United States

Putting Problem Gambling in Perspective

Posted on September 16, 2010

The success of gaming development on Indian lands has allowed many tribes to explore the feasibility of replacing their aging, temporary buildings with new, amenity rich facilities. Despite the recession, tribes are moving forward with plans for future development. These developments, often in more accessible locations closer to population centers, often spark debate among various constituencies in the local community.

Any public debate on the pros and cons of casino development inevitably brings up the topic of problem gambling and its economic and social costs on the host community. Often these debates take place without a reasonable understanding of what problem gambling is, how prevalent it is and how significant the problem is when compared to other pathologies. These debates are frequently led by those who are morally opposed to casino gambling and it is that moral opposition that often clouds reasonable discussion. It is essential to clarify what problem gambling is, explore its prevalence in society, and compare its social and economic costs to other forms of aberrant behavior caused by what many see as more benign industries.

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Don’t Shoot the Messenger

Posted on June 16, 2009

The recession of 2008-2009 has touched nearly every facet of American business. Indian gaming has not been immune from the sudden drop in consumer spending, which followed a rapid rise in fuel prices last summer. Nearly every US gaming market and the vast majority of casino enterprises operating in those markets saw declines in gross gaming revenue and net income, coupled with lower operating margins. Tribal governments in turn saw precipitous drops in revenue derived from their gaming operations and have been forced to reduce spending on essential services such as health care, education and elder care.

The sudden drop in the gaming revenue stream caught many tribal governments by surprise. Since budgeting often takes place in two to three year horizons, it quickly became difficult for many governments to meet their ongoing commitments. Unable to fully fund essential services, governments turned to their business enterprise boards who in turn looked to their casino management teams for solutions to very large and ultimately global business problems.

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The Components of the Marketing Audit

Posted on January 16, 2009

With the economic downturn affecting casinos in jurisdictions throughout the U.S., casino managers are trying to reduce variable costs to better match business volume. The largest variable expense for a casino is labor, followed by marketing and advertising. While managers have begun to trim labor costs through layoffs and a reduction in hours for hourly workers, many managers are reluctant to reduce marketing expenses. In fact, many operators feel the need to increase marketing expenses in order to maintain revenues and market share.

While maintaining market share is critical, it is often done at great expense and can have a deleterious effect on cash flow. Large scale drawing drum promotions, free play offers and point multiplier days are typical programs that gaming markets see during economic downturns. What casinos should first do is determine how to best allocate their precious marketing dollars. This is done through a marketing audit.

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The Six Audiences of Casino Advertising

Posted on August 17, 2008

The economic downturn, coupled with higher gasoline prices has had a significant impact on many of this nation’s casinos. In response, casinos have stepped up their promotional efforts in order to maintain market share. In addition, many casinos have increased their advertising efforts, ostensibly to attract new gamers to their properties and some defectors who had altered their visitation patterns. The general opinion is that advertising is used to target these segments while direct mail is utilized to encourage repeat visitation from existing customers.

Casinos advertise, particularly during economic downturns. However, they often do so without first understanding the various audiences that these advertisements are supposed to target. Because of this, many advertising efforts fail to reach the right audiences or the wrong messages are delivered to the wrong group. There are six audiences of casino advertising and strategies to effectively communicate with each of them.

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Happy Employees Make Happy Customers

Posted on February 16, 2008

Leaders of many Indian casinos have long recognized the importance of providing outstanding customer service to their guests. They recognized that casino gaming is comprised of a unique suite of products and services and those products and services make up what is referred to as gaming entertainment. Gaming entertainment incorporates slot machines, table games, quality food products and lodging delivered in a fun, energetic and entertaining atmosphere. The linchpin of those products and services are the employees who deliver them to guests. They are the ones who
provide the service that makes the gaming entertainment experience memorable. The ultimate measures of success are happy customers who come back on a regular basis.

Making customers happy is not a simple procedure. It involves a complex process of getting the right products to satisfy their needs coupled with caring employees. This requires assembling the appropriate mix of gaming products, restaurants and other amenities and placing them in an attractive environment. Then it requires happy, upbeat employees to deliver great service. The hardest part of the equation is getting employees with the right disposition and keeping them happy so they in turn can make the casino’s customers happy. The ongoing question for all casino operators is how do you keep your employees happy?

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Making Nightclubs Work

Posted on May 16, 2007

For years casino operators from around the world have looked to Las Vegas in order to spot emerging trends that could be adapted to their markets. The opening of Caesars Forum Shoppes in 1993 inspired other gaming operators to add shopping malls in order to broaden their reach into new markets. For example, the Viejas Casino in Alpine, California and the Horseshoe Casino in Bossier City, Louisiana developed stunning factory outlet malls to broaden their appeal and casinos in Atlantic City developed first-class shopping malls appurtenant to their casinos.

The more recent phenomenon of so-called “celebrity chef” and “eatertainment” restaurants in Las Vegas inspired casinos in regional markets to also add locally and nationally recognized restaurateurs to their food product offerings. Mohegan Sun features a restaurant by Boston-based Todd English, who opened Olives at Bellagio in 1998 and dozens of casinos now feature nationally recognized brands such as Ben and Jerry’s, Hooters and Wolfgang Puck Café.

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“New and Better” works

Posted on March 16, 2007

The rapid growth of Indian gaming has created an unusual dilemma for the leaders of many tribes. In the years following the passage of the Indian Gaming Regulatory Act, many tribes attempted to develop casinos. Unfortunately, it was unclear how successful these gaming properties would ultimately be, particularly for those tribes whose reservations were far removed from major population centers. Access to traditional capital markets was difficult. Amidst this uncertainty many casinos were developed using low-cost construction techniques or existing commercial structures were converted to gaming space.

As the industry matured and as properties were able to demonstrate their viability to the investment community, the cost of capital dropped and many tribes were able to replace their temporary structures with more attractive, full-service gaming/entertainment properties. Conversely, other tribes chose to keep their original properties and gradually expand them, all the while continuing to employ low cost construction techniques. Many of these casinos generated outsized revenues relative to their invested capital. The logic for many in tribal leadership was, why
incur additional debt by replacing low-cost structures when revenue streams were growing? The emerging dilemma was, why spend the money if one did not have to?

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The Changing Role of the Casino Hotel

Posted on October 16, 2006

A hotel addition to a casino has long been recognized as an important amenity for any local casino that seeks to evolve into a regional gaming and entertainment destination. A hotel allows a casino to be more than just a daytrip destination. A well designed and well maintained hotel that is effectively marketed can generate a substantial amount of profit as a stand-alone revenue center. Also, the hotel allows the casino to generate incremental revenue through casino marketing programs.

Traditionally, hotels were developed at casinos as standalone profit centers where a portion of room sales (normally 20%-30%) were allocated towards casino marketing and the remainder sold to transient, group and commercial segments. However, this business model is changing. Casino operators have begun to realize that hotel rooms can be used to overcome locational disadvantages and drive greater revenues into the casino. The trend is to allocate a far greater percentage of hotel rooms to casino marketing, which are then offered to various segments of the database through demand stimulation programs.

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Striving for the Highest Standards in Casino Design

Posted on August 16, 2006

Indian casinos now dot the American landscape. They can be found in such diverse places as Wyoming, New York and California. Architecturally, these casinos range from stunning resorts that rival the most beautiful casinos in the world to modest facilities that were built as temporary gaming venues. Unfortunately, it can be the latter that defines the expectations of customers when they think of Indian casinos. The question that must be asked is, “why does an industry with some of the highest operating margins of any segment of the hospitality industry offer its customers gaming environments that are not always the most attractive or comfortable?”

It is important to understand Indian casinos in a historical context in order to appreciate how many of these gaming properties were developed. Wid1 the passage of the Indian Gaming Regulatory Act in 1988, tribes were able to open casinos. However, many states’ governors were unwilling to negotiate compacts with tribes or chose to severely restrict the types of games that could be offered.

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The Coming of the Entertainment Superstore

Posted on June 17, 2006

Casino development in Las Vegas has historically acted as a bellwether for the development of gaming and nongaming amenities in regional markets. Development trends such as the multi-station buffet, multiple dining options, casino food courts and showrooms were first introduced in Southern Nevada and eventually exported to other markets. Casino developers in regional markets have traditionally looked to Las Vegas to see what works and what doesn’t work; what is particularly appealing to gamers and what is not and adopted those development trends that hold the greatest promise.

While Strip properties often offer the most glamorous of amenities, it is Las Vegas’s locals casinos that have developed amenities that are most relevant to casinos in regional markets. Beginning with the opening of Sam’s Town Casino in 1978, followed by the Gold Coast Casino, the whole concept of a locals casino was first developed in Southern Nevada along with the suite of amenities that held appeal to local gamblers.

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