Gambling
Description
Companies in this industry operate gambling facilities or offer gaming activities, while some companies also operate hotel facilities. Major companies include US-based casino operators Las Vegas Sands, MGM Resorts, and Wynn Resorts, as well as Galaxy Entertainment Group (Hong Kong), IGT (UK), SJM Holdings (Hong Kong), Tabcorp (Australia), and William Hill (UK).
The global market projection for gambling was expected to reach about $1 trillion by 2030, according to Research and Markets. Revenue is expected to grow steadily as casinos continue to expand in new markets, specifically in Asia.
The US gambling industry has more than 3,000 establishments with overall revenues of $25 billion.
COMPETITIVE LANDSCAPE
Demand for gambling is driven by consumer income growth and state spending. The profitability of individual companies depends on efficient operations and effective marketing. Large operators have the financial resources to make significant investments in facilities and efficient computer operations; they may also enjoy cross-marketing opportunities. Small gambling facilities can thrive by catering to local residents, who may not be able to afford travel to such gambling centers as Las Vegas or Atlantic City.
The US gambling industry is concentrated: the top 50 companies account for about 60% of revenue. The casino hotel segment is highly concentrated: the top 50 companies account for about 80% of revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Gaming operators mainly provide a place or a means to play games of chance, where the odds of winning favor the "house." Popular casino games are slot machines (slots); video poker; and table games such as roulette, baccarat, blackjack, and craps (dice). The industry's products get revenues from gambling machine products (more than 70%), followed by table wagering games (10%), and lotteries (less than 10%). Other revenue sources include pari-mutual sports gambling, meals, snacks, other food items, and nonalcoholic beverages.
The actual operation of a casino involves acquiring and servicing gambling machines, training and supervising dealers and cashiers, entertaining customers, and managing cash. Large game equipment manufacturers are International Game Technology and the Bally Technologies. Gambling operators are free to set the odds of winning at a particular game as long as they prominently post a pay schedule on the machine. Operating licenses for some casinos require the operator to pay the state a fee based on a percentage of gross revenues.
To attract and retain customers, many casino companies operate casino hotels that can accommodate large numbers of guests and feature a variety of entertainment, restaurants, and retail stores in addition to the casino. The average US casino hotel property has more than 700 rooms, while the large casino hotels on the Las Vegas Strip have more than 4,000 guest rooms and thousands of slot machines and table games. Hotel room bookings account for some revenue in the US casino hotel industry while casino operations generate more. However, hotel rooms are becoming increasingly important revenue drivers as gaming income has leveled off in recent years. This is especially true in competitive, high-demand markets where operators are able to charge higher daily rates: casino hotels on the Las Vegas Strip now earn more than a quarter of their revenue from accommodations, according to the UNLV Center for Gaming Research. Other revenue sources include food and beverage sales, retail stores, shows, and other entertainment.
Typical operating contracts offer operators some percentage of net annual revenue and extend for a term of five years or more. Although not directly regulated by the state in which they operate, Indian casinos must have a revenue sharing agreement ("compact") with the state.
States operate a variety of state lottery games, most of which involve guessing a randomly drawn number. "Instant games" let the gambler buy a ticket with a hidden number that can be revealed by scratching off the covering. About 45 states operate lotteries, with combined annual net revenue of about $24 billion, according to The North American Association of State and Provincial Lotteries (NASPL). Lotteries typically return less money to players than casinos do, paying out about 60% of gross sales as prizes. The remaining funds cover retailer commissions, administrative costs, and transfers to state and local governments. To counter moral objections, some states earmark the proceeds of lottery operations for specific laudable social spending projects, like education. Lottery tickets are sold through special computer terminals that retail outlets rent from the state.
The global market projection for gambling was expected to reach about $1 trillion by 2030, according to Research and Markets. Revenue is expected to grow steadily as casinos continue to expand in new markets, specifically in Asia.
The US gambling industry has more than 3,000 establishments with overall revenues of $25 billion.
COMPETITIVE LANDSCAPE
Demand for gambling is driven by consumer income growth and state spending. The profitability of individual companies depends on efficient operations and effective marketing. Large operators have the financial resources to make significant investments in facilities and efficient computer operations; they may also enjoy cross-marketing opportunities. Small gambling facilities can thrive by catering to local residents, who may not be able to afford travel to such gambling centers as Las Vegas or Atlantic City.
The US gambling industry is concentrated: the top 50 companies account for about 60% of revenue. The casino hotel segment is highly concentrated: the top 50 companies account for about 80% of revenue.
PRODUCTS, OPERATIONS & TECHNOLOGY
Gaming operators mainly provide a place or a means to play games of chance, where the odds of winning favor the "house." Popular casino games are slot machines (slots); video poker; and table games such as roulette, baccarat, blackjack, and craps (dice). The industry's products get revenues from gambling machine products (more than 70%), followed by table wagering games (10%), and lotteries (less than 10%). Other revenue sources include pari-mutual sports gambling, meals, snacks, other food items, and nonalcoholic beverages.
The actual operation of a casino involves acquiring and servicing gambling machines, training and supervising dealers and cashiers, entertaining customers, and managing cash. Large game equipment manufacturers are International Game Technology and the Bally Technologies. Gambling operators are free to set the odds of winning at a particular game as long as they prominently post a pay schedule on the machine. Operating licenses for some casinos require the operator to pay the state a fee based on a percentage of gross revenues.
To attract and retain customers, many casino companies operate casino hotels that can accommodate large numbers of guests and feature a variety of entertainment, restaurants, and retail stores in addition to the casino. The average US casino hotel property has more than 700 rooms, while the large casino hotels on the Las Vegas Strip have more than 4,000 guest rooms and thousands of slot machines and table games. Hotel room bookings account for some revenue in the US casino hotel industry while casino operations generate more. However, hotel rooms are becoming increasingly important revenue drivers as gaming income has leveled off in recent years. This is especially true in competitive, high-demand markets where operators are able to charge higher daily rates: casino hotels on the Las Vegas Strip now earn more than a quarter of their revenue from accommodations, according to the UNLV Center for Gaming Research. Other revenue sources include food and beverage sales, retail stores, shows, and other entertainment.
Typical operating contracts offer operators some percentage of net annual revenue and extend for a term of five years or more. Although not directly regulated by the state in which they operate, Indian casinos must have a revenue sharing agreement ("compact") with the state.
States operate a variety of state lottery games, most of which involve guessing a randomly drawn number. "Instant games" let the gambler buy a ticket with a hidden number that can be revealed by scratching off the covering. About 45 states operate lotteries, with combined annual net revenue of about $24 billion, according to The North American Association of State and Provincial Lotteries (NASPL). Lotteries typically return less money to players than casinos do, paying out about 60% of gross sales as prizes. The remaining funds cover retailer commissions, administrative costs, and transfers to state and local governments. To counter moral objections, some states earmark the proceeds of lottery operations for specific laudable social spending projects, like education. Lottery tickets are sold through special computer terminals that retail outlets rent from the state.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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