Is the gaming industry still recession-proof?

Abstract

Purpose – The purpose of this study is to examine how the recent recession affected Iowa's gaming industry by analyzing gaming volumes before and through the recession. Design/methodology/approach – This study used autoregressive integrated moving average (ARIMA) with intervention analysis to examine Iowa statewide aggregated monthly slot coin-in, table drop, and admission from December 2001 through June 2012. Findings – The results of analyses show that: slot coin-in was not affected by the recession; table drop was slightly affected, but started to recover in late 2010; and monthly admission was not affected by the recession, and showed a significant increase after the recession. The results also indicate that the decrease in table drop in Iowa casinos represented only a very small amount of state gaming revenue in 2008. Therefore, the findings of this study suggest that Iowa's gaming volume was not significantly affected by the recent recession. In other words, Iowa's gaming industry is still recession-proof. Practical implications – Current economic conditions suggest that the threat of a double-dip recession is quite real. The findings of this study are expected to help casino managers in Iowa understand how non-destination casinos behaved differently through the recession and strategically plan for a possible future economic downturn. In fact, the significant increase of monthly admission during the last recession implies that the Iowa gaming industry has actually benefited from the recession by accommodating more patrons. Therefore, to capitalize on the next recession, Iowa's casino operators should consider reducing the number of table games and increasing the number of slot machines to accommodate more slot players and reduce operating costs. Originality/value – Most existing gaming-related research focuses on gaming destinations such as Las Vegas and Atlantic City. No known study on gaming volume in non-destination gaming markets has been identified. By examining Iowa's gaming volume through the recession, this study provides initial empirical evidence of the impact of recession on non-destination gaming markets.

Double down: economic downturn and increased competition impacts on casino gaming and employment

“…Statistical analysis further indicated that the monthly average gaming volume, which includes table drop and coin-in, depicted only a relatively minor drop in Indiana during the 2007-2009 period compared to the monthly average gaming volume during 1999-2007; this difference was not statistically significant. The results of statistical analysis of gaming volume in Indiana are remarkably similar to the results of the Zheng et al (2013) investigation into gaming volume in Iowa, another nondestination gaming state. That study found a statistically significant decrease in table game drop but as table games represented such a small portion of drop-in repeater markets, the number of table games dollars lost due to the recession was not practically significant.…”

“…Historically, the expansion of commercial casinos passed through two stages (Zheng et al, 2013). The first stage, in response to the Great Depression in 1929, was designed to stimulate the Las Vegas, Nevada economy during the 1930s, leveraging legalized gambling as a strategic method of economic development.…”

“…The first stage, in response to the Great Depression in 1929, was designed to stimulate the Las Vegas, Nevada economy during the 1930s, leveraging legalized gambling as a strategic method of economic development. Commercialized casino gaming was designed to stimulate the host community's economies (Zheng et al, 2013). The second stage in the development of commercial casinos started in the late 1980s and continues today (Coulter et al, 2013;Richard, 2010).…”

“…Many hospitality-related studies used this methods to examine and measure impact of exogenous events. For example, Zheng et al (2013) examined the impact of the 2007 recession on US restaurant stocks using ARIMA with intervention analysis; Zheng (2014) also used this method to measure the changes of weekly US RevPar during the 2007 recession; and Ming et al (2011) analyzed the impact of SARS outbreak on Japanese tourism demand for Taiwan. In fact, ARIMA with intervention analysis is the only technique that can be used to test and measure the impact of an event on a time series, and it has been proven effective.…”

“…Most existing research on gaming-related economic impact has focused on traditional gaming destinations such as Atlantic City, New Jersey and Las Vegas, Nevada. Until the work of Zheng et al (2013), no research addressed nondestination gaming performance during an economic downturn. Their results suggested that nondestination gaming locales' gaming performance, measured by volume, showed resistance to the economic downturn.…”