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The rise of the casino and gaming business may be traced back to enormous development in Las Vegas properties. The casinos began in the last century but have managed to develop in terms of income and visitors since their inception. Despite the fact that the industry had a difficult time during the 2008 financial crisis, it was able to re-establish its clientele who routinely visit for entertainment and leisure activities (Scarne 122). As the industry further grows into the U.S, the attention later diverted to Asia from Las Vegas because there were wealthier customers who wanted to spend their money as well as fuel their appetite for gambling. This essay is going to elaborate more on the casino and gaming industry, its growth and the impact.
The casino industry is led by large brand players based out of Las Vegas like Macau and Hong Kong. Currently, the Las Vegas Sands Corp is the largest American casino company because it generates about 64% of all revenues abroad. The second largest Casino is the Wynn Resort Ltd. Founded by Steve Wynn. The company is a gaming and hospitality which serves tourist whenever they visit (Eadington 165). The third largest casino is the MGM resort international because of the revenue it generates. While the casino industry is normally based in Las Vegas, other states also support the notion of allowing casinos to operate because of the tax they generate. In Native America, they have also permitted the operation of casinos.
In Singapore, the gaming and casino industry is also on the rise immediately the Las Vegas Sands opened its doors at the Marina Bay Sands resort. Asia on the other hand also decided to boost their economy by allowing casinos to operate within its territory. In recent times, the Asian markets have come on the radar such as Philippines, South Kores, and Japan (William 154). Contrastingly, since the bargaining power of the casino is low, they have related their normal operations to furnishing of casinos as well as introducing food supplies. Another reason is that the casinos are still dormant and so they have more advantages over the small suppliers.
The gaming and casino industry in normal circumstances consist of gambling and casino operations. Often the casino companies are classified as engaging in the hotel and auxiliary restaurant services. Sometimes, they also include casino hotels, stand-alone casinos, bookmaking, internet gambling services and other gambling services. The industry even excludes dog and horse race tracks, leisure and recreation, alongside cruise-lines, classified hotels, and Motels. For instance since the Las Vegas Sands Corp is the largest because it attracted competitors like the MGM Mirage and the Wynn Resort where they operate in Macao and Las Vegas markets. The LVS also draws competitors from the Boyd Gaming, Native American casinos, and the privately-held Harrah’s Entertainment (McMullen 474).
Unlike casinos like the Las Vegas Sands and the Wynn Resorts, who usually focus on the high-end customers, the Boyd casino only caters for the middle-income earners. The company just targets the local Las Vegas residents making it become one of the fastest and most reliable growing segments. The MGM, on the other hand, operates its focus on golf courses, golf clubs, and casino resorts in the U.S. It also has a strategic alliance with the owner of Foxwoods Casino, and the Mashantucket Pequot tribal casino (Scarne 132). The MGM owns and operates under the Horseshoe and the Harrah’s Caesars brand names. The company also owns the World Series of pokers as well as the London Clubs International.
When the current economic situation is observed in the U.S, it is unfortunate with the way the casinos operate and perform. Most people in this case who live in places like the Atlantic City or Las Vegas choose to go to casinos during economic hardships with the aim of improving the living standards. However, most gaming firms decided to put their growth plans on hold till the economy was stable. When casinos are opened at large, more gambling takes place thus making it accepted as part of the entertainment. People as old as 48 years old attend casinos with about $50,000 just for gaming. Due to the technological growth, gambling has also advanced to slot machines which are meant to be coin free or cashless (Bellringer & Reith 101). Gaming has also become popular over the internet. However, in the United States, internet gambling is not allowed, but the electronic payment system has influenced the citizens in the U.S to participate.
The change in business landscape has intensified the Casino industry. Such modifications include the increase in the legalization of gambling and other alternatives offered by the industry. Ever since the law was passed in the United States, more gambling games have flourished in casinos. The gaming machines, internet gambling, and waterborne casinos have attracted customers to patronize gambling everywhere and every time. Customers get different fun experiences in waterborne casinos while some of them get their money tax free after they win from gambling. Some casinos, in this case, will make sure that they retain their customer with the aim of publishing them online to get more market of customers who will at the end gamble (Scarne 150).
One primary issue that affects the casinos is legalization of the gambling activities and competition. There are many states that have the urge of making money fast from the legalization of gambling thus ending up running the business without professional personnel. As more states and cities are embracing to the legalization of gambling, there are private companies that are hired to write new regulations for casinos with the aim of helping them enter the new markets for people lobbying their interest (Peter 157). Hotels on the other hand use native people to get the casino licenses because it’s easier for them to do the application in the United States. Although it is relatively easy to enter the industry, it requires one to have a significant capital for building the casino.
