The more things change, the more they stay the same.
—Jean-Baptiste Alphonse Karr
There is a great deal of noise and commotion today about change and the threats and opportunities it represents.
No doubt, there is plenty of change. The Internet has radically altered business models and social interaction. It has accelerated the pace of globalization. Big data is revolutionizing marketing.
Indeed, the pace of all change is accelerating.
Equally no doubt, the gaming industry will have to adapt to this constant swirl of change.
However, before we sell all our stock in brick-and-mortar casinos and rush out to buy virtual reality companies, let’s take a look around.
Commercial brick-and-mortar casinos in the U.S. last calendar year generated $42 billion in revenue, 5 percent more than the pre-Great Recession peak in 2007. Tribal gaming grew even more, 19 percent to $31 billion in the fiscal year ended June 30. Combined, U.S. casino gaming revenues reached a record $74 billion, up 12 percent.
Now, those aren’t stunning numbers, but they represent steady growth. Indeed, if you look after the Great Recession, U.S. casino revenue has risen 18 percent from the nadir. Year to date, commercial and reporting Indian casinos are up about 4 percent, which is faster growth than the overall economy.
We soon will get fresh evidence of the health of the casino industry as companies report their second quarter results. The expectation is that, not only will they report growth in gaming revenues, but that the proportionately greater growth in non-gaming revenues – food and beverage, hotel rooms, conventions and trade shows, even retail where significant – will continue.
Nor are the shiny new forms of gaming set to upset the casino apple cart anytime soon.
Daily fantasy sports is variously estimated to be a $3 billion business growing to over $5 billion by 2020.
The latest new-game du jour, eSports, is estimated by NewZoo to be a $696 million “economy” growing to $1.5 billion by 2020 with a gambling component of equal size. About half of that is in the US.
Online gaming in New Jersey is running at an annual rate of $243 million and, while still growing, growth is slowing. If all 50 states offered full-blown i-gaming like New Jersey—and we know that isn’t going to happen—the U.S. market would be $8.4 billion.
So, add up all the new gaming and, at best, it would total $15 billion in 2020, or one fifth of the size of the conventional casino industry today.
And casinos will take part in the new forms of gaming, as they are doing in New Jersey, Nevada and Delaware.
The reason that casinos will remain strong businesses is because of the quote that begins this column—things are changing, but more so, they remain the same.
The millennial generation that so many obsess over has its differences, but unless human nature changes, they are more like previous generations than not. They want to gamble, play and compete.
The more high technology separates us, the more we will want to gather together in a high-touch environment, as James Nesbitt said in his famed book Mega Trends. Thus, the continuing growth in convention and meeting business despite the ever-greater capabilities of electronic communications.
Gambling is a natural human activity. It is the entertainment form of the essential human quality and need—risk taking. Gambling is not going away.
Casinos are evolving into entertainment centers where gambling is a central activity, but just one of many. In brief, casinos are built around having fun … and having fun will never go out of style.
