Gaming Trends
For the ninth year, Spectrum has compiled this list that addresses ongoing changes in technology, demographics, politics and regulation to determine the most significant trends. New Jersey-based Spectrum has experts around the world, and tracks these and other trends in its award-winning newsletter Gaming Industry Observer.
Domestic expansion: States that already have casino gambling will seek expansion, either through more properties or new games.
Financial: As gaming facilities multiply and become more commoditized, more facilities will be financed with real estate oriented structures like REITs and CMBS.
International: Development plans for the Primorye Gaming Zone in Russia, near the eastern port of Vladivostok, will continue to come into focus, revealing its potential to become a prominent Asian gaming center.
International: Major US gaming operators will continue to scout Asia and other, underserved international markets to develop major gaming resorts.
Internet: Age-verification and geolocation software will become critically important as more lottery and gaming jurisdictions enter the online space. Providers that can best demonstrate reliability, accuracy and ability to inhibit spoofing and errors will be in particularly high demand.
Internet: Social networking and electronic gaming will make further, behind-the-scenes steps toward a convergence that could, at some point, be the next big thing in gaming.
Law enforcement: States will move faster to either eliminate or regulate Internet/sweepstakes cafes, recognizing them either as financially harmful or a revenue source.
Lottery: More lotteries will face pressure to privatize or bring in private management, as they simultaneously move toward a greater online presence.
Lottery: The convergence of traditional gaming and state lotteries will accelerate, in large part due to the prospect of Internet gaming.
Markets: Gaming operators will exert pressure to lower tax rates in high-tax markets to better compete against neighboring states.
Markets: Legalization efforts will continue in longtime casino-reluctant states such as Kentucky, New Hampshire and Texas, as those states seek additional revenue streams while trying to stem the flight of gambling dollars across state lines.
Markets: More states will explore augmenting their current gambling offerings with retail gaming i.e., slots in bars or taverns.
Native American: Expect the argument about opening up the Indian Gaming Regulatory Act for Internet gaming purposes to get louder. Native American casinos, meanwhile, will dip their toes into Internet gaming with free-play poker sites.
Native American and online: States will feel pressure from tribal operators to rescind or renegotiate exclusivity provisions in compacts as states pursue online gambling through state lotteries.
Online: Online gambling companies will seek bricks-and-mortar properties in certain states to gain a licensing foothold for Internet operations.
Online: Social gaming and online gambling will converge, creating new competitors in gaming and putting pressure on regulators to oversee the marketing and implementation of social gaming.
Online: Tribal operators, large and small, will seek a visible presence in online gambling.
Regulation: The convergence of casinos and lotteries, coupled with new suppliers from Europe seeking to enter the US market, will prompt more lotteries to require background investigations and licensure of suppliers.
Regulation: Regulators will increase their scrutiny of licensees operating in international jurisdictions where money-laundering and currency law violations are common.
Regulation: The expansion of gaming worldwide will continue, but companies will be subject to continuing scrutiny by US and international law enforcement related to their conduct and practices internationally.
Technology: The US economy will continue to struggle and unemployment levels will remain high through at least the next year, forcing US casino operators to continue to implement automated technologies and find operating efficiencies. This will lead to further reductions and restructuring of employment and payroll levels for casino operators.
Atlantic City: With considerable state muscle and funding and the spring opening of Revel, Atlantic City will begin to rebound from its five-year slide, although this will lead to further erosion of revenue and financial instability for weaker operators.
Development: New-casino development will emphasize sensible, mid-scale size and design as gaming companies emphasize return on invested capital in a soft economy.
International: Development plans for the Primorye Gaming Zone in Russia, near the eastern port of Vladivostok, will come into focus, revealing its potential to become a prominent Asian gaming center.
International: Major US gaming operators will continue to scout Asia and other, underserved international markets to develop major gaming resorts.
Internet: Land-based US casino companies will continue preparations to immediately capitalize on the eventual legalization of Internet poker.
