes have returned to pre-recession levels. Two indexes, employment and consumer confidence, have long served as bellwethers for gaming revenue forecasts. In August 2013 the U.S. unemployment rate stood at 7.5 percent, down from 8.2 percent for the prior-year period. By August 2014, the unemployment rate dropped to 6.4 percent. In August 2013, the consumer confidence index stood at 80.3, up from 75.3 in 2012. By August 2014 it rose to 82.0.

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Legislative Dynamite: State failures the exception to the rule

As state budget crises continue to sweep across the nation due to the effects of the Great Recession, more and more states are making foolhardy decisions in an attempt to plug part of a budget deficit that may benefit them in the short term but will ultimately hurt them in the long run. Many investors in the gaming world have historically been gun-shy of investing in many international destinations due to legislative risk, viewing the United States as a stable jurisdiction in which the future is predictable. However, events of recent years have shown this premise of legislative stability in the United States as false.

New Jersey, feeling the pressure to expand gaming outside of Atlantic City to help reduce its deficit, has an opportunity to do it the right way that will benefit all stakeholders. Hopefully, they follow sage advice and set the example to how to responsibly expand gaming while simultaneously benefiting companies that have invested billions in their state.

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Putting Problem Gambling in Perspective

The success of gaming development on Indian lands has allowed many tribes to explore the feasibility of replacing their aging, temporary buildings with new, amenity rich facilities. Despite the recession, tribes are moving forward with plans for future development. These developments, often in more accessible locations closer to population centers, often spark debate among various constituencies in the local community.

Any public debate on the pros and cons of casino development inevitably brings up the topic of problem gambling and its economic and social costs on the host community. Often these debates take place without a reasonable understanding of what problem gambling is, how prevalent it is and how significant the problem is when compared to other pathologies. These debates are frequently led by those who are morally opposed to casino gambling and it is that moral opposition that often clouds reasonable discussion. It is essential to clarify what problem gambling is, explore its prevalence in society, and compare its social and economic costs to other forms of aberrant behavior caused by what many see as more benign industries.

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Don’t Shoot the Messenger

The recession of 2008-2009 has touched nearly every facet of American business. Indian gaming has not been immune from the sudden drop in consumer spending, which followed a rapid rise in fuel prices last summer. Nearly every US gaming market and the vast majority of casino enterprises operating in those markets saw declines in gross gaming revenue and net income, coupled with lower operating margins. Tribal governments in turn saw precipitous drops in revenue derived from their gaming operations and have been forced to reduce spending on essential services such as health care, education and elder care.

The sudden drop in the gaming revenue stream caught many tribal governments by surprise. Since budgeting often takes place in two to three year horizons, it quickly became difficult for many governments to meet their ongoing commitments. Unable to fully fund essential services, governments turned to their business enterprise boards who in turn looked to their casino management teams for solutions to very large and ultimately global business problems.

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