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A Bigger Pot

A Bigger Pot. The US gaming industry generated $71.1 billion in total revenues for 2015, a 3.1% increase over 2014, the sixth consecutive year of increased revenues and the first time the total exceeded $70 billion.

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A Bigger Pot

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  1. A Bigger Pot • The US gaming industry generated $71.1 billion in total revenues for 2015, a 3.1% increase over 2014, the sixth consecutive year of increased revenues and the first time the total exceeded $70 billion. • Commercial gaming led with $38.5 billion, a 54% share; followed by tribal gaming, $29.3 billion, 41.0% share; limited stakes gaming, $3.3 billion, 5.0% share; and igaming, $200 million or less than a 1% share. • Most of the revenue increase came from existing casinos. Of the 580 total casinos located in 24 states, 140 of them operated during all 12 months of 2014 and 2015, and 60.7% of them reported increased revenues.

  2. States Reap the Rewards • According to the University of Nevada-Las Vegas’ Center for Gaming Research, April 2016 revenues for 20 of the 24 states with either commercial gaming operations or commercial and tribal gaming operations were $3.362 billion, or a 3.09% YOY increase. • For the first four months of 2016, the total revenues generated in these 20 states were $13.33 billion, or a 2.74% YOY increase. Not surprising, Nevada accounted for $3.71 billion, or a 27.8% share, with Pennsylvania a distant second, at $1.09 billion. • Nevada also generated the most revenues during April 2016, or $876.1 million, followed by Pennsylvania, Louisiana, Illinois and New Jersey; however, Maryland had the largest YOY increase, or 16.75%, followed by Illinois, Ohio, New York and New Jersey.

  3. Tribal Casinos Bring Down Big Game • The latest data (2014) from the National Indian Gaming Commission showed total revenues of $28.5 billion; however, the Casino Journal numbers on page 1 were $29.3 billion for 2015, or a 2.8% increase, and also the sixth consecutive year of increases. • During 2014, 72% of all tribal gaming operations generated some YOY growth: 88 operations generated less than $3 million in 2014 revenues; 76, $3 to $10 million; and 96, $10 to $25 million – all of which represented almost 60% of all casinos. • New tribal casinos in development as of March 2016 include the Cowlitz Project, southwest Washington State; Project First Light, Taunton, MA; and Shooting Star Casino, Dent, MN.

  4. A Safe Bet Is More Sports Betting • According to the American Gaming Association, there isn’t much of a debate among the public, as polling results released during February 2016 revealed that 66% of 2016 Super Bowl viewers thinks states should have the freedom to implement sports betting. • With an estimated $95 billion in bets on NFL and college football games during the 2015-2016 season, GamingCompliance, a global gaming research firm, has projected annual revenues of $12.4 billion from US sports betting. • To put that in perspective, $12.4 billion would be five times more than the United Kingdom’s regulated sports betting market. The NFL’s annual revenues are approximately $12 billion, $7.2 billion of which the teams shared during fiscal 2014.

  5. Dealing for a Winning Future • Although Fitch Ratings forecasts a stable 2016 for the gaming industry, but tepid long-term growth, Technavio, a global technology research and advisory company, estimates revenues will increase to $93 billion by 2020, a 31% increase over 2015’s $71.1 billion. • Although Millennials are attracted to Las Vegas, they are not as interested in slot machines as much as video games, creating a major challenge for the industry. In response, some casinos are testing skill-based slots. • During 2016, two major casinos are scheduled to open: MGM Resorts International’s $1.2 billion National Harbor project in Maryland and Penn National Gaming’s $390 million Hollywood Casino Jamul near San Diego.

  6. Advertising Strategies • With high-income adults, 50+, still the primary target for the gaming industry, direct mail and television is likely to be an excellent combination to reach this audience. TV should be strategically bought to skew slightly towards women, and even African American women. • Casinos that are the first to offer skill-based slots should feature these games in advertising directed at Millennials, with a radio, TV and digital media mix. It may be possible to promote skill-based slot tournaments that are likely to appeal to Millennials. • Another promotional idea to attract more Millennials may be to partner locally with Uber, Lyft and other ride-sharing services and offer a free ride coupon to and from the casino for a Friday or Saturday night, or an entire weekend.

  7. New Media Strategies • Among the many topics of content posted and shared in social media, gaming operations should include articles related to gambling addiction – signs of addiction, resources to help, former addicts sharing their stories, etc. – to show their genuine concern for their patrons. • Gaming operations should post a poll or survey quarterly via email blasts as well as on social media to determine patron demographics as well as learning what they like and don’t like at the casino and soliciting suggestions for improvements or expansion. • Offer selected patrons a food and/or beverage coupon/discount to share their activities at the casino with photos and videos of the excitement, fun and action, especially at the moment of winning money.

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