Key Takeaways

Most states have restricted large-scale rally and closed commercial casinos since March to alleviate the spread of COVID-19. From spring to summer, S & amp; Samp; P Global Ratings has significantly reduced tax revenues related to casinogaming. However, as the regulations on economic and social activities are gradually released, fluidity has increased, and casinogening tax revenue has begun to recover.

All states that allow commercial casino games impose some gambling tax on the amount of prize money from the total gaming income or the total gaming income. Most commercial casinos were closed in April and May in the United States, and regulations were gradually alleviated in June. Casino, which was able to use the online gaming platform, could reduce income. Comparing commercial gaming income nationwide, gaming activities were historically reduced. From January to July, casino revenue in 2020 fell 43 % yea r-o n-year, down by 79 % from April to June, a nationwide casino closure.

Chart 1

Nevada (AA+/ minus), the most dependent on gambling activities, closed the casino throughout the state for almost three months, and did not collect taxes related to the total gaming income. Similar measures were taken in the northeast, and gaming tax revenues were limited.

S & amp; Samp; p global ratings, especially if other entertainment facilities are limited, expects that customers usually live by car from the facility, so that the local gaming market will recover first. I am. However, Las Vegas is likely to be delayed in recovery (see Ratingsdirect) because it depends greatly on air travel, overseas tourists, meetings and group meetings. Most states have restricted large-scale rally and closed commercial casinos since March to alleviate the spread of COVID-19. From spring to summer, S & amp; Samp; P Global Ratings has significantly reduced tax revenues related to casinogaming. However, as the regulations on economic and social activities are gradually released, fluidity has increased, and casinogening tax revenue has begun to recover.

All states that allow commercial casino games impose some gambling tax on the amount of prize money from the total gaming income or the total gaming income. Most commercial casinos were closed in April and May in the United States, and regulations were gradually alleviated in June. Casino, which was able to use the online gaming platform, could reduce income. Comparing commercial gaming income nationwide, gaming activities were historically reduced. From January to July, casino revenue in 2020 fell 43 % yea r-o n-year, down by 79 % from April to June, a nationwide casino closure.

Nevada Casino Gaming Tax Collections Started To Recover In August

Nevada (AA+/ minus), the most dependent on gambling activities, closed the casino throughout the state for almost three months, and did not collect taxes related to the total gaming income. Similar measures were taken in the northeast, and gaming tax revenues were limited.

S & amp; Samp; p global ratings, especially if other entertainment facilities are limited, expects that customers usually live by car from the facility, so that the local gaming market will recover first. I am. However, Las Vegas is likely to be delayed in recovery (see Ratingsdirect) because it depends greatly on air travel, overseas tourists, meetings and group meetings. Most states have restricted large-scale rally and closed commercial casinos since March to alleviate the spread of COVID-19. From spring to summer, S & amp; Samp; P Global Ratings has significantly reduced tax revenues related to casinogaming. However, as the regulations on economic and social activities are gradually released, fluidity has increased, and casinogening tax revenue has begun to recover.

Chart 2

All states that allow commercial casino games impose some gambling tax on the amount of prize money from the total gaming income or the total gaming income. Most commercial casinos were closed in April and May in the United States, and regulations were gradually alleviated in June. Casino, which was able to use the online gaming platform, could reduce income. Comparing commercial gaming income nationwide, gaming activities were historically reduced. From January to July, casino revenue in 2020 fell 43 % yea r-o n-year, down by 79 % from April to June, a nationwide casino closure.

Nevada (AA+/ minus), the most dependent on gambling activities, closed the casino throughout the state for almost three months, and did not collect taxes related to the total gaming income. Similar measures were taken in the northeast, and gaming tax revenues were limited.

Northeast Casino Gaming Tax Collection Declines Vary, Offset By Online Gaming

S & amp; Samp; p global ratings, especially if other entertainment facilities are limited, expects that customers usually live by car from the facility, so that the local gaming market will recover first. I am. However, Las Vegas is likely to be delayed in recovery (see Ratingsdirect) because it depends greatly on air travel, overseas tourists, meetings and group meetings.

S& P Global Economics now expects the economic recovery to enter a slowing growth phase in 2021, with the U. S. economy returning to its designated level (Q4 2019 real GDP) at the end of 2021, and forecasting annual GDP growth of 3. 9% next year (up from 5. 2% in June). Unemployment is expected to reach pre-crisis levels in Q3 2024 (see "Rebooting the U. S. Economy, But a Tough Road Ahead," published September 24, 2020). High unemployment and a slow economic recovery will make casino gaming taxes a fragile source of government revenue.

Chart 3

In 2019, Nevada accounted for 26. 5% of annual casino revenue, compared to New Jersey (A+/-) and Pennsylvania (A+/-), which tied for second place at 8%. Based on this concentration, Nevada is the state most dependent on gambling activity. In fiscal year 2019, about 18% of general fund revenues came from gambling taxes, fees, and licenses, and 25% of employment was concentrated in the leisure and hospitality sector (see 19 Excessive Industry Impact, released on April 27, 2020).

Sports Betting May Provide States A New Incremental Revenue Source

Before the pandemic, casino revenues in January and February were 5%, 5%, and 3% higher than last year's monthly totals. However, on March 17, the Governor of Nevada ordered a statewide shutdown of all non-essential businesses, including casinos, to reduce the health and safety risks of the coronavirus. As a result, gaming revenues were nearly zero in April and May, and there were no related tax collections for the state. About three months later, on June 4, casinos resumed operations with security measures in place.

