Wednesday, February 27, 2013
Report: Indian Casinos Revenue up Slightly in 2011 - ABC News
Indian casinos brushed off weak consumer spending in a sluggish U.S. economic recovery to post a modest increase in revenue in 2011, an industry study reported Wednesday.
Not only did revenue rise 3 percent, to $27.4 billion, but Indian casinos are holding on to their share of total casino gambling revenue, competing closely with commercial casinos, according to the report, "Casino City's Indian Gaming Industry Report."
The revenue increase is the second in as many years following a first-ever drop in Indian casino revenue in 2009 as the worst recession in decades took its toll on consumer spending. The back-to-back increases in revenue are encouraging, the report said.
"The question is how much further can Indian gaming grow?" author Alan Meister said.
Indian gambling was slowing before the start of the recession in late 2007 due to legislation, regulations and court decisions that restricted the types of games offered by Indian casinos, the number of states where gambling is permitted and other limits, he said.
The outlook for Indian gambling now appears healthy because the economy is expected to continue improving, restoring consumer spending, Meister said. In addition, many tribes are upgrading, expanding and replacing casinos.
Indian-run casinos such as those in Alabama and Nebraska, he said, enjoy the advantage of being closer to consumers than many commercial casinos. "They're a good alternative to Vegas that's closer to home," he said.
But the long-term outlook for Indian gambling is uncertain, Meister said. Potential threats include continuing legal challenges — such as a land dispute court case in Michigan that Meister said increases the likelihood of other legal challenges to gambling projects — and state regulations that restrict Indian casinos and limit expansion. Indian casinos face "a lot more" restrictions than their commercial counterparts, he said.
"That, in some ways, holds back Indian gaming from what it could potentially be," Meister said.
Other potential challenges include increasingly saturated markets, rising competition and Internet gambling.
Indian gambling generated about 43 percent of U.S. casino gambling revenue in 2011, the report said. Revenue at commercial casinos was 45 percent and revenue from racinos — casinos that operate at race tracks — accounted for the remaining 12 percent. That's unchanged from 2010, but represents a huge gain from the Indian casino share of less than 20 percent in 1993.
Both Indian and commercial casinos could lose business to racinos, he said. State approval of gambling is easier at race tracks where betting already occurs than establishing new casinos, Meister said.
Revenue growth varied from as much as 26 percent in Alabama to minus 3 percent in New York. After Alabama, the fastest-growing states were Mississippi, Montana, North Carolina and Oklahoma.
Following New York, the steepest decline in revenue was in Oregon, North Dakota, Connecticut and Idaho.
Revenue at Indian casinos continued to be concentrated in certain states. California generated more revenue at Indian casinos than did any other state, producing $6.9 billion in 2011. Casinos in California accounted for more than 25 percent of Indian casino gambling revenue nationwide.
The top five states — Washington, Florida, Connecticut, California and Oklahoma — accounted for about 61 percent of total gambling revenue. The top 10 states, which include Arizona, Michigan, Minnesota, Wisconsin and New York, account for 86 percent of total Indian casino revenue.
Ironically, the weak economy has helped spur casino growth among states seeking more revenue, Meister said.
Tuesday, February 26, 2013
New Jersey Passes Online Gambling Law | GamePolitics
February 26, 2013
New Jersey lawmakers have approved a bill that will make
online gambling in the state legal, opening the door for companies in the space -- including game companies like Zynga -- to operate online games that provide real-money gambling. Of course, you won't be able to play these games unless you reside in a state where it is legal to do so. Currently there are three: Nevada, Delaware, and now New Jersey. Nevada passed its online gambling bill last week.
Governor Chris Christie (R) has already signed the bill into law. The one caveat is that the bill will not take effect until the state's Division of Gaming Enforcement sets an official start date which could be somewhere between three and nine months after the law is signed.
One a related note, the Poker Players Alliance (PPA) issued a statement today applauding the move by lawmakers and the Governor:
"New Jersey has gone ‘all in.’ Residents now will have access to a safe and regulated online gaming market, and the state will have a new source for revenue and job creation -- something the federal government has failed to do thus far," said John Pappas, executive director of the PPA. "The U.S. represents the largest percentage of Internet
poker players worldwide, so there is clearly a want and a need for a legal and regulated online gambling market. New Jersey will now serve as a leader in this thriving industry."
Ruchir Sharma: China Has Its Own Debt Bomb - WSJ.com
China Has Its Own Debt Bomb
Not unlike the U.S. in 2008, China is at the end of a credit binge that won't end well.
Six years ago, Chinese Premier Wen Jiabao cautioned that China's economy is "unstable, unbalanced, uncoordinated and unsustainable." China has since doubled down on the economic model that prompted his concern.
