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Is the Worst Over?

Is the Worst Over?

Wow, this has been some tough period. Battered and bruised, the gaming industry seemed to be, at times, almost ready to collapse.

Las Vegas and Atlantic City were hammered with increased competition and the reluctance of their customers to travel, for business or pleasure. Macau had been growing at an incredible pace, but about mid-year in 2008, things took a turn for the worse when the Chinese government issued visa restrictions on its most important customers, visitors from the mainland.

The industry in the U.K. was continuing to labor under the neglect and restrictions imposed by the Labour party (pun intended). And Australia and New Zealand were struggling to respond to smoking bans and efforts to minimize problem gambling that greatly impacted the non-problem gambler.

So things could hardly get much worse. And maybe that’s the first sign that we’re at the bottom. So let’s consider: If that’s true, what will be the consequences for the industry?

Last month’s release by the American Gaming Association of its annual “State of the States” report shows exactly where the damage has been done. We reviewed some of this in the first part of this column. And even with the loss of business in many sectors of the gaming industry, there still is a lot of business intact.

And it is that intact business that will be the core of any future growth. It is business we must protect and value above all others.

The recovery of the gaming industry will depend on growth, but that growth cannot happen if we disregard the business that has stuck with us through the tough times. Competition is fierce, as usual, in the jurisdictions, so if you have steady business that has not deserted you during these difficult times, it’s important that you demonstrate to those customers that you appreciate them and their loyalty. Because you can bet your competition is going to give them many reasons to visit them and experience what they have to offer.

In many ways, this heated competition will be good for the industry. For far too long, casino marketers have employed a “follow the leader” mentality that had them replicating successful promotions staged by competitors. Today, creativity is at a premium, and casinos that are first with a promotion, event or program will be front and center in the minds of your loyal customers and those who you want to attract.

There’s been a lot of talk about new ownership in the gaming industry as well. Although we’ve yet to see the dominos begin to fall, analysts are telling us that some of the troubled gaming giants will begin to sell assets as a way to pay down debt and/or concentrate on their core business. New owners could be wealthy individuals, investment banks or groups of investors.

This will cause some consternation in the regulatory community, but adaptations will be made and the sales/transfers will be completed. New management will emerge and innovative marketing and operational systems will be put in place.

This “new blood” will be good for the industry. It will open up job opportunities across the sector and a premium will be placed on experience, motivation and “thinking outside the box.”

Some sectors of the industry will continue to lag long after the recovery begins. Design and construction will have to wait until full-scale lending, a valuation model and a modicum of confidence in the gaming industry return to the financial community.

And we may never again see the “meta resorts” that characterized the last five years of casino expansion. But shrewd operators will understand that the concept of renovation, capital reinvestment and forward-looking planning will never go out of style.

Along with those concepts will come the cutting-edge technology that is being crafted as the manufacturers wait for the recovery to begin. And as that recovery lengthens and confidence returns, that technology could clearly accelerate the good times.

So while we cling to the phrase “it’s always darkest before the dawn,” we can embrace the night, because we know for sure that the bright rays of the sun will once again penetrate our gloom and bring a new day for the gaming industry.


Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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