From Macao to the Borscht Belt, gambling on gambling is no longer a safe bet.
While the gaming industry has been a global growth business for several decades, the rapid expansion of one-off regional casinos in the US and the spread of legalized gaming in strategic hotpots across the globe have oversaturated the market.
There isn’t enough market share left to support more expansion. And, to survive, traditional gambling meccas like Las Vegas and Atlantic City are being forced to widen their vacation-destination appeal beyond casinos.
In 2014, Atlantic City lost four of its 12 casinos. And while Las Vegas didn’t see that economic devastation, it did see double-digit declines in gambling revenues as the year closed. And Caesars’ Chapter 11 filing this January further dampened enthusiasm over gambling’s future.
In New York State, four new non-Indian gaming licenses were approved late in 2014. The upstate casinos will open in the next two years at a time when expansion in neighboring Pennsylvania already has cornered the day-trip market for gamblers. Pennsylvania generated $3.1 billion in revenue and nearly $1.4 billion in state and local taxes in 2013, according to Econsolutions.com. Clearly, when gamblers were faced with traveling to a gaming destination (i.e. Atlantic City) or gambling close to home, they chose the latter.
Upstate New York economic developers are banking on the theory that New Yorkers now traveling to regional casinos in Pennsylvania will stay closer to home to gamble. But the market is overserved. This exemplifies the larger trend line: State governments slow to grant licensing are playing catch-up at a time when the market is glutted — and the economy is stagnant.
Gambling worldwide is dependent on disposable income. It is not recession-proof; down numbers in 2009 and 2010 demonstrate that. As such, the forecast for casinos will continue to be negative because the market is oversaturated and the consumer base with enough disposable income to gamble isn’t large enough.
This is directly akin to one of the Trends Research Institute’s top trends for 2015, Price Wars. Consumers can’t spend money they don’t have. A wide range of economic sectors — from retailers to commodities to services — are either overbuilt or have too much inventory for the demand.
As we wrote in the December 2014 Trends Journal, “Too much product is flooding the global marketplace and there’s a chronic shortage of people with enough money to buy those products.”