According to the American Gaming Association, casinos operate in more than 40 states. Gaming today is considered not just as a niche but a billion dollar industry that supports over 1.7 million jobs and also generates about $38 billion worth of revenue. Every year, the demand continues to grow for betting entertainment (Chenery 270). Research shows the industry has the highest acceptance rate among younger audiences. This provides a basis for growth in future decades as they mature and income increases.
The gaming industry employees the use of technology and data as a way of predicting behaviors and monitoring results. When companies use the data analytics and technology, organizations can target an audience based on behavior. Gaming brings jobs to local markets which include technical, security finance, hospitality, construction, compliance, marketing just to name a few (Bellringer & Reith 132). For smaller communities, this provides a method for increasing employment and tax revenues. According to the American Gaming Association, a study by the congressional committee, National Gambling Impact Study Commission, gaming was found to provide a net positive to communities through economic impact. (Abbort et al., 860).
The fundamental reason regarding the increase in employment is that casinos require a lot of labor which usually comes from the local area. Most casino jobs, in this case, require skills like accounting, security, dealing with cards and other expertise. But if the casino, lucks such professions, it then seeks labor from outside. However, it is important to note that if there is increased unemployment in areas that have casinos, it means that there is no skilled labor in that area.
Most states present an opportunity for growth. Forty countries have some gaming agreements; most have not yet endorsed full-scale gambling. With the exception a couple of states, there is an opportunity to increase the gaming formats by gaining acceptance of additional categories of gambling. With few casinos in the United States, there are untapped markets. Most states do not have full gambling venues. In addition, the small community market is untapped. Most regional areas and communities in the country do not have casinos. By infiltrating smaller markets, acceptance of gaming increases and removes the destination barrier (Eadington 172).
With the open landscape, a smaller, franchised type gaming and entertainment venues could tap into a new market. This prospect introduces a new method for delivery gaming services to local communities. There is an unmet audience in geographical markets across the United States. By creating a new market through local gaming establishments, there is an opportunity to increase revenues through combining a branded theme with locality. Destination gambling limits the audience. Branding themes can be geared toward young career professional, middle-aged groups, and retirees. All viewers can be targeted in local markets.
Assess the industry’s capabilities
The gaming industry has future growth opportunities if there is a concerted effort towards expansion. Forty states currently allow some form of gambling. The opening is the ability to create new markets and new business models. With the status quo, the slow, laborious growth will continue (Scarne 167). The gaming industry has the capability to make an entirely new form of entertainment for the public and penetrate new markets if they adopt new concepts about what gambling can be in the future.
Identify the barriers to strategic implementation
The most obvious obstacles are regulatory, and state and local government approvals. There has been a slow acceptance among states to allow gaming. However, money is always a motivator for cash-strapped governments. The casino industry needs to demonstrate the benefits through economic impact data, compliance with meet regulatory requirements and increased tax revenues. If the positive effects on the economy are not enough to persuade officials, the next logical step is to learn what objections there are. If crime or moral corruption are of concern, actual impact studies should be conducted using previous implementers of gaming.
The casino industry, however, has a few political challenges that affect how the businesses operate. For many years the only state that was legally allowed to have gambling was Nevada, hence the popularity of Las Vegas. Nevada, as a result, is still the single state that retains its status as it gives the highest revenues from casinos above 10 billion dollars. In 1976, the New Jersey State passed laws allowing gambling in the Atlantic City, which made it easier for the east coast to have access to gaming (McMullen 482). Since 1988, more countries have passed laws allowing casinos to be built in their state. Many states passed laws allowing casinos to operate on waterfronts or rivers. By 2012, eighty waterborne casinos were making about $10 billion in annual revenues.
Challenges in the gaming industry
Competitive Forces Appendices one shows the five forces model of competition for the casino industry and gives examples of who MGM Resorts is competing with regarding to each competitive force. Rivalry among competing sellers (casinos) is apparent for MGM Resorts. They have to contend with all of the other casino operators in not only Las Vegas, but Atlantic City too since these are the two most significant gambling cities in the United States (McMillan 285). The rivalry is stronger because buyer demand is growing slowly and people can go to Las Vegas or Atlantic City and gamble and get the same results at either place. The competitive pressures associated with the threat of new entrants are high because many states are now permitting gambling and online has become more popular.
