• by Aaron Baar , February 23, 2010

Americans are turning to casinos less often for their entertainment -- no surprise there, given the current state of the economy. But the woes may go deeper than economic doldrums, suggesting the industry has a harder road to travel once recovery sets in.

"We're seeing a steady, gradual decline, not associated with the broad ups and downs of macroeconomics in the U.S.; the decline crosses two recessions and a boom in between them," Billy Hulkower, a senior analyst with Mintel, tells Marketing Daily. "This isn't about economics. And we're talking about all casinos here, including local casinos."

According to new Mintel study, 30% of U.S. adults said they visited a casino in the past year, and attendance has been declining steadily since 2001, when 35% of adults went to the casinos. (In real terms, that's about 14% fewer people visiting casinos since 2001.) The steady decline suggests it's less one event -- such as the recession -- causing people to stay away, than it is the option of increasingly compelling entertainment offerings elsewhere.

"When we look at leisure in general, everything that doesn't revolve around the screen tends to be losing its audience," Hulkower says. "Even the pursuits that are supposedly gaining in steam for demographic reasons -- like, say, soccer -- are actually just treading water from a penetration perspective."

Of those who did visit a casino, 27% chose to stay closer to home, visiting casinos on Indian reservations, while 24% said they traveled to Las Vegas. Only 12% traveled to Atlantic City, N.J. According to the study, people making more than $100,000 a year were more likely to head to one of the destinations, but those making less than $25,000 a year were more likely to be frequent visitors -- most of them retirees.

While casinos have implemented loyalty marketing programs to keep gamblers coming back, they may not be using them effectively, Hulkower says. While more than 60% of casino-visiting adults over 55 are members of loyalty program, fewer than 50% of adults 21-44 are members of loyalty programs. Among all casino-goers, only one in four said they gambled at only one casino during an overnight trip.

"Regardless of the level of participation, they haven't effectively incorporated reward systems in loyalty programs," Hulkower says.

In addition to the closer destinations, online gambling is attracting consumers, despite the fact that it's illegal in the United States. According to the study, 12% of adults have visited an online gambling site in the past year. Perhaps not surprisingly, men are more likely to gamble online than women.

"When something is illegal, we tend to assume that it will be under-reported in studies -- some people are simply not going to believe that the survey is anonymous, and we don't know the size of that group. Even so, one in eight respondents gambled online in the past year," Hulkower says. "This is a big deal, if you assume that even a small percentage of that expenditure could have been on a physical casino."