Internet: Offshore operators, particularly those who have never taken bets from American gamblers, will sign even more deals with US land-based operators in preparation for eventual legalization of online wagering.
Internet: Social networking and electronic gaming will make further, behind-the-scenes steps toward a convergence that could, at some point, be the “next big thing” in gaming.
Internet: Sweepstakes convenience gambling in storefront cyber cafes will continue to grow and negatively impact commercial casino revenue unless state and local governments enact stronger restraining legislation.
Las Vegas: Intense competition accelerates in Las Vegas locals market as local employment and housing markets remain weak.
Las Vegas: Las Vegas convention business continues its upswing, boosting midweek room rates and improving overall property margins.
Las Vegas: Las Vegas Strip operators focus on debt restructuring and property enhancements rather than new development and consolidation.
Lottery: More lotteries will face pressure to privatize or bring in private management, as they simultaneously move toward a greater online presence.
Lottery: The convergence of traditional gaming and state lotteries will accelerate, in large part due to the prospect of Internet gaming.
Markets: Gaming operators will exert pressure to lower tax rates in high-tax markets to better compete against neighboring states.
Markets: Legalization efforts will continue in longtime casino-reluctant states such as Kentucky, New Hampshire and Texas, as those states seek additional revenue streams while trying to stem the flight of gambling dollars across state lines.
Markets: Major states where casino gaming is limited will continue to pursue expansion opportunities, such as in Florida, Illinois and New York.
Markets: Regional casino competition will continue to increase in both California and the Northeast as racinos, slot parlors and Native American casinos expand and add new upscale amenities placing added pressure on the destination resort cities of Las Vegas and Atlantic City.
Native American: Expect the argument about opening up the Indian Gaming Regulatory Act for Internet gaming purposes to get louder. Native American casinos, meanwhile, will dip their toes into Internet gaming with free-play poker sites.
Operations: Server-based gaming will continue make only small steps as slot managers maintain their wait-and-see approach to the return on investment for such a system.
Sports Betting: The US Department of Justice will find be pressed to defend the constitutionality of PASPA legislation allowing only four states to practice sports betting in the face of state challenges.
Technology: The US economy will continue to struggle and unemployment levels will remain high through at least the next year, forcing US casino operators to continue to implement automated technologies and find operating efficiencies. This will lead to further reductions and restructuring of employment and payroll levels for casino operators.
A growing interest by regulators in some states to become more industry-friendly, serving as partners and protectors in an effort to protect gaming revenue.
A new militancy on the part of financial sources who will demand tribal operators that seek financing to increase transparency in more areas of tribal operations.
A shifting competitive landscape in the United States in which pari-mutuel operators become more aggressive players in casino gaming and online gaming, and lotteries compete against commercial operators to become online gaming pioneers.
Baccarat will continue to take a larger slice of the Las Vegas Strip gaming-revenue pie, as the weak dollar encourages Asian visitation and as Strip operator in Macau encourage their premium players to gamble in lower-tax Las Vegas.
Continued evolution of slots-only markets into slots and tables will grow, fueled by states that have already made that change.
Convergence of mobile Internet and social networking trends will present new opportunities for casinos to expand their gaming product variety and reach while enhancing the immediacy and geographic targeting of marketing efforts.
Decisions by Singapore and its two casino licensees to limit the reliance on junkets for generating VIP business could limit the effectiveness of junkets in various markets, including Macau, by providing additional options for their high-end customers.
Efforts by major cities that have, or are considering, gaming will grow, creating a challenge to Las Vegas in conventions and meetings business.
Efforts to overturn the US prohibition on sports betting outside of Nevada, Montana, Oregon and Delaware will increase due to the inevitability of Internet gambling in the United States.
Established gaming markets, including hubs such as Atlantic City and Las Vegas, may continue to be suppressed, or slower to recover (if at all), due to continual rise in convenience-based gaming locations (i.e. more states entering/embracing gaming business).
