VGM tax revenues improve
By Paul Tash
Montana Tavern Times
Led by some strong gains in eastern Montana, state tax revenues from video gaming machines in the fourth quarter of Fiscal Year 2011 showed a small improvement over the same period last year, preliminary figures from the Gambling Control Division showed.
The slight gain of .8 percent from fourth quarter FY10 to fourth quarter FY11 broke a string of eight consecutive quarters that revenues have fallen year-over-year. (Year-over-year is the term used to compare the current quarter with the same quarter in the previous fiscal year. Quarter-over-quarter is the term used to compare a quarter's results to those in the preceding quarter.)
But more impressively, fourth quarter FY11, which ended June 30, showed a fairly significant gain over the third quarter FY11, improving about 4.6 percent from $12,164,000 to $12,726,000. The 4Q FY10 total was $12,627,000.
Some of the larger eastern counties that showed significant year-over-year gains include Sheridan County, up 30.2 percent from $55,000 to $72,000; Rosebud County, up 23.2 percent from $96,000 to $118,000; Richland County, up 20.5 percent from $309,000 to $372,000; and Roosevelt County, up 18.4 percent from $231,000 to $273,000.
The fourth quarter numbers were “a pleasant surprise,” said Neil Peterson, Gaming Industry Association executive director.
“I hope the trend continues,” he said, as the industry prepares to introduce line games to the public in January 2011. “It's good news for a change.”
Peterson said the strong showing in eastern Montana “is attributable to the oil drilling” in the region. “There's a lot of (drilling) activity in eastern Montana and western North Dakota.”
He added that the hot weather hitting much of the state could bring more folks out of the heat and into nice, cool bars and casinos to play.
The figures hopefully indicate a rebound, said Mark Staples, government affairs counsel for the Montana Tavern Association.
"Our country and state have been suffering the worst economic downturn since the 1930's,” he said. “Gaming has been ravaged like most other sectors. It's all interrelated; as the overall economy recuperates, so will gaming, I'm confident. But, it was also a truly colossal crash, so it's going to take time to recover fully from it. Hopefully, this signals that the healing has begun."
Tim Carson, of Amusement Services, one of the state's largest machine vendors, said good operators are starting to see results.
“People who are paying attention to their business and providing good customer service are being rewarded,” he said. “It comes down to one thing: customer service, customer service, customer service.”
VGM tax revenues had remained quite stagnant since the inception of the smoking ban in bars and casinos in October 2009. The recent fourth quarter totals still show a decline of about 17 percent, representing about $2.6 million, from the fourth quarter two years ago just a few months before the smoking ban went into effect.
Of the state's seven largest counties, Cascade enjoyed the best improvement from last year. Revenues for that county increased 2.7 percent, from $1,335,800 to $1,372,300, fourth quarter FY10 to fourth quarter FY11.
For the second consecutive quarter, Silver Bow County suffered the greatest decline of the largest counties year-over-year, with revenues down 7.1 percent to $726,600 from the previous year of $782,500.
Figures for the other larger counties are:
• Gallatin, up .1 percent to $673,300 from $672,500;
• Yellowstone, down .2 percent to $2,503,800 from $2,507,700;
• Missoula County, up .3 percent to $1,274,900 from $1,271,000;
• Lewis and Clark, down .1 percent to $910,700 from $911,700;
• Flathead, down 2.0 percent to $1,078,300 from $1,100,500.
Regarding larger cities specifically, Columbia Falls for the second straight quarter showed the strongest improvement year-over-year, experiencing a 34.3 percent gain to $147,900 fourth quarter this year from $110,100 last year. That city's gaming revenues also showed the greatest increase from the previous quarter, jumping 18 percent from the third quarter FY11.
The next cities showing strongest growth mirror the eastern Montana county growth. Sidney showed strong growth year-over-year last quarter, gaining 25.7 percent to $264,900 from $210,700. It also enjoyed a 14 percent gain from the previous quarter. And Glendive experienced a 25.5 percent gain year-over-year ($127,700 from $101,800) and a 16 percent gain from third quarter.
The worst city performers included Hamilton, which fell 14.6 percent to $168,300 from $197,000 from last year; and Deer Lodge, which fell 11 percent to $72,400 from $81,300 year-over-year.