US casino growth gives government revenue long odds

Davenport, IA recently announced it plans to issue us$ 48 million of general obligation bonds to purchase a privately owned riverboat casino operating in the city and move its operations to a new and expanded land-based facility. Iowa currently has 18 casinos, riverboats and racetracks. “We see the region, including Iowa, Missouri, Illinois and Indiana, as a commercial casino competitive hot spot”, the company said.

The company pointed that, for strategic and political reasons, gaming expansion has often been focused on state borders, seeking to draw consumers from beyond state boundaries. “This has created fierce competition for gaming profits and forced existing gaming markets to adjust their business strategies to maintain market share. While the risks to gaming operations are increasing, the payback could be large. In fiscal 2011, we estimate states' recorded combined direct gaming revenue at approximately us$ 7.5 billion. This includes licensing fees, gaming taxes and other allocations,” it noted.

More details on Fitch's views of this expansionary trend and how it will produce winners and losers are available on in the special report titled "States and Locals Turn to Gaming," available at www.fitchratings.com.