Ironically, the story of a bypass around my little town is a powerful analogy for today’s casino industry. Ironic because my town, Boulder City, is one of only two towns in Nevada that prohibits gambling within its borders.
Las Vegas and Phoenix, Arizona are the two largest cities in the U.S. not connected by an interstate highway. To get to Phoenix, drivers had to navigate through little Boulder City. On weekends and holidays, the roads were jammed heading to the bridge to Arizona. (It used to be Hoover Dam until they built the Mike O’Callaghan/Pat Tillman Bridge over the Colorado River). Residents knew to avoid the main highway through town on those days.
Congress passed a law creating I-11 that will stretch eventually from Phoenix to Reno, Nevada. But the first step was to build a bypass around Boulder City. There were lots of consultations with Boulder City officials and residents, but eventually it was decided to swing it far out in the desert several miles south of town.
It opened last summer, and for us residents it has been a godsend. Traffic virtually disappeared overnight, making it easy to enjoy what our town offers no matter the date or time. It’s been harder on businesses, however. Those fast-food outlets that depended upon thousands of cars driving by each day are suffering. Already Burger King has closed, and who knows how long the others will last?
There are plenty of stories about little towns whose downtowns dried up when a bypass opened directing traffic away from those areas. Job losses, home foreclosures and many other dire circumstances followed.
That won’t happen in Boulder City. As a bedroom community to Las Vegas (and nearby Henderson), Boulder City has a bright future. It will be a little more challenging, but residents and officials are working hard to develop attractions and events that will keep the city vibrant.
So how does this relate to the casino industry? Well, there has been a bypass—several bypasses in some cases—built around land-based casinos over the past decade. And the industry’s response will determine whether casinos become like those dusty abandoned downtowns or remain vital as Boulder City hopes to do.
Let’s consider online gaming. Players in certain states no longer have to travel to their favorite casino. Their preferred games are now as close as their computer or device. They can play on the couch in their pajamas instead of getting dressed and driving to a casino. And in many cases, the games and odds are better online than in person.
Since there are only four states where online gaming is legal at this point, most casinos don’t see this as an immediate threat. But it won’t be long. Mobile sports betting is already legal in many more states than iGaming. Once bettors get accustomed to betting on their devices or their computers, how much longer will it be until they are deferring trips to the casino and opting to play online?
Yes, we’ve heard the argument that the Atlantic City casinos are deriving first-time land-based players from the internet. Truth be told, however, most Atlantic City casinos do a very poor job marketing their brick-and-mortar properties to their online players.
American casinos seem to be missing the
lesson that European casinos learned years ago. Online gaming has the potential to devastate your market, and unless you are proactive in marketing your land-based and online offerings hand-in-hand, you’re courting disaster.
But maybe your “bypass” is increased competition not only from online gaming but also from new and newly renovated casinos in your area. How you respond to that challenge is also very crucial.
In California, there’s an arms race of casino improvements as each tribal casino tries to one-up the competitors with amazing amenities and added gaming. But if you go too far, what’s the return on investment? And are there enough customers to go around?
In the northeastern U.S., competition is fierce. Where once Atlantic City was the only gaming option, there are now dozens of casinos spread from Maryland to Massachusetts. And many of them are modern five-star casino resorts, spreading the market for players at that level very thin.
So if you don’t want your casino to dry up and blow away, you’d better have a strategy to defend your turn no matter how many bypasses direct customers away.