Each year, the American Gaming Association’s “State of the States” report provides the definitive analysis of the commercial gaming industry’s performance. 2020 was a different year for nearly every industry—and gaming was certainly no exception.
As a result, this year’s report is a little different. In addition to our regular coverage of state revenue, taxes, competitive landscapes and regulatory changes, we also detailed the impact of industry closures and operating restrictions in each of the 30 commercial gaming jurisdictions.
Let’s take a deep dive into the numbers and what they mean for gaming’s recovery.
Nationwide, commercial casinos lost nearly 46,000 days of business due to pandemic-related closures, driving full-year commercial gaming revenue down 31 percent to $30 billion, the first annual market contraction in seven years and lowest overall total since 2003.
Annual gaming revenue at the state level closely correlated with the duration and severity of local closure orders established to mitigate the spread of Covid-19. New Mexico (-78.8 percent GGR) reported the sharpest decline in annual commercial gaming revenue in 2020, as casinos were ordered to close in mid-March and were unable to reopen for the rest of the year.
Revenue declines of more than 50 percent were also reported in Michigan (-56.1 percent GGR), where casinos shuttered for a second time in November after already facing the most stringent reopening capacity restrictions in the nation. In contrast, states like South Dakota
(-4.5 percent GGR), Mississippi (-18.4 percent GGR) and Iowa (-21.5 percent GGR) —which all reopened sooner than others and avoided subsequent pandemic-related shutdowns—saw more modest revenue declines.
These trends demonstrate that casinos saw solid consumer demand when open in 2020 despite restrictions on capacity and many amenities.
Like in other sectors of the economy last year, gaming consumers moved some of their business to online options. While only available in four states in 2020, total internet casino gaming revenue increased to $1.55 billion for the year, up 198.9 percent against 2019. Revenue in New Jersey, the largest internet gaming market, doubled to $970.3 million. Next door in Pennsylvania, internet gaming revenue totaled $565.8 million for the state’s first full year of legal online gaming. One major trend to watch over the coming year will be how physical casinos rebound in states with iGaming compared to those without.
Sports betting also grew significantly in 2020, with expansion into five new states and Washington, D.C., offsetting the scrambled sports calendar and temporary closures of physical sportsbooks. Total revenue from commercial and lottery-run sports betting operations rose 68 percent to $1.55 billion in 2020.
Despite the drastic fall in gaming revenue, the major takeaway from these figures is that, considering all the challenges of the pandemic, nationwide gaming revenue didn’t drop nearly as much as it could have. Dramatic rises in sports betting and iGaming revenue buoyed the industry, and as health and safety restrictions eased, many Americans showed they were ready to make casinos their entertainment destination of choice once again.
With vaccines widely available and pandemic restrictions gradually lifting, gaming is primed for brighter days ahead. Many consumers are emerging from the past year in better financial shape and with more economic optimism than they had prior to the pandemic, and we’re already seeing evidence they want to return to casinos.
In many regional gaming markets, like Indiana, Iowa, Mississippi and Pennsylvania, among others, early 2021 gaming revenue has returned to the growth trajectory it was on before the pandemic. And major gaming destinations like the Las Vegas Strip, where gaming revenue continues to climb to pre-pandemic levels, are beginning to follow. This past March, Las Vegas Strip gaming revenue reached 91 percent of March 2019 levels while revenue for Nevada’s entire gaming market saw its highest total since February 2013.
New casino or sports betting markets are also poised to open in the coming months in states like Arizona, Maryland, Louisiana and Nebraska, which will add to gaming’s growth opportunities.
Once we are fully on the other side of the pandemic, the second coming of the “Roaring ’20s” has been a popular prediction. If that does indeed come to fruition, it’s clear gaming will be one of the biggest beneficiaries, as we’ve proven we can face any challenge head-on and still meet the highest standards of safety, hospitality and entertainment. I couldn’t be more optimistic about our future.