FY 09 posts first-ever gambling declines
Montana's gaming licensees will no doubt be looking forward to Fiscal Year 2010, as the one just ended June 30 was unprecedented in its declines.
In Fiscal Year (FY) 2009, July 1, 2008-June 30, 2009, the first quarter (Q1) saw a tiny .43 percent uptick in gaming machine revenues over the same quarter the year previous, while the second quarter (Q2) declined 4.99 percent, Q3 grew just .38 percent and Q4 revenue declined 4.34 percent.
All-in-all, the year's average revenues and tax collections were down 2.16 percent, whereas gaming revenues in FY 2008 grew 4.38 percent over FY2007, and the prior 10 years saw annual growth in the 6 percent neighborhood.
In Q1 of FY 2009, gaming machine tax collections grew just $67,254, but shrunk $800,042 in Q2 which equates with $5.33 million in machine revenues for operators. Tax collections increased $58,592 in Q3, but declined $696,122 in Q4, the equivalent of $4.64 million in operator revenue.
Altogether, tax revenues for FY 2009 declined $1.37 million, meaning licensees saw a revenue reduction of $9.14 million for the year. Divided by approximately 1,700 licensed establishments, the average reduction per establishment was about $5,376 in VGM revenue.
Industry leaders are attributing the volatile gaming business climate to the same volatility and uncertainty characterizing the national and Montana economies. Gaming entertainment expenditures come from highly discretionary income, they say, and as consumers clamp down on all spending, they particularly tighten up on the discretionary spending.
The same folks say they fully expect to see gaming play expenditures return to more normal levels as soon as the economy settles and begins to recover.
Mark Staples, government affairs counsel for the Montana Tavern Association, said Montana's gaming businesses haven't been hit as hard as has been the case in other jurisdictions, where double-digit declines have been common, or as hard as other economic sectors.
"Over the years here we've seen steady and reasonable growth," Staples said, "and that's largely due to almost a decade of stability in the gaming business environment, particularly in regulation. We've also seen the industry mature but continue to invest in improvements, especially in entertainment value, even as the market place approaches satiation."
As has been seen in the past, the volatility is spread erratically over the economic and geographic Montana landscape. Some relatively poor and rural counties saw just small declines or even modest gains, whereas other counties had the opposite experience.
In Q4, Fallon county was up 1.44 percent, Granite was up 22.06 percent, Hill was up 1.3 percent and so on. On the other hand, the big losers, if not so much on a percentage basis as on an actual dollar basis, were mostly the more populated counties such as Gallatin (down 8.83 percent) where tax collections shrank $85,295, which means operators were down $568,633 in the last quarter.
Lewis and Clark County was down 4.02 percent, Cascade declined 1.11, Flathead declined 7.54 percent, Missoula was off 8.92, Silver Bow down 4.47, and the biggest, Yellowstone, ticked down 3.39 percent, which means tax collections shrank $106,137, and operator revenues were reduced there by $707,580 in just the final quarter.
Similarly some towns fared better than others. Belgrade and Whitefish, just a year ago the hottest growth markets in the state, led the pack of losers, down 19.34 and 14.7 percent respectively. Belgrade licensees saw revenues shrink $364,893 April-June, 2009, while Whitefish owners saw a revenue decline of $201,820.
The city of Billings was off 3.1 percent, Bozeman dropped 3.1 percent, Columbia Falls dipped 9.25, Great Falls 5.11, Hamilton 2.45, Helena 3.54, Kalispell was down just 0.89 and Laurel was down just 0.77. Lewistown took a 9.55 percent hit, Livingston 6.45, Miles City 6.52, Missoula 8.22 and Sidney, whose oilfield activity had been giving it a steady trend-defying boost, was off 10.42 percent in the last quarter.
Also, according to Gambling Control Division reports:
"During the fourth quarter of fiscal 2009, 869 video gambling machines received permits, down from 1,077 permits issued in the fourth quarter of fiscal year 2008."
There were 16,538 machines actively permitted at the end of the Fiscal Year.
Additionally:
"The number of card tables licensed in the fourth quarter of fiscal year 2009 was 434, down 34 tables for the same period the previous year.
"The number of card dealers licensed has decreased by 119 since July 1, 2008 with 736 card dealers currently licensed.
"The total number of bingo and keno licenses has increased to 62 in the fourth-quarter of fiscal 2009, a decrease of 10 over the fourth quarter of fiscal 2008.
"Currently 95 percent of all video gambling machines are reporting through an approved automated accounting system."