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While there are many ways to gauge the size of any industry—by the number of employees, the output of products, tax receipts or customer count—the most common comparison is by gross revenues, or sales. When gross revenue is used to gauge the size of the gaming industry, it is a measure of how much consumers spend—or the operator wins—on legal gambling games. This appears to be an easy question. But the answers vary widely. For example, a Washington Post columnist claimed that "Legal gambling takes in" about $637 billion yearly. Within a week, however, U.S. News and World Report stated that "The gambling industry's revenues" were "$50.9 billion at the most recent count." Who's right?
To understand why people arrive at different estimates of the gaming industry's size, consider a hypothetical casino customer's experience.

Sue and Bill visit Casino Royale one Saturday evening to gamble a bit and see a show. Bill exchanges $100 in cash for 100 $1 tokens to use in Casino Royale' s slot machines. Bill bets one token at a time and bets each of his original 100 tokens. He'll win some of these bets, and he'll lose some of these bets. Because the typical slot machine pays out 90 cents for every dollar put in the slot machine, Bill ends up with about 90 tokens.

Bill continues to bet one token at a time, and bets each of his 90 remaining tokens.
Of his original $100, Bill has $81 left. He has, for all practical purposes, "spent" $19 on the slot machines. He's wagered both his original $100, plus the $90 he had in his tray after his first round on the machine—or a total of $190. But Casino Royale only has $19 from Bill.

Confusion between the amount wagered, sometimes called "handle," and the amount actually spent accounts for the widely varying estimates of the size of the legalized gaming industry. The only relevant figure - for Bill's personal accounting, for the casino's accounting and to gauge the size of the gaming industry in relation to other industries—is the amount actually spent by customers, not the total amount they may have wagered repeatedly over the course of the evening. Legalized gambling is accurately depicted as a $54 billion industry, the gross revenue reported by operators before salaries, taxes and expenses are paid.

Definition of gross gambling revenue (GGR) = amount wagered minus the winnings returned to players, a true measure of the economic value of gambling. GGR is the figure used to determine what a casino, racetrack, lottery or other gaming operation earns before taxes, salaries and other expenses are paid - the equivalent of 'sales' not 'profit.'




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