After a brief lull at the turn of the century, U.S. gaming expansion resumed in 2004 when four New York racetracks opened the first video gaming casinos run by the New York Lottery. In total, eight states have added casino-style gaming since then, and two more added gaming in new types of facilities to their existing properties.


In these newer jurisdictions, racetrack gaming has taken center stage. And as recent events have proven, that could be a dangerous thing. What governments give, they can take away, as they are doing in Ontario and as they have proposed doing elsewhere. Some of my thoughts on that topic are in a previous column.
    
We also have the odd case of Kansas, where the enabling legislation for casinos also authorized slots at racetracks. However, the tracks didn’t care for the terms and shut down entirely – it’s the first jurisdiction where racetrack slots were offered, but not accepted by tracks. Other states also have onerous terms, but the tracks chose to live with them rather than without them.

Racetrack gaming accounted for more than 75 percent of the total gaming revenues generated by these newer markets in 2011 – $4.3 billion out of the $5.6 billion total. Growth rates are not particularly useful in many of these states because of new facilities, market adjustments as they feel their way and other factors.

The following summarizes some of the key developments in each jurisdiction from 2007 through 2011. See the complete underlying data.

Arkansas: The state’s two tracks opened their casinos in November 2006, limited to electronic games of skill. Not as lucrative as standard slot machines, they nevertheless provide a new source of revenue. Southland in West Memphis in particular had been severely wounded when casinos came to Tunica across the border in Mississippi. In 2011, Southland was able to capitalize on Tunica’s misfortune when floods closed the latter’s casinos for several weeks, attracting and keeping players cut off from their regular haunts. Gaming revenues at the Greyhound track increased by almost 125 percent from 2010 to 2011.

Florida: Slot machines at South Florida’s pari-mutuel facilities made their debut at two tracks in late 2006. Other casinos opened in 2007, 2009 and 2010, and combined revenue has grown every year except 2009. The first to open, Gulfstream Park, got off to a rocky start initially, and had the most to gain. Sure enough, it is the only one of the first three operating casinos which has increased revenue every year. In contrast, nearby Mardi Gras is the only one of those three where 2011 revenue is lower than revenue in the first full year. All five tracks had stellar years in 2011, with most up by double digits.

Indiana: The state’s two racetracks added slot machines in 2008, joining 11 dockside casinos which were first legalized in 1995.

Kansas: The state’s first casino, opened in late 2009, has proven to be very successful in its small market and expansion is underway. A second, much larger casino opened in Wichita in late December and just started to make its presence felt in the revenue figures.

Maine: A slot casino opened at Bangor Raceway in November 2005. After strong growth early on, the casino had its first annual revenue decrease in 2011.

Maryland: Slot parlors were legalized in 2008 and the first casino opened in September 2010 in Perryville. The Casino at Ocean Downs, a racetrack, opened in January 2011, and has not quite performed to expectations.

New York: Video gaming at racetracks throughout New York started off slow, but after legislative changes provided marketing funds and other revenues, they have generally posted impressive results year after year. Hamburg Casino at the Fairgrounds in the Buffalo market has regularly reported double-digit growth despite being surrounded by tribal casinos. Vernon Downs is holding its own against another tribal casino. Even Monticello, which did not do well early on, has had two straight strong years. And of course the long-awaited casino at Aqueduct finally opened in late October 2011, and revenues have been pouring in there.

Oklahoma: Electronic gaming at three of the state’s racetracks was authorized in 2004 as a way to help them compete against a rapidly growing tribal gaming industry. All opened their casinos in the fall of 2005. One, Blue Ribbon Downs, closed in 2009 citing financial losses. Despite the closure, total gaming revenues in the state have increased every year with two remaining track casinos.

Pennsylvania: The state has quickly risen to the top echelon of gaming markets since the first casinos opened in late 2006. In 2011, six racetrack casinos and four other casinos brought in just over $3 billion in total gaming revenue. Although statewide revenues have grown by double-digits every year since inception, individual results have varied widely. Some of the early properties, such as Harrah’s Chester Downs and Mount Airy, experienced declines when a newer property opened within striking range. Slot revenues at most of the racetracks declined in 2011, but the addition of table games beginning in July 2010 provided more than enough compensation and all properties grew in total revenues.

West Virginia: In 2009, a small casino opened at the Greenbrier Resort in the southeast part of the state near the Virginia border; revenues grew by more than 55 percent from 2010 to 2011.

Coming Thursday: The total gaming market picture