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If you’re looking for further evidence that regulated online gambling in the United States does not cannibalize the operations of brick-and-mortar casinos, the National Indian Gaming Commission (NIGC) has some big numbers for you. Per the NIGC’s accounting for the past fiscal year, gaming revenue from tribal authorities within US borders surpassed the $40 billion mark for the first time.
At the same time, the NIGC’s newest data show that the gap between the largest tribal gaming operations in the US and less robust tribal casinos changed over the past year. It suggests that some of the busiest tribal casinos might have slipped a bit during the period.
NIGC says FY22 broke annual revenue record
The news in this regard isn’t really that tribal gaming revenue hit a new high in FY22. Indicators pointed toward that likely being the case, such as several record highs in the commercial segment of gaming in the US during the same time period.
Ahead of the NIGC’s fiscal year report, analysts were more curious about how much, not whether, the industry grew. The total of $40.9 billion for FY22 represented growth of almost $2 billion or about 4.9% from the previous record for tribal gaming revenues in FY21.
That’s the greatest annual increase by percentage in a year that didn’t feature a global pandemic shutdown since FY2006, when revenue jumped by 9.2%.
The NIGC adds that of the eight regions it divides the more than 500 gaming operations it oversees, seven of those saw individual annual improvement in revenues. Leading the way in that regard was the Phoenix region (comprising gaming operations within the borders of Arizona, Colorado, New Mexico and most of Nevada) at 15.7%.
The Sacramento region (California and northern Nevada) was the outlier, seeing a marginal 1.4% decline in revenue. The others ranged from a single percentage point to 10.8% in growth.
Just as growth was divided unevenly among the regions, the $40.9 billion sum was not an equal division among individual casinos. In fact, the majority of this revenue was reported by the smallest portion of these tribal gaming authorities.
Revenue disparity among tribal gaming operations
According to the NIGC, 8% of the tribal gaming operations like casinos it oversees reported at least $250 million in revenue for FY22. The largest group of the tribal casinos, representing 55% of operations, reported less than $25 million in revenue for the fiscal year.
The NIGC further points out that the 8% group accounted for 51% of the $40.9 billion national total. While the percentage of operations reporting revenue at that threshold held steady from FY21, such casinos accounted for 52% of the revenue sum in the previous fiscal year.
The numbers seem to suggest that the small change came from casinos who reported at least $250 million in revenue for FY21 failing to reach that threshold again in FY22. In FY21, operations reporting between $100 million and $249.9 million in revenue accounted for 12% of all casinos and nearly 26% of the revenue total. In FY22, that group now accounts for 13% and 29%, respectively.
The percentages for casinos reporting lower revenue numbers stayed consistent compared to FY21. Thus, it seems that these businesses face challenges to significant upward mobility, at least in this small sample. There are other considerations necessary to accurately put these numbers in context.
Did online gaming play a factor in revenue growth?
There is a big caveat to statements about revenue to consider. Revenue is not profit. The NIGC’s report does not share expenses these tribal gaming operations incur. For that reason, it’s difficult to evaluate whether any of these operations are actually profitable and if so, to what extent.
A breakdown of the profitability of these operations could look very different. It’s possible that more of the $25 million or less group might have actually turned a profit during the past fiscal year as opposed to casinos that generated more revenue.
Each of the 519 operations deals with its own challenges and opportunities that can greatly affect its revenue from one period to the next like population fluctuations, labor pools, market saturation, consumer spending changes and their participation or lack thereof in online gambling.
For FY22, that participation seemed to have some positive correlation with annual growth based on the NIGC’s report. Tribal gaming operators in the Phoenix, St. Paul and Washington, DC, regions all offer online gaming to various extents.
As previously mentioned, the Phoenix region saw the greatest year-over-year improvement by percentage. Simultaneously, the DC region posted the second-highest growth. However, the St. Paul region grew by just 3.4%, ranking sixth of eight.
At the same time it’s difficult to isolate online gaming as an actual cause of those increases. For example, the Phoenix region added a land-based casino during the past year, likely accounting for some of the growth.
The bottom line is that just like in the commercial sector of gambling in the United States, regulated online gaming is not destroying tribal casinos. If anything, tribal gaming authorities who have found a way to offer online gaming may have improved their revenue totals in FY22.
