States End Up Losers in Gambling Pullback

Consumers' Timid Betting Leads to Drop in Income From Commercial Casinos and Lotteries, Exacerbating Budget Deficits

By CONOR DOUGHERTY

States' revenue from casinos, slot machines and lotteries is falling for the first time in many of the 48 states that have grown to depend on gambling as a crucial source of income.
View Full ImageAssociated Press

A technician looks over one of the 3,000 plus on the floor of the new Rivers Casino in Pittsburgh.

Revenue contributed by commercial casinos to state and local governments was down 2.2% in 2008, to $5.7 billion, according to the American Gaming Association, an industry trade group. In many states, the declines have continued.

Eight of the 12 states that allow commercial casinos saw their take of gambling revenue fall in the fiscal year ended June of this year, compared with the same period a year ago, according to data from states and the Nelson A. Rockefeller Institute of Government at the State University of New York.

In five of those states, including Illinois and Nevada, gambling income fell by a greater percentage than the state's overall revenue did. Nevada's gambling-tax revenue fell 15% in the fiscal year ended June compared with the same period a year earlier. That contributed to a drop of 10% in the state's overall revenue.

Many lotteries also are hurting. In a sampling of 20 state lotteries, including California and Illinois, 14 had year-over-year drops in revenue for the fiscal year ended in June, according to Rockefeller Institute.

It is a harsh reversal for states that had come to count on the gambling industry's rapid expansion to provide steady revenue growth. States saw total gambling revenue including casino games, lotteries and horse-racing wagers rise 65% from fiscal year 1998 to $23.9 billion in 2008. Overall state revenue over the same period grew to $774 billion, up 65%.

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