European online operators and suppliers will aggressively pursue US commercial and tribal partners in anticipation of online gaming in the US.
Internet gambling will continue to grow in the US as it becomes more accepted globally. In the absence of Federal legislation, state and tribal governments will begin to push the envelope harder and litigation may resolve the legality issue before legislation does.
Major investment banks are demonstrating a renewing, greater interest in gaming, which could spur a wider variety of deals in coming months, including mergers and acquisitions at a variety of levels.
Multi-player electronic games and skill-based slot games will continue to develop, to capitalize on their social appeal without the high costs of traditional live table games.
Regulators and lawmakers throughout the world are developing new regulatory structures to identify, discourage and combat the use of casinos for money-laundering, which is itself a worrisome trend for law-enforcement professionals.
Slot manufactures will attempt to be an adjunct marketing engine for casino operators by streaming marketing content to slot devices customized for the individual player at the game.
State governments will tend to increasingly authorize commercial gaming, including table games, as a source of “voluntary” tax revenues, while becoming less amenable to Tribal developments with lower if any returns to the state(s).
States that already have gaming will look for new ways of tapping gaming to plug budget deficits, including expansions through new licenses, conversion of tracks to racinos and new in-state competition, such as VLTs at taverns.
The growing interest by tribal operators to identify opportunities and become early participants in online gaming in the United States.
The success of Singapore’s two integrated resorts, which is forcing analysts and other to upwardly revise their estimates and is encouraging gaming operators and national governments to expand legalize gaming throughout the region, including Southeast Asia and Japan.
USA broadband providers will become advocates for Internet Gaming legalization efforts in the US, due to increased usage of their products as result of I Gaming.
Cities that compete for national and regional conventions and meetings look to gaming as a competitive amenity, thus creating a new catalyst for casino expansion.
Consumers continue to "deleverage" their personal balance sheets, paying down debt and increasing savings. This will make it more difficult for casinos, particularly destination resorts, to reach pre-recession revenue levels.
Continued conversion of racetracks to racinos, particularly in states that border gaming states, such as Kentucky and Massachusetts.
Corporate and property debt restructuring in wake of declining revenues, including deleveraging through the disposition of non-essential assets, creating entry points for new operators.
Existing racinos that are struggling under tax burdens seek tax relief as well as other forms of growth, such as table games.
Increased legislative acceptance of allowing the deduction of issued electronic promotional gaming credits from the gross revenue tax/fee calculation.
Increased use of electronic table games, particularly in slots-only states, while full-service casinos begin to seriously introduce such games as entry-level, low-cost options.
Increasing reliance on non-traditional sources of financing, such as private equity, as traditional lenders and investors shy away from gaming. This is tied partly to a growing number of former investment bankers in gaming who are developing new firms able to identify and encourage such non-traditional sources.
Internet gambling in US will rise on the agenda for the new administration and Congress; gaming companies will begin to align in favor of legalization.
Major operators will seek new sources of revenue, including outsourcing brands and loyalty programs, which would also increase cross-market opportunities.
Major tribal operators will seek new opportunities in commercial gaming to boost their brands and leverage their loyalty programs and the low tax rates at their home properties.
Off-reservation gaming becomes an increasingly heated issue in Washington and in state capitals, with existing tribal operators staking out positions on both sides, seeking to lobby the Obama Administration to either retain or amend the Bush policies limiting such casinos to within 50 miles of the reservation.
Opening of integrated resorts in Singapore becomes catalyst for counter-moves in Asia, starting with potential expansion in Taiwan, while China takes steps to protect gaming in Macau.
Recent moratorium on development of big-box gaming resorts in US due to economic downturn evolves into a long-term clamp down. Whether such big-box plans re-emerge is dependent on improved access to affordable capital, as well as on performance of CityCenter in Las Vegas.
Relative strength of regional, convenience-based casinos continues to advance public acceptance of gaming as a form of entertainment.
