This is a summary of an in-depth article that examines Gaming revenue behavior and its impact on the Gilpin County budget and the Parks and Recreation Department. The in-depth article can be accessed on The Mountain-Ear website at https://www.themtnear.com/ articles/gaming-revenue-and-gilpin-community-center-place-your-bet/.

One of the overall conclusions of the detailed study is that Gaming revenue is not a steady revenue stream – it is volatile, takes years to recover from economic downturns, and is unpredictable.

In 2008 the Great Recession impacted the country and Gilpin County. Gilpin County’s Gaming revenue dropped 21%. It took Gaming revenue eight years to recover to pre-recession levels. In 2020, four years after attaining pre-Great Recession Gaming revenue levels, casinos were again financially impacted by the pandemic. This time Gaming revenue dropped 42.5%. In 2021 the County Gaming revenue did recover somewhat, but was still less than the pre-pandemic 2019 revenue.

2022 saw $15.3 million in Gaming revenue. That increase, though, did not match the losses incurred in 2020 and 2021. During this period, and, as occurred during the Great Recession, the County had to use reserve cash funds to meet expenses. Additionally, the County made budget cuts that included closing of the Community Center and associated programs like after-school programs and senior programs.

In contrast to Gaming revenue, non-Gaming revenue, which is composed of property taxes from commercial businesses, residential properties, and other assets, such as vacant lots and agricultural land, is much more stable. These revenues show much less volatility and have shown a continuous growth dating back to 2007. Additionally, there were no losses due to economic downturns, as opposed to Gaming revenue, which fluctuates up and down and which is very sensitive to the economy.

A large proportion of this revenue is from mill levy-driven property taxes. This income is not affected by economic downturns because mill levies stay constant. This is one of the arguments for having Parks and Recreation funded by a mill levy. The funding would be immune to economic downturns and therefore avoid closing the rec center as occurred in 2020 because of Gaming revenue losses.

Another interesting question to ask is: What percentage of the overall Gilpin County revenue does Gaming cover? Looking over the last decade, Gaming revenue has made up less than half of Gilpin County’s total revenue. Except for 2020, when it comprised a little over half of the overall revenue, Gaming revenue has provided anywhere from 31% (2010) to 49%.

So, while some may argue that Gaming revenue is a great source of income, it typically is less than half of the overall revenue stream, with extreme drops during bad times.

Revenue also needs to be considered in light of expenditure. We can argue about how much revenue there is, but without contrasting it with expenses it is a meaningless exercise. From 2012 to 2019, expenditure and revenue were roughly equivalent. Due to this equivalence capital improvements were limited in order to maintain a balanced budget.

Starting in 2020, overall revenue increased as a result of Gaming rebounding from the pandemic along with property values going up. At the same time, though, expenditure rose in tandem due to inflation and the implementation of capital projects to address much-needed improvements. Expenses and revenue vary very closely together. There is no large pool of discretionary money emerging.

The future of Gaming revenue? Trying to forecast future Gaming revenue is impossible because of the inability to foresee events such as the subprime mortgage meltdown in 2008 and the pandemic in 2020. Economists are saying that people’s savings from the pandemic years are being exhausted, thus less spending is taking place. Plus, inflation continues to be an issue, along with the possibility of a recession in 2024.

Looking at the first two months of the new 2023-2024 Gaming fiscal year, it shows a decline of $5.7 million, a 2.9% loss from the same time period of the previous fiscal year. Gaming revenue follows a fiscal calendar from July 1 to June 30; the County then receives those revenues in August and September. Thus economic factors may be having an effect – we will have to wait and see.

When Gaming revenue first reached the County in the 1990s, it helped make Gilpin solvent and continues to provide Gilpin County a needed revenue stream. Yet, it is not making Gilpin County rich by any means, and does provide challenges such as volatility and taking years to recover from economic downturns. It does not provide a pool of discretionary funds.

The County is pursuing a mill levy for Parks and Recreation to provide a steady revenue stream that is insulated from Gaming revenue vicissitudes.