Photographer: Simon Dawson/Bloomberg

Gambling Pays Out Less for U.S. States

Gambling revenues have been on a cold streak.

State-sanctioned gambling has changed a lot since the 1970s, when a flurry of states began to introduce lotteries as a way to bring in extra revenue.

Since the 1990s a number of additional states allowed casinos as an additional way to bring in money from gambling. And then there's racinos, hybrid racing and gaming sites, which have caught on since 2000, according to a study from the Rockefeller Institute.

States saw a 1.8 percent increase in gambling revenues between 2008 and 2015, but that varied widely among states, according to the Rockefeller study. Arkansas, which introduced its state lottery in 2009, has seen the biggest increase in overall gaming tax-and-fee revenue during the period. New Jersey earnings fell 20 percent as neighboring Pennsylvania and New York introduced new options for gamblers.

Pennsylvania saw a gambling boom, but then the state's gaming revenues fell 1.6 percent between 2014 and 2015. "What we concluded is that these revenues are not sustainable. The novelty of new games and facilities eventually wear off," study author Lucy Dadayan said.

Alabama saw the biggest percentage decline in gambling revenues, but the state's gaming earnings are among the smallest in the nation.

Some states may see increased budget challenges but declining gambling revenue won't likely lead to any material impact on the states' credit quality, according to a recent Moody's report. That's because lottery revenues only account for about 2.5 percent of states' operating revenue on average, according to Moody's.

For an interactive version of these charts with a state-by-state breakdown, see Bloomberg Briefs here.

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