Tribal Gaming Casinos Faces New Challenges with Inflation, Labor Costs — Report
Posted on: August 24, 2023, 02:44h.
Last updated on: August 24, 2023, 02:51h.
The consulting firm Wipfli recently released the results of its 2023 Indian Gaming Cost of Doing Business Report. The report indicates that Tribal gaming casinos have mostly navigated out of stormy pandemic seas, but there are new challenges on the way.
The survey highlighted several positive trends for tribal gaming revenue. Last year, tribal casinos 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.
But that doesn’t mean revenue will continue to follow the same upward trend. The survey highlights that tribal casinos face a “new normal” of balancing revenue and expense stabilization. There are several other challenges on the horizon for tribal casinos.
Inflation and labor shortages also continue to drive up costs for operators, as noted by the survey. There is also more stringent competition on the horizon and more competition for discretionary dollars for tribal casinos compared to the pandemic era.
The study examined the financial performance of Tribal gaming facilities. The 2023 report includes data from 132 Tribal Casinos in 17 states. This is the 25th annual report from Wipfli.
New Metrics on Sports Betting
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. Tribes are the sole sports betting offers in California, Connecticut, and Florida. However, this does not guarantee future revenue as battles over sports betting continue to play out.
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.
Notable Revenue and Expenses
Indigenous casinos widened their operating expense margins by almost 2% despite higher interest rates, inflation, and higher spending on staff and marketing.
Other notable findings include an increase in spending on marketing expenses, promotions and wages 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 study found.
The primary source of gaming revenue continued to be slot machines. The average net profit margin for Indian gaming casinos was about 30%, about 6% lower than the previous year.
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