gaming_industry

gaming_industry - Economic Analysis o f the Gaming Industry...

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Economic Analysis of the Gaming Industry Siddarth Subramony Matthew Tracy Robert Walker Jeffrey Wan Stmcture of American Industry December 7,2007
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1. Industry Overview Race and Sports \/Va~leli n g - Tribal Charitable r <3 Lllll i I 9 ·"'0 1 .j /0 Casino The casino gaming industry has been rapidly expanding over the course ofthe last thilty years. Industry revenues have increased from $540 million, in 1970 when casinos were only legal in Nevada, to more than $25 billion today where gambling is legalized in 48 states). The bulk of revenue earned in the industry is from traditional (3':Hll ing -----/ casinos (Fig. 1) which feature an extensive 2:3% I -~ ." . r and Card \ F~O O ll V Ga n ing 1 40% collection of slot machines as well as table games (poker, blackjack, etc.f The majority of income from these casinos is fi-om slot machines but the recent rise in popularity of poker (coinciding with the televised World Series of Poker) has resulted in over $1 billion in revenue from table games 2 . The success of the industry has been reflected in the growth of Las Vegas, Nevada which was one of the five fastest growing metropolitan areas in the / r····· Lotteries Fig. 2005 revenue by gaming activity in the gambling industry2. United States during the past four decades). Casino revenue has exceeded $10 billion since 2001 (Fig.2) and in 2006 Las Vegas casinos earned over $12 billion dollars 3 . Annual Inflation Adjusted Casino and Card Room Gaming Revenue 0 "1,LOO (f) ::J IJ") • "1,700 CJ CJ N - VJ . i. .!C1O - c ~ 0 -- - - - '0,700 I--- - - ~ r-- ~ .E Q.~OO t-- _ ~ I---r--f-- '" ::l c ~":"DO <!J t--- f--- :> ~ . ~CIO 0:: 2:101 2CD ~ 200? 2,: 04- Fig.2. Inflation adjusted revenue for Nevada 3 caSInOs. - f-- f- I 1CO:, Las Vegas is the most populated city in the state of Nevada' and is an intemationally known resort, shopping, entertainment, and gambling destination. It is commonly known as the "Entertainment Capital of the World" for its massive and lavish casino resorts and is cunently home to over 378 casinos 2 . The primary drivers of the economy are gaming, tourism, and conventions which in turn feed the retail and dining industries. Gambling was legalized in 1931 Nevada with the passing of the "wide open gambling" bill in 1.931 by the state legislature. This bill established a schedule of license fees for all games and machines with the counties assuming the responsibilities for the licensing and collection of fees. The first gaming license was issued shortly thereafter to the Northern Club and the industry quickly became organized and regulated 4 In 1941, the first casino, the EI Rancho, opened on Las Vegas Boulevard or what is today known as the 'Las Vegas Strip'. This 'strip' is a 4 mile section of Las Vegas Boulevard South that is home to 26 m~or casinos today. The first series of gaming regulations came in 1946 taxes were levied on the industry thus making gaming
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a supplemental source of the state's revenue. In December of that same year, the Flamingo, Nevada's first major resort hotel casino, opened marking a turning point in the history of Nevada's gaming industr/. The Flamingo was opened by Bugsy Siegel, a reputed American gangster, and was the beginning of speculated mob involvement in the industry. The second
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gaming_industry - Economic Analysis o f the Gaming Industry...

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