Slot Revenue Growth in Nevada: An Empirical Analysis

Abstract

This paper examines the economic effects of changes in technology on gaming revenue in Nevada between 1984 and 2015. Slots outperformed table games in terms or revenue growth during that time-period. The paper provides evidence that those performance gains are attributable both to increased capacity and increased efficiency. Gains attributable to increased capacity, measured by units-in-service, are indicative of successful industry efforts to tap new market segments. Gains attributable to increased efficiency, measured by revenue-per-unit, are indicative of successful industry efforts to expedite gaming productivity. Additional analysis shows that most of the growth in slot revenue occurred prior to 2002, and was primarily attributable to increased capacity. Between 2002 and 2007, revenue growth was more modest, with most of the gains attributed to improved efficiency. Finally, beginning in 2008, slots began to reflect the effects of the Great Recession, surrendering a significant portion of their revenue gains, with decreases in both capacity and efficiency. These results should be of interest to policy makers and others interested in the determinants of gaming revenue.