Is It Risky To Include Casino Licensing Money In State Spending Forecasts?

01.23.2008 | 6:45 am | News, casinos

As news reaches the press that another state in the US is looking to rely more heavily upon casino licensing income to fund state spending, many are now starting to ask whether the politicians are taking the biggest gamble, depending upon a business of chance.  So is there any risk?

More and more we are seeing casino license fees used to top-up already sky high state spending in the US, and while this trend has not yet reached other countries around the world it seems only a matter of time.  However, many of the politicians seems to be ignoring the potential risks of depending upon this income at a time when the worldwide economy is looking to nose dive and casino expansion plans all around the world are being put on hold. 

While the long term future of the casino industry is fairly secure, there will be bouts of competition which will, and have, pushed some major players to the edge (and even into serious financial trouble on occasions).  The more companies that struggle the more pressure they will place upon the relevant states to reduce their fees, or risk moving casino operations to a “more friendly state authority”, so this particular line of income may not be as secure as many believe.

There are few who would disagree that where there are casino operations they should in some shape or form assist with the social services of a state, but these are businesses and they have a growing power in the US already.  If they were to put pressure upon states to reduce their fees, etc, then this could have a material impact upon state spending plans.

It will be interesting to see how the relationship between the state and the casino operators’ develops in the “lean” times ahead and whether there are any changes in the licensing fee structure.