New “Normal” in Tribal Gaming: Report
Tribal gaming revenue stabilized in 2022 but is still growing, according to a report published by Wipfli.
Wipfli, a consulting firm, recently released the results of its 2023 Indian Gaming Cost of Doing Business Report. The report states most Indian gaming casinos returned to a new “normal” level in 2022.
The new “normal” highlighted in the lead of the 25th annual report from Wipfli refers to a stabilization of revenues and expenses. That’s compared to the record highs and record lows produced in the years before the COVID-19 pandemic.
The year 2022 saw an average of 17% revenue growth. That follows double-digit increases of 35% revenue growth in 2021.
While 17% is slower, it is more “stable,” according to Wipfli, and marks the industry’s third consecutive year of double-digit growth. That’s even though 2020 included government relief to help cover payroll and expenses.
Today, there’s also more competition for discretionary dollars for tribal casinos compared to the pandemic era. The report also highlights inflation and labor shortages that continue to drive up costs.
In the document, the firm quantifies the financial performance of Indian gaming facilities, which is essentially a measure of performance against the data. The 2023 report includes data from 132 Native American Casinos in 17 states.
The 25th annual Cost of Doing Business Report for the first time includes some metrics on sports betting. While it is not a major income stream, sports betting did help tribal casinos attract new clients, according to Wipfli.
Sports betting is now legal in 37 states but that’s not a guarantee of future revenue, as battles over sports betting continue to play out.
Currently, Native American tribes have control over sports betting in California, Connecticut, and Florida. However, as reported by Casino.org, a Florida cardroom operator has asked a federal appeals court to reverse its decision to uphold an agreement that gives the Seminole tribe exclusive rights to sports betting in the Sunshine State.
While the 2023 Indian Gaming Cost of Doing Business Report indicates Indian gaming casinos have navigated out of stormy pandemic seas, there is more stringent competition on the horizon, and inflation and labor shortages will have to be addressed.
Other Notable Revenue and Expenses
Native American casinos widened their operating expense margins by almost 2%, despite higher interest rates, inflation, and higher spending on staff and marketing.
Marketing expenses increased compared to previous years, along with promotions and wages. Casinos of almost every size and location also spent more on employee benefits and incentives.
The primary source of gaming revenue continued to be slot machines.
The average net profit margin for Indian gaming casinos was about 30%., which is about 6% lower than the previous year