Gaming’s continuing sprawl across the U.S. and into Asia has companies pursuing visions of big returns. It also creates competitive pressures that would have been difficult to imagine a few years ago when there was plenty of business for companies ambitious enough to carve out a niche.
Times have changed. They are continuing to change and the evolution is producing some surprises.
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Remember when the big resorts along the Strip corridor marketed their promises of big experiences to out of town visitors from wherever? Neighborhood bars and casinos were content to welcome locals.
Neither one got in the way of the other most of the time. Everyone seemed satisfied. There was plenty of business to go around.
The industry’s high rollers in Nevada recently waged a successful war against sports bars and restaurants. Their goal: keep the latter free of anything resembling a sports book.
There was also a time when even Atlantic City had all the business its handful of casinos and hotels could handle. That was before things turned ugly and the struggles to continue growing or even survive brought a visible change in tactics.
The promise of Internet gaming seems to suggest Atlantic City is ready to turn the corner toward better times. But when the Internet gaming colossus known as PokerStars went after one of the licenses limited to Atlantic City casino owners, the existing marketers there seemed to cringe.
Their snarled response came quickly enough from the Washington trade organization whose membership includes the biggest casino companies, including those already in Atlantic City.
PokerStars would bring its global name recognition and database to its Boardwalk-based Internet gaming operation, if the company could acquire a casino and get licensed.
That’s when the American Gaming Association wrote a letter to casino regulators describing PokerStars as a “criminal enterprise” because the Gibraltar-based company had continued dealing cards to American players after congressional action put 2006 prohibitions in place.
A change of ownership and the paying of millions in fines rehabilitated the company – at least in theory, but I’m guessing the AGA leadership is not putting a lot of stock in such thinking.
PokerStars has agreed to an Internet partnership with Resorts, that’s if it can get a license.
Nowhere is domestic competition and the politics of gaming any tougher than in Illinois where there has never been a shortage of conflicting ideas about the care and management of the state’s casino industry, an industry that includes a number of Las Vegas-based companies with casinos throughout Middle America.
The possibility of a major Chicago casino and expansion elsewhere in Illinois that might include racetrack slots has gotten a lot of attention since late last year when lawmakers passed expansion legislation that has since been rejected by Gov. Quinn.
Companies working to suck business out of the Chicago area market are not necessarily supportive of a major resort in Chicago and more competition elsewhere in the state.
What’s the likelihood there will be expansion? I had put the question to a politically savvy friend with interests tied to one of the current Illinois operators.
“I’ve never seen them closer than they are now,” he said, pausing for a couple moments, “but maybe we can find some way to muddy the waters.”
Yes, it is probably easier to walk the Grand Canyon on a high wire than it is to get a gaming expansion proposal through the Illinois legislature, and that is both the good news and the bad news in one sentence… depending on your perspective.
Penn National Gaming President Tim Wilmott was frank about Penn’s efforts to break the back of “illegal” competition in Ohio where Penn and Caesars each operate two land-based casinos – Caesars in Cleveland and Cincinnati and Penn in Toledo and Columbus.
The so-called cafés – 600 to 800 throughout the state – look like the kind of competition that would not have warranted a second glance several years ago, but Wilmott maintains, “They have had a material impact on our operations both in Toledo and Columbus.”
Penn gave its strong support to recent legislation that has banned the “illegal operations” beginning in September, but café supporters have already launched a petition drive to put the issue on the 2014 ballot.
Putting down competition can resemble a “whack a mole” game.
Wilmott insists closing the cafés will boost casino revenues at the casinos operated by Penn and Caesars. The companies spent millions on the successful campaign to get casinos approved.
Competitive pressures are being felt everywhere, even in Macau where the returns have set records, but it costs at least several billion dollars to make any kind of statement. There’s not a lot of room for mistakes.
“We’re in a very competitive market in China (Macau),” says Wynn Resorts CEO Steve Wynn, “and the licensees are all very smart people with very intelligent organizations who are learning from each other, making sure competition does not get the jump on each of them.”
The road to satisfying profits in the casino business is being paved with a lot of intense competition.
Phil Hevener has been writing about the Nevada gaming business for more than 30 years. He can be reached at [email protected].