Competitive pressures for MGM Resorts from the sellers of substitute products are low because other casinos cannot attractively price their rewards to gamblers much differently than MGM. They also do not necessarily have better performance features other than online gambling with the convenience factor, but it is illegal in the United States to gamble online (McMullen 305). The different suppliers of casinos or casino operators have a stronger bargaining power because there are no good substitutes to what the operators are providing (they all are providing casinos). The buyers’ (gamblers) bargaining power is reliable because the cost of switching to competing casinos is low. They also can postpone purchases by choosing to not go on vacation to Las Vegas or Atlantic City.
The collective impact of the driving forces is making the competition more intense because it is allowing a lot of room for new entrants into the marketplace. However, the forces will make the industry have high profits. This is due to the fact that all of these new advances and entrants will continue to make profits for the casino and gambling industry. Strategic Groups and Key Success Factors the vital groups in the casino industry are MGM Resorts, Wynn Resorts, Boyd Gaming, Caesar’s Entertainment, and the Las Vegas Sands. All five of these casino operators have a comparable product-line breadth (they all have casinos). They all offer to gamble to consumers in either Las Vegas or Atlantic City (McMullen 272). The key success factors in the casino industry are the fact that all five of these casino operators try to differentiate themselves somehow from their competitors.
Even though they all are casinos, they all try to do offer customers something different whether it be the fact that Atlantic City can provide gamblers with a casino and a beach or Las Vegas has the dining, shopping, and entertainment factor. They will also try to differentiate themselves based on a particular theme: the medieval castle, a pirate ship, a movie studio, or the look or feel of a foreign country (Chenery 292). Casinos will provide complimentary rooms, food, beverages, shows, and other complimentary items to keep gamblers from going to competing casinos.
Based on all of the information about, the casino industry is going to continue to grow and thrive in the United States. It will continue to make enormous profits, and more casinos are going to open in the future. The long-term attractiveness of this industry is very good because there is so much room for opportunity and growth. Recently, the casino gaming industry is making the small business to grow across the country because it supports about 350,000 small business jobs (Marfels 239). When compared with the air traffic controllers in America, it appears to be twice the number and more substantial than the entire freight industry.
Mostly, the degree to which the casinos assist the local retails is that they have the ability to attract visitors outside their area. The substitutional effect of this is that as customers go to gamble, they end up taking dinner or going out to the movies locally. However, this comes with an advantage because as the visitors come, the local retail sales increase thus making it unaffordable to residents. Rural areas in this case usually have one or two casinos to attract a high number of tourists (Eadington 180). Also, the rural community promote their casinos with other areas attraction to boost their economic status
The availability of the electronic gambling machines
Gambling’s conveniences and accessibility are strongly associated with the availability of such devices. Mostly the EGM are located outside the casinos and widely dispersed in hotels, bars, and clubs. Most of the problems of gambling are associated and encouraged by this machines. In fact, the EGM’s are known to be fastest growing in the sector of the gaming globally. Their popularity has made women to be described as feminization because of gambling. For instance, in Britain, the type of electronic machine used known as the fixed odd betting terminals is known to create gambling addictions (Chenery 288). Casinos also require deliberate effort when it comes to the planning of traveling to the venue. Convenience is crucial to regulating the issue of public awareness activities because most of the time it discourages impulsive play. However, the majority of casinos are linked to high rates of problematic behaviors, but the pictures make them more complex primarily because of the location and size of the casino.
The casino gambling industry is seen to grow immensely ever since its prohibition in many countries. Also the United States, casinos have employed many people because of the growth. The local areas have also been given job opportunities because operating a casino requires intense labor. Despite the strengths highlighted in the essay, weaknesses are also seen. It is also accounted that casino creates an addiction to gambling thus forgetting their aspects of life. As I conclude, the casinos can be good business if they are adequately regulated. With the right format of monitoring and legalization, it can turn out to be an excellent source of income.
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Christian Marfels, 'Casino gaming,' In the Structure of American Industry (9th ed.), Walter Adams and James Brock, editors, Prentice Hall, New York, 2015, pp 223-345.
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William R. Eadington, 'the emergence of casino gaming as a major factor in tourism markets: policy issues and considerations,' In Change in Tourism: People, Places, Processes, Richard Butler and Douglas Pearch, editors, Routledge Press, New York, 2015, pp 159-186.
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