Mr. Wen spoke out in an attempt to change the course of an economy dangerously dependent on one lever to generate growth: heavy investment in the roads, factories and other infrastructure that have helped make China a manufacturing superpower. Then along came the 2008 global financial crisis. To keep China's economy growing, panicked officials launched a half-trillion-dollar stimulus and ordered banks to fund a new wave of investment. Investment has risen as a share of gross domestic product to 48%—a record for any large country—from 43%.
Even more staggering is the amount of credit that China unleashed to finance this investment boom. Since 2007, the amount of new credit generated annually has more than quadrupled to $2.75 trillion in the 12 months through January this year. Last year, roughly half of the new loans came from the "shadow banking system," private lenders and credit suppliers outside formal lending channels. These outfits lend to borrowers—often local governments pushing increasingly low-quality infrastructure projects—who have run into trouble paying their bank loans.
Since 2008, China's total public and private debt has exploded to more than 200% of GDP—an unprecedented level for any developing country. Yet the overwhelming consensus still sees little risk to the financial system or to economic growth in China.
That view ignores the strong evidence of studies launched since 2008 in a belated attempt by the major global financial institutions to understand the origin of financial crises. The key, more than the level of debt, is the rate of increase in debt—particularly private debt. (Private debt in China includes all kinds of quasi-state borrowers, such as local governments and state-owned corporations.)
On the most important measures of this rate, China is now in the flashing-red zone. The first measure comes from the Bank of International Settlements, which found that if private debt as a share of GDP accelerates to a level 6% higher than its trend over the previous decade, the acceleration is an early warning of serious financial distress. In China, private debt as a share of GDP is now 12% above its previous trend, and above the peak levels seen before credit crises hit Japan in 1989, Korea in 1997, the U.S. in 2007 and Spain in 2008.
The second measure comes from the International Monetary Fund, which found that if private credit grows faster than the economy for three to five years, the increasing ratio of private credit to GDP usually signals financial distress. In China, private credit has been growing much faster than the economy since 2008, and the ratio of private credit to GDP has risen by 50 percentage points to 180%, an increase similar to what the U.S. and Japan witnessed before their most recent financial woes.
The bullish consensus seems to think these laws of financial gravity don't apply to China. The bulls say that bank crises typically begin when foreign creditors start to demand their money, and China owes very little to foreigners. Yet in an August 2012 National Bureau of Economic Research paper titled "The Great Leveraging," University of Virginia economist Alan Taylor examined the 79 major financial crises in advanced economies over the past 140 years and found that they are just as likely in countries that rely on domestic savings and owe little to foreign creditors.
The bulls also argue that China can afford to write off bad debts because it sits on more than $3 trillion in foreign-exchange reserves as well as huge domestic savings. However, while some other Asian nations with high savings and few foreign liabilities did avoid bank crises following credit booms, they nonetheless saw economic growth slow sharply.
Following credit booms in the early 1970s and the late 1980s, Japan used its vast financial resources to put troubled lenders on life support. Debt clogged the system and productivity declined. Once the increase in credit peaked, growth fell sharply over the next five years: to 3% from 8% in the 1970s and to 1% from 4% in the 1980s. In Taiwan, following a similar cycle in the early 1990s, the average annual growth rate fell to 6%.
Even if China dodges a financial crisis, then, it is not likely to dodge a slowdown in its increasingly debt-clogged economy. Through 2007, creating a dollar of economic growth in China required just over a dollar of debt. Since then it has taken three dollars of debt to generate a dollar of growth. This is what you normally see in the late stages of a credit binge, as more debt goes to increasingly less productive investments. In China, exports and manufacturing are slowing as more money flows into real-estate speculation. About a third of the bank loans in China are now for real estate, or are backed by real estate, roughly similar to U.S. levels in 2007.
For China to find a more stable growth model, most experts agree that the country needs to balance its investments by promoting greater consumption. The catch is that consumption has been growing at 8% a year for the past decade—faster than in previous miracle economies like Japan's and as fast as it can grow without triggering inflation. Yet consumption is still falling as a share of GDP because investment has been growing even faster.
So rebalancing requires China to cut back on investment and on the rate of increase in debt, which would mean accepting a rate of growth as low as 5% to 6%, well below the current official rate of 8%. In other investment-led, high-growth nations, from Brazil in the 1970s to Malaysia in the 1990s, economic growth typically fell by half in the decade after investment peaked. The alternative is that China tries to sustain an unrealistic growth target, by piling more debt on an already powerful debt bomb.
Mr. Sharma is head of emerging markets at Morgan Stanley Investment Management and author of "Breakout Nations: In Pursuit of the Next Economic Miracles" (Norton, 2012).
Monday, February 25, 2013
Friday, February 22, 2013
Jury Finds Farmers Insurance Guilty of Fraud | Reuters
Jury Finds Farmers Insurance Guilty of Fraud
* Reuters is not responsible for the content in this press release.