According to a public policy research group’s study, released on Tuesday, gambling provides only a short-term solution for U.S. states looking to boost revenue without having to hike up their taxes.
The Rockefeller Institute of Government said more than a dozen states legalized or expanded ambling in the wake of the Great Recession in the last decade. However, taxes and fees generated from casinos and other forms of gambling have declined in recent years due partly to market saturation.
Lottery revenue in fiscal 2015, fell for the second consecutive year.
“History shows that in the long-run, the growth in state revenues from gambling activities slows or even reverses and declines,” the study said.
In New Jersey, voters will decide in November whether to allow two new casinos close to New York City, in the north.
Local officials in cash-starved Atlantic City, currently the only area in New Jersey where gambling is allowed, say that more casinos will cause the city to lose even more of its revenue.
Atlantic City’s property tax base declined nearly 70% in just six years as its casino industry suffering from competition in neighboring states.
The U.S. gambling market could be saturated. Nationwide, inflation-adjusted revenues from commercial casinos declined 1.5% between 2008 and 2015, according to the study. While states with newly authorized casinos had their revenues increase, those with older, established casinos faces a decline.
Hawaii and Utah are the only two U.S. states that do not collect revenue from lotteries, casinos, racinos, pari-mutuel betting and other forms of gambling, as the study laid out, which added that gambling revenue only accounts from between 2 and 2.5% of a typical state’s general revenue.
In a separate report on Tuesday, Fitch Ratings said that with the recovery of U.S. regional gaming revenues tepid, long-term issues will continue to weigh on the sector.
Fitch said the barriers to growth include “slower wage growth, less certain retirement prospects for baby boomers, and alternative avenues for gambling.”