Casinos: Commercial Casinos - The Market

Commercial casinos are those owned and operated by large and small companies. They are heavily regulated by state governments. Each state sets different limits on the types and locations of casinos permitted. Some states allow land-based casinos, while others restrict casino games to floating gambling halls on barges or riverboats. A handful of states allow slot machines at noncasino locations, such as horse and dog racetracks or other commercial establishments. Most states specify exactly which table games can be played in casinos. Some states place a limit on the amount that can be wagered, in so-called "limited-stakes" gambling.

In gambling terminology, the "handle" is the gross amount of money wagered by gamblers. As reported by Dan Seligman in "In Defense of Gambling" (Forbes, June 23, 2003), approximately $600 billion was gambled at U.S. casinos during 2003. The American Gaming Association (AGA) reported in 2004 State of the States: The AGA Survey of Casino Entertainment that commercial casinos kept $27 billion of this amount in 2003. This is called the gross gaming revenue or "casino win." The remaining $573 billion was taken home by gamblers and is called the "payout." The casino industry considers its revenue to be consumer spending, as gamblers "spent" that money while gambling. In 2004 State of the States, the AGA reported that consumer spending on gambling ($27 billion) was far less than consumer spending on fast-food meals ($137.8 billion) but greater than spending on other leisure activities, such as amusement and theme parks ($10.3 billion) and movies ($9.49 billion).

2004 State of the States reported that there were eighty-three riverboat/dockside casinos operating during 2003 in Illinois (nine), Indiana (ten), Iowa (ten), Louisiana (fourteen), Mississippi (twenty-nine), and Missouri (eleven). Major markets for floating casinos included Chicago, Illinois; Tunica, Mississippi; the Mississippi Gulf Coast; and Bossier City, Shreveport, and Lake Charles, Louisiana. Some of the largest gaming companies, including Harrah's Entertainment, Inc., MGM Mirage, Park Place Entertainment, and Mandalay Resort Group, operated floating casinos.

According to the AGA, there were 432 major commercial casinos operating in eleven states during 2002. (Note: This total does not include casinos in Nevada with annual revenues less than $1 million.) The eleven states listed are also those in which full-scale casinos that offer table games and machines are legal:

• Nevada
• New Jersey
• Mississippi
• Indiana
• Louisiana
• Illinois
• Missouri
• Michigan
• Iowa
• Colorado
• South Dakota