The benefits of geographic diversity continue to be highlighted as companies reach aggressively toward new U.S. markets with strategies that have the effect of balancing bad news in one region with good news in another. The strategy has also put Las Vegas-based companies closer to customers, wherever they live.
We’ll see this thinking at work in major new U.S. markets over the next year or two. Top domestic prospects include the heavily populated northeast where major resort projects are on the way in Massachusetts and Maryland.
We’ll know soon whether Illinois Gov. Pat Quinn will veto (as expected) or accept a casino bill by Aug. 28 that would give Chicago its own casino and allow growth at existing locations. The issue will be revisited late this year in a lame-duck session, assuming Quinn rejects the current bill. Expansion proponents are betting that in a post-election environment they will have enough votes in both the House and Senate to over-ride a veto or force a compromise.
Major Las Vegas companies are already heavily involved in Illinois, a state where the give and take of politics has produced a lot of uncertainty. But what company wants to turn its corporate back on any opportunity to be as close as possible to the Chicago market?
The benefits of diversity seem to promise some multi-billion-dollar differences.
Where would Steve Wynn and Las Vegas Sands Chairman Sheldon Adelson be without their Asian projects that were posting big profits as Las Vegas struggled over the last several years? Wynn says those Macau profits have helped finance continuing Las Vegas improvements.
The same is true of MGM Resorts, which has a huge Las Vegas investment with a lot of debt, but has benefitted from strong domestic performances at its Detroit and Mississippi casinos as well as continuing strong Macau numbers.
And where would Boyd Gaming have been this last quarter without the strong earnings posted by its Southern and Midwest casinos during a time of “challenges” in Atlantic City (where it owns half of the market-leading Borgata) and weakened Las Vegas performances?
Let’s not forget that Boyd also has a Broward County, Florida site that will become a place of major development. The door can eventually open to casinos in Dade and Broward counties, a prospect that may be no further away than the next year or two, depending on legislative action and calls for a statewide referendum.
When companies are close to established customers they are also within easy reach of new business. Caesars CEO Gary Loveman talks about the ripple effect of benefits provided by its Ohio casinos. They will put “thousands” of Total Rewards members within easy reach of Caesars marketing programs that will ultimately benefit the company’s Las Vegas business.
The recent opening of the company’s Cleveland casino has already added more than 50,000 new names to its Total Rewards database. Still to come is the opening of the Caesars Cincinnati casino in early 2013.
Wynn Resorts and MGM Resorts improved their access to regional U.S. markets when they signed cross-marketing agreements with Pinnacle and Ameristar, respectively.
When Penn National bought the M Resort in Las Vegas, marketers quickly sent promotional mailings to Penn customers. The effort produced an increase in bookings at what had been a stand-alone hotel. Penn will also have two Ohio casinos open within the next year.
Boyd officials have recently been touting the system-wide benefits of its pending purchase of Peninsula Gaming with its roster of regional casinos across the South and Midwest.
“Each region has its own unique challenges,” CEO Keith Smith said of the second quarter when the company’s Las Vegas recovery hit something of a speed bump that forced a reassessment of local strategies. But in the South and Midwest, areas where Boyd already has casinos, “results were more encouraging. We maintained or grew market share in every area where we operate.”
Golden Nugget owner Tilman Fertitta touted the benefit of his Landry’s Restaurants database when he bought the Trump Marina in Atlantic City and rebranded it as a Golden Nugget.
The Landry’s and Nugget database with its millions of names would jump-start a nice marketing program for his Atlantic City Nugget, he said, each one complementing everything that was possible because of the other.