While there is a growing saturation of gaming in certain markets in the US, there are still many areas of the country which can sustain new or expanded gaming. States that are currently looking at implementing new casino options (or expanding current offerings) include New Hampshire, Maine, Kentucky, Illinois and Vermont. Florida and Texas have been major targets for years and Arkansas has entertained various initiatives over the last few years to introduce commercial casino options. Many of these states have long grown tired of seeing their citizen’s dollars crossing borders to be deposited in neighbor states’ coffers as the result of taxes on gaming revenue. In addition, gaming on Native American lands is also facing similar challenges – saturation in some areas, expansion opportunities in others.
At the same time in many of these jurisdictions, casino gaming has evolved into just another amenity as part of a modern package of entertainment, which includes food and beverage, entertainment and other alternatives from golf and spas to ice skating rinks and water parks. Historically, Las Vegas was a gaming-centric market, with 61% of revenues coming from the casino category in 1990. Bank of America Merrill Lynch says that today, non-gaming revenue comprises about 64% of Las Vegas’ total revenue mix as a result of the market changing (started by the Mirage in 1989) into a more complete tourist destination with hotel, entertainment, retail, and F&B becoming increasingly critical drivers of revenue.
According to the 2014 Nevada Gaming Abstract, from 2006-14, beverage revenues have grown by 82 percent, while gaming win increased by only 16 percent and in fiscal 2014 (July 2013 to June 2014), non-gaming revenues grew more than gaming revenue (a 6.6 percent increase vs. a 3.6 percent rise).
This transition of casino properties into true entertainment destinations has changed the minds of politicians to at least consider implementing casinos into their states in order to generate additional tax dollars without going directly into the pockets of their citizens and casinos have become palatable to a large percentage of residents of these states who now must travel some distance to visit a casino.
As the Gaming Industry works to recover from the global recession and expand into new markets both domestically in the U.S. as well as internationally, governments, owners, operators and investors continue to seek insightful advice about gaming operations. This includes understanding market elasticity, expansion opportunities at existing facilities, and capacity for new properties and new jurisdictions. The big question that always needs to be addressed is “Will the expansion produce the desired revenue and profits to justify the investment”.
The best way to address this question and others (how big, what kind of amenities, where, future impacts, etc.) is to conduct a comprehensive market demand or feasibility study. Investors, gaming operators and state agencies are all interested in the variables that drive demand and need an accurate estimate of future gaming and non-gaming activity. These studies consider macro and micro economic factors, customer demographics, regional trends, future plans, current or proposed litigation, amenities, competition, project size, capacity and many other factors in presenting a comprehensive analysis.
WhiteSand supports the expansion of gaming but only in markets and jurisdictions that have the capacity for additional gaming venues and can sustain growth over year-to-year periods. Our efforts in this area help clients make “go or no-go” decisions for financing and development. We look forward to continued growth in this sector in 2015 in viable markets. Learn more at www.WhiteSandGaming.com.