When looking at state tax collections on total gaming activity, it is important to note that collections lag one month from when the activity occurs. April collections (reflecting gaming activity in March) were down 54% from the same month last year. From May through July, almost no gambling taxes were collected. States began collecting gambling taxes in August collections, but tax collections for that month were down 56% from the previous year.

Chart 4

Nevada, the largest casino gaming destination in Japan, is always facing headwinds, including the turmoil in the travel industry and the cancellation of major indoor events (such as conventions). Social distance and other health and safety measures are likely to harm comprehensive experiences in Las Vegas, and may make your visit less preferred for a while. S & amp; Samp; p Global Economics base line scenario assumes that COVID-19 vaccines will be widely used in mid-2021, but they may be used faster. Until vaccines or effective treatments can be widely used, casino gambling and travel activities are suppressed, and the speed of recovery from casino gambling taxes is expected to be restricted.

Casino Gaming Tax Revenue Collections May Be A Useful Indicator Of Economic Activity

The northeastern part is a very saturated casino gamble market with a mixture of tribal casinos and commercial casinos (see). "Betting Against Yourself: NORTHEAST STATES EXPAND CASINO GAMING DESPITE WEAK DEMOGRAPHICS," Published on JULY 31, 2017). In the area, Massachusetts (AA/ stable), New York (AA+/ stable), and Pennsylvania have greatly expanded commercial casinos over the past five years, promoting economic growth, and new to state finances. Bred additional income.

In these states, the amount of casino taxes has changed significantly from March to August. New Jersey had a reduction rate of only 23 %, while New York was 78 %. This variation was a major factor in the introduction of New Jersey's online games and sports betting, offsetting the decline in gambling income. In contrast, the adjacent New York states have only allowed commercial indoor casino games and have resumed in September. The decline in gambling income is dramatic, but the proportion of these states is small.

Related Research

• It is expected that New York earned $ 162 million in 2020, but to $ 89 million in FY2021 (ended March 31), to $ 89 million, and gradually increased. There is. One of the characteristics of New York is that all income from commercial casinos in the state are used for schooling, and if the casino income falls below the estimated level, it is expected to absorb the shortage of general financial resources. In the first quarter of FY2021, the expectations of video lotteries and commercial casinos have decreased $ 288 million, which increased the number of general accounting for schooling assistance (published on August 27, 2020). See "Expenditure Reduction").
• In May 2018, the Supreme Court of the U. S. has removed a barrier to legal sports betting. In the next year, efforts on this issue began to move in each state. In the northeast, New Jersey expanded first, followed by Pennsylvania and Road Island (see AA/ stable) (see). "Northeast States Gamble on Expanded Sports Betting and Casinos, But Are Unlikely to See Tax Revenue," Published July 31, 2018). In November this year, three states in Louisiana (AA-/ stable), Maryland (AAA/ stable), and South Dakota (AA+/ stable) are legalized in some form. Votes in front of voters to recognize. In general, a state, which is significantly lacking in revenues, may regard sports betting as a gentle source of revenue to offset potential tax increase and expenditure reduction.
• New Jersey has benefited from Sports Betting in 2019 and has earned $ 23 million in sports betting at the venue since June 2018. Sportsbetting has been expanding to an electronic format soon, and this includes a high tax rate. Looking at the amount collected in FY2020, New Jersey's tax revenue of sports betting has exceeded the previous year. This growth is one of the reasons why the profits have increased rapidly in January, which overlaps with the Super Bowl (Details, "The US State, which is legalized in Sports Betting, is looking for cash in Super Bowl 53. ).).
• However, sports betting has stopped sporting events and reduces scale reductions in order to respond to social withdrawal measures, so future revenue growth remains unclear (see, "Refer to casinos and games closing and operating. Nevertheless, the sports gambling in August and August is an important source of income in New Jersey. However, even a small source of income, continuous losses need to be given to other parts of the budget (see the COVID-19). Throw a curve of the state budget "21, 2020).
• The lack of consumer mobility has caused the country's economic orbital to sudden suspension. In order to measure economic recovery, new indicators of e-mobility are increasing. Nevertheless, activities (finances, recreation, leisure, travel, restaurants, hospitality), which are directly influenced by social withdrawal, are rising from the bottom, but are only slightly improved (see). See "U. S. economic data, confusion due to decrease in convenience" announced on June 11, 2020).
• In Connecticut and Road Island, commercial casinos and tribal casinos have started business in June with limited capacity, and the Atlantic City's New Jersey Casino resumed on July 2 with a 25 % capacity. Is allowed. In New York, some tribal casinos resume business early, and commercial casinos may resume business in September. As the regulations on economic and social activities continue to be alleviated, state income should increase from historic shrinking to rise in recent months.
• On September 24, 2020, the US economy will restart, but the future is very difficult.
• The US accommodation, leisure, and gaming sector are facing a steep road to recovery June 30, 2020
• Restart US media sector in the world after COVID-19 June 10, 2020

May 21, 2020, in which the economic recession by COVID-19 causes a song to the US government budget

States that depend on US sightseeing in the United States may face the trust anxiety due to the overconfunction of the COVID-19 industrial industries, April 27, 2020	The government contract of state and local governments has become weakened by the occurrence of COVID-19 on April 2, 2020
Published on January 22, 2019 to seek cash in Super Bowl 53, the United States, which legalizes sports betting	Northeast states, sports betting and the expansion of casinos, but the tax revenue is not expected to increase on July 31, 2018.
The state of the northeastern part that bets yourself is expanded on July 31, 2017, despite its weak population.

This report is not an evaluation action.

Main credit analyst

Timothy W Little, New York + 1 (212) 438 7999; Timothy. Little@SPGLOBAL.

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