WASHINGTON – Casinos across the nation are suffering from a generation gap, especially at the slot machines, as young people seek more exotic electronic games like the ones they can play on smartphones.
That's a problem not just for casino operators, but for the 23 states that rely on revenue from casino taxes to help balance their budgets and fund new priorities.
State revenue from taxing gambling has been largely flat since the Great Recession, when adjusted for inflation, according to the Rockefeller Institute, which studies taxes.
Casino tax revenue in 16 states studied by the institute increased just 0.1 percent in fiscal 2015 compared to the year before when adjusted for inflation. Excluding Maryland, which opened a new casino in Baltimore, tax revenue declined 1.2 percent in the remaining 15 states.
That's prompting the casino industry and the states to scramble for new ways to satisfy a younger generation of casino gamblers to keep their revenue up, including mimicking the types of games millennials play on the Internet, such as online poker and fantasy sports.
Millennials think of leisure activities as "a social experience that you share with friends," said Daniel Sahl, associate director of the Center for Gaming Innovation at the University of Nevada, Las Vegas. "Gambling does not resonate with them as particularly fun."
While seniors play the slots, the "young ones" are not as interested, said Larry Gregory, executive director of the Mississippi Gaming & Hospitality Association.
Alex Bumazhny, a financial analyst at Fitch Ratings who studies gambling, has found that millennials who go to casinos spend more time and money on food, drink and entertainment than they do on gambling.
That's why casinos are making enormous investment in nongaming amenities such as clubs, spas, restaurants and shows.
Companies that produce gambling devices are experimenting with ways to combine skill with luck in games that feel more like the hybrid games found on the Internet.
Sahl said his institute is working with companies to combine the skills associated with games such as Halo and Clash of Clans (in which players acquire weapons and compete against other players) with games of chance.