Server-based gaming, which some are trying to repackage as networked gaming, rolls out in fits and starts, with some operators investing in smaller offerings that include some server-based advantages, such as yield management.
States seeking new sources of revenue in continued fiscal crisis look to new forms of gaming, such as VLTs in taverns.
Suppliers focus on areas of proven popularity, such as communal gaming and by expanding offerings tied to their own libraries of proven brands.
The debate on tax rates in emerging and existing casino states heats up, as existing states consider ways to protect their domestic industries while emerging states debate whether rates should be set competitively to encourage capital investment.
The demographics of gaming in major markets, particularly Las Vegas, shifts as lower-income adults step in to take advantage of continued downward pressure on room rates, packages.
Wall Street securities firms become less of a driving force in gaming, a result of cutbacks in coverage of gaming and the emergence of smaller, more responsive firms willing to fight for that business.
Advancements in technology that impact revenues and cut costs will continue to be attractive to operators even in an economic downturn.
Continued conversion of racetracks to racinos, as well as non-gaming expansions to existing racinos.
Continued elimination of jobs, both through cuts and attrition.
Continued moratorium on development of big-box gaming resorts due to economic downturn.
Convenience-based gaming continues to achieve better year-over-year results than destination-based gaming.
Corporate and property debt restructuring in wake of declining revenues.
Eastern Europe countries will increase their efforts to meet EU regulations, including smoking ban.
Gaming companies increase efforts to export their brands globally.
Gaming equipment manufacturers continue to invest in games that appeal to a younger demographic, including lotteries, bingo and server-based technology.
Increased legislative acceptance of allowing the deduction of issued electronic promotional gaming credits from the gross revenue tax/fee calculation.
Increased use of electronic games, including the emergence of scalable electronic table games in which players at different locations on the floor wager on a single outcome.
Increasing alliance between commercial gaming operators and outside investors, as well as between commercial and tribal operators.
Increasing integration of new or different non-gaming amenities into gaming venues.
Internet gambling in USA will be a hot federal issue for the new administration and Congress; gaming companies will fund lobbying efforts on both sides.
Major gaming operators commence deleveraging by selling off properties to emerging operators.
More pronounced shift in market share among suppliers as operators attempt to shift away from IGT participation games.
Native American tribal gaming revenue estimates remain on track to surpass US commercial gaming totals.
Prices for hotel rooms, shows and food and beverage will return to lower levels at large gaming resorts as operators need to fill their properties.
Slow but continual advancement toward server-based gaming, as operators remain skeptical as to the potential financial returns on investment.
States consider expanding or legalizing casino-style gaming to help fill state budget gaps.
Uncertainty in various European countries concerning regulation, thus increasing cases being referred to the European Court of Justice.
Adding more electronic table games to slots-only markets, taking advantage of new generation of electronic games.
Additional joint ventures between casino companies and international investors, including arms of governments, which will be a major source of capital for the industry.
Adoption of select new slot technologies that were originally designed for server-based gaming, including WMS’s episodic “Adaptive Gaming,” which allows players to interrupt, resume play at a later date.
Continued conversion of racetracks to racinos, as well as non-gaming expansions to existing racinos.
Development of “hybrid hubs” in which states opt for more reasonable tax rates, limited licenses in the hope of developing destination resorts.
Evolution of “hub-and-spoke” business model, as properties in high-tax markets develop alliances, mergers with destination properties in low-tax markets.
Evolution of gaming companies into entertainment providers.
Expansion of communal gaming, in which multiple players can play in same bonus round, with new generation of games that have smaller footprints.
Expansion of gaming into urban markets, with the prospect of added convention business as the chief catalyst.
Gaming destinations targeting gamblers, others priced out of higher-end Las Vegas properties.
Growing partnership between gaming, high-end retail and the marriage between retailing and casino loyalty programs.
Growth of conventions in destination, hub markets such as Las Vegas, Atlