Recently, we came across an interesting piece about the state of the retail casino industry, via The Motley Fool.
For those of you who don’t know, The Motley Fool is a pseudo-news rag aimed at selling readers on stock market tips and investing strategies.
Most of their puffery is inconsequential marketing wank, but every now and then they hit some nail or other (mostly) on the head.
Now is one of those times.
Indeed, the article pulls no punches in addressing the dire reality of the brick-and-mortar casino industry in the United States.
Just take a look at this click-baity title:
“Las Vegas Casinos Have No Recovery in Sight”
But while the above sounds plenty hyperbolic, it’s not as embellished as it seems on the surface.
Las Vegas casinos, for all their glitz and glamor, have been struggling for ages in the growth department, as the very nature of consumer entertainment is changing rapidly.
Just type “Vegas millennial problem” into any search engine, and you’ll see a torrent of doom and gloom dating back years.
But then 2020 happened.
With the coronavirus closing down retail gambling venues and ancillary hospitality and entertainment outlets nationwide, many millions of Americans have adjusted to the “new normal” of individual isolation, virtual socialization, Zoom meetings, home delivery, etc.
And of course, nobody more embraced these lifestyle changes than the people best equipped to do so: young adults.
That’s a huge problem for Las Vegas.
Thankfully, it’s not necessarily a huge problem for the gambling industry as a whole.
On the surface, though, it sure sounds like a death knell.
Per The Fool:
“[Broadly] distributed COVID-19 vaccines and easing of casino floor restrictions will help, but there’s still no convention business occurring in Las Vegas and little in the way of gambling going on. It may pick up some, but there doesn’t appear to be any momentum whatsoever to jump-start a full-throated casino revival.”
The site then crunches the various numbers.
In Las Vegas, airport arrivals were down 57% year over year. Hotel occupancy was down to 42% capacity, the lowest rate in 30 years. Revenue per room? Down 71%.
Overall, in 2020, Las Vegas visitor volume was down 64% from 2019. Today, year to date, that number is 55%.
And, of course, there’s the direct gambling losses.
For the lockdown quarters during the summer of 2020 (Vegas casinos are finally open again, albeit at drastically reduced capacities), Sin City’s revenue was down 97% year over year.
Ninety-seven. Per. Cent.
But – and this is where there’s actually a light at the end of the tunnel – New Jersey’s revenue, in that same time period, was down just 40% or so.
Because New Jersey has online casinos.
To be clear, this is where The Motley Fool begins to miss the plot. The site actually credits sports betting with buoying New Jersey and other markets as Vegas fell to pieces:
“[There’s] little need to actually be physically present at a casino to gamble, and consumers are finding there are more opportunities in sports betting to get some action.”
Of course, Nevada doesn’t just have legal sports betting, the state has legal online sports betting, so that argument doesn’t hold much water.
If convenient sports betting were the savior, Vegas would have been saved.
But the reality is that sportsbooks are low-margin products designed primarily to get participants playing high-margin products.
In other words, online casinos are the thing.
And unfortunately, right now, only five states have them: Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia.
During 2020, that’s exactly what millions of Americans did, as membership rates at these overseas venues hit several new all-time highs.
If you want to join the fun and are at least 18 years of age or older, you can sign up at any of several reputable gambling sites today and be betting – and winning – in just a few minutes.
Consumers already know the score, and they’re already going with the best options available.
Maybe Vegas will figure that out one day.
Source: The Motley Fool