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Recurring Revenue

Seeking new casino revenue sources in a competitive environment.

Recurring Revenue

As you might imagine, I visit lots of casinos in the course of my work. Huge integrated resorts. Riverboat-cum regional casinos. Tribal gaming facilities. Card rooms. Las Vegas Strip casinos. Atlantic City Boardwalk casinos. Racinos. Slot parlors. Truck stops with slots. Bars with VLTs. You name it, I’ve been there.

But the one thing all these kinds of gaming establishments have in common these days is that gaming revenues have gone flat or declined. While much of that drop is due to the economy, a lot of it is also due to competition for the gambling dollar. Where once many of these facilities had the market to themselves, there are now competitors near enough to depress their gaming revenues today and for the foreseeable future.

So what is a property to do when gaming revenue disappears without much hope it’s going to return anytime soon? Like any business, you look to develop new sources of revenue.       

But since gaming revenues are difficult to increase because of the tax rates and the cost of acquiring business, most gaming facilities are turning to non-gaming revenues.       

It depends, of course, on the size of your facility and the available funds to invest in these non-gaming amenities, but for most gaming properties, it’s no longer a question of if they should do it but when and how big. And if you’re not thinking of ways to supplement your gaming revenue, you’re not doing the job that your stakeholders expect of you.       

Non-gaming revenues are a major source of income for Las Vegas Strip resorts. Speaking at the IAGA conference in Las Vegas last month, Las Vegas Sands COO Michael Leven told attendees that a full 70 percent of the revenue of the Venetian/Palazzo/Sands Expo Center complex was from non-gaming sources. For most of the Strip resorts, non-gaming dollars account for more than half of revenues.       

I can see those of you in the smaller regional casinos, slot parlors, racinos and other non-Vegas locations shaking your heads. Sure, you don’t have the number of hotel rooms (if you have any at all). You don’t have multiple gourmet restaurants (or customers that could afford that $50 steak). And you can’t bring in Lady Gaga (but why would you even want to??) to play a 15,000-seat arena.       

What you can do, however, is do things to scale. For an integrated resort, it’s a no-brainer. Ample meeting and convention space, top-flight entertainment, a dozen or more gourmet restaurants, luxurious hotel rooms, nightclubs, a world-class spa and multiple pools are just some of the elements that make up these properties.

 It gets a little more dicey at smaller properties, but the opportunities are still there. Food and beverage can be an attraction at any facility. If you know your market, you’ll know whether a gourmet restaurant will work or if a fast-food venue will be more successful. Maybe you can’t afford Lady Gaga, but maybe you can buy Herman’s Hermits (that Peter Noone is a really nice guy, too!), if that’s your market. Pay a little more and let “Herman” mingle with your customers who buy a “premium” ticket.

Or how about trying some “alternative” entertainment? Bring in cast members from Deadliest Catch or Pawn Stars, two of the most popular reality shows on TV today, to discuss the shows and meet with your players. Some casinos have even brought in political commentators or talk show hosts to entertain and engage their customers.

Think outside the box and think local. Are there special events or attractions in your region? Do a marketing partnership to spread the word and it might not cost you an arm and a leg, and could increase your clientele for a busy weekend.       

You might not be able to put together a “Pure” or a “Surrender” nightclub, but all around the world there are people who like to hang out to see and be seen in these kinds of clubs (and who will pay for the privilege). Innovative design and clever lighting can transform a dark corner of your property into a hip and happening place.

Don’t have much meeting space? Use your huge parking lots for ethnic festivals, flea markets, car shows or other outdoor entertainment.

Unfortunately, there is no formula that will guarantee a return on your investment when you develop non-gaming attractions. But we know that gaming revenues just aren’t enough anymore, and profits made from non-gaming goes straight to the bottom line. Don’t sit around and wait until your competition does it. Get started and learn about how to bring new and different revenue to your property.

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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