Our own experience in dealing with various casinos during the current pandemic mirrors the general direction but varied intensity of downward pressure on gaming revenues suggested by the limited published data. Some casinos we have seen have experienced drops of 25 to 30 percent in gaming revenue or more, while others have seen declines closer to the 10 to 15 percent range. Ancillary revenue declines have been consistently greater. Of course, casinos that have remained closed throughout the pandemic have lost all revenue for many months. As noted in our original report, the standard deviation for revenue per customer per visit for gaming is quite large, unlike nearly all other businesses dependent upon direct customer interaction in large numbers. A small number of key customers, sometimes referred to as “whales” in the old casino vernacular, generate a disproportionately large amount of gaming revenue. As a result, a reduction in capacity by 50 percent does not have to automatically mean a reduction in revenue by 50 percent. In addition, casinos capture a large percentage of their total revenue in certain short periods of time, generally weekend and holiday evenings. For much of the week and the vast majority of the hours they are open, they are nowhere near 50 percent capacity, much less full. Both of these characteristics mitigate to a degree the impact of reduced capacity on the gaming floor. However, as also noted in our original report, those characteristics cannot protect revenue from ancillary facilities at Indian casinos to the same degree. This too has been validated, at least anecdotally, by performance levels since Indian casinos reopened. Based upon the information available on Indian casino performance in 2020, we now estimate that gaming revenue declined 27.7 percent in 2020 and ancillary revenue at Indian casinos declined 34.4 percent, for an overall decline in total revenue at Indian casinos for 2020 of approximately 28.7 percent. For 2021, we forecast an increase in gaming revenue of 32.3 percent and an increase in total revenue of 30.2 percent as recovery begins, still leaving the industry approximately seven percent below estimated 2019 levels. In 2022, substantial recovery is forecast to continue, with gaming revenue up 8.1 percent and total revenue up nearly 9.7 percent from 2021. By the end of 2022, the Indian gaming industry will have surpassed 2019 levels and already be showing new growth. This information is presented in the graph on the following page. Gaming revenue data for 2017, 2018 and 2019 are taken from NIGC statistics. All other figures are estimates and forecasts by KlasRobinson.
∴ TRIBAL GOVERNMENT GAMING
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