States derive the bulk of gambling-related revenues from three major sources—lotteries, casinos, and racinos. While casinos experienced dramatic growth during the 1990s, that trend shifted downward over the past decade. In recent years, much of the growth has shifted to racinos—hybrids of casinos and racetracks —as more states have approved such facilities. Pari-mutuel betting, once the major source of gambling revenue for states, now represents less than 1.0 percent of such revenue.
When tax revenue weakens during economic downturns, states often consider expanded gambling operations among other options for balancing budgets. That has been no exception during the Great Recession and its aftermath. Since the recession began in December 2007, over a dozen states have enacted various measures to expand gambling.
States’ revenues from gambling showed soft growth at 0.6 percent in fiscal 2014, despite expansion of various gambling activities in recent years. In fiscal 2014, revenue collections from lotteries and racinos grew by 0.6 and 1.5 percent, respectively, while revenue collections from casinos declined by 1.4 percent. The expansion of gambling across the nation created stiff competition for certain regions of the nation and heightened rivalry for the same pool of consumers.
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