Casinos in Arizona are starting to regain some of the business lost during the recession, but the recovery process has been slow and numbers are still far below the highs the industry experienced a few years ago.
Arizona Indian casinos reported yearly gross gaming revenue for Fiscal Year 2014 that surpassed $1.8 billion, according to the Arizona Deportment of Gaming, for the first time since 2009, when the industry was in a decline related to the national recession.
Although gross casino gaming revenue has consisted increased each year since it reached its low in 2010 during the recession, the numbers are still far short of the highs of 2007 and 2008, where the gross revenue each year hovered just under $2 billion.
“The contributions to the State began recovering after the recession, but for the last three fiscal years have remained stagnant, increasing at a rate of less than a half of a percent,” says Courtney Coolidge, legislative & policy analyst with the Arizona Department of Gaming.
Yearly revenues reported by the casinos have gone up each year since the low of June 2010 when the reported gross revenues for the year were $1,687,785,462, according to the ADG annual report. However, even the most recent report from 2014 still has the annual revenue at $20 million less than in 2009 when the recession was already under way.
“The revenues to the state have not come back to pre recession revenues and there is no indication this will take place anytime in the near future,” says Coolidge, “We (ADG) don’t see anything on the horizon that would make revenues increase significantly. Although the economy has been improving, reports suggest that wages are not and thus neither is individuals disposable income…Gambling is similar to other forms of entertainment, the same way people with more disposable income might choose to go out to dinner or the theater more often, individuals who gamble may also do so more frequently.”
Arizona casinos recorded their highest single-year revenue during the period of July 1, 2007 to June 30, 2008, when the casinos’ aggregate gross gaming revenue reached $1,982,018,281. The same year saw tribes give the highest percentage of revenue to date at 5.6 percent, or $15,152,219 allocated to the state and local communities.
In a trend that is not very surprising in hindsight, the negative turn in the economy at the end of 2008 led to a severe and almost immediate drop in revenues recorded by casinos. By the following report published in June of 2009, gross gaming revenues in Arizona had already dropped by over $160 million to $1,828,218,614.
Following in the trend of the economy as a whole at the time, casino revenues continued to plummet, reaching $1,687,785,462, a drop of nearly $300 million in revenue in less than two years.
Arizona passed Proposition 202 or the “Indian Gaming Preservation and Self-Reliance Act” in 2002 an attempt to add regulation to the industry. This led to the founding of the Arizona Department of Gaming, a state agency tasked with overseeing and properly distributing some of the revenue generated from class III casinos which are ones that contain slot machines, blackjack, keno and other casino style games, according to the ADG.
Arizona currently hosts 22 federally recognized Native American tribes spread across over a quarter of the state. There are a total of 23 Class III casinos being operated by 16 different tribes, with another five tribes owning slot machines that they lease to other casinos and tribes. Although there are currently 23 casinos in Arizona, the compacts allow for a potential total of 29.
The reduction in revenue meant that fewer funds were available for tribal communities, as only $11 million was allocated in each of 2009 and 2010 for the revenue for local cities, which was down from a high of $15 million the previous year, according to the ADG annual report.
Tribes share from one percent to eight percent of their gross gaming revenues with the state according to Proposition 202. Of this revenue given to the state, 88 percent is paid to the Arizona Benefits Fund, and the other 12 percent goes directly to cities, towns, and counties for “government services that benefit the general public, including public safety, mitigation of impacts of gaming, and promotion of commerce and economic development.”
The Arizona Benefits Fund amounts to an average of just under $80 million annually since its inception, and is controlled and distributed by the Arizona Department of Gaming. The breakdown of the fund according to the annual report is: 56 percent of the shared revenues is directed to educational programs and needs; 28 percent funds emergency services and trauma centers; 7 percent funds wildlife and habitat conservation; 7 percent funds statewide tourism promotion; and 2 percent supports the education, prevention and treatment of problem gambling.
Gaming has been a part of Indian culture, according to the Arizona Indian Gaming Association, and began with the operation of bingo and poker games played on the reservation in the 1970s.
“Indian gaming is the first and only tool for self-sufficiency that has ever worked for tribes,” according to the AIGA. The gaming revenue allows tribal governments to offer services to citizens that would otherwise be funded from taxes.
There can be maximum of 1,301 slot machines in any one casino, and a maximum of 18,158 machines in the entire State, of which there are currently about 15,390 machines, according to the Arizona Department of Gaming.
The five Arizona tribes that own slot machines without their own casino are the Havasupai Indian Tribe, the Hualapai Indian Tribe, the Kaibab-Paiute Tribe, the San Juan Southern Paiute and the Zuni Tribe. Each of these tribes has the potential opportunity to own several hundred machines each, however the data suggests that there are somewhere around 35 Class III machines owned by non-gaming tribes that they are leasing to casinos.
“We have heard information of a couple new facilities that may be on the horizon,” says Coolidge, “Just recently the news reported Tohono O’odham broke ground on their Glendale casino, although we do not have a date for completion. We have also heard that San Carlos Apache may be looking into building a new facility.”
Harrison Leff is a reporter for Arizona Sonora News, a service from the School of Journalism at the University of Arizona. Reach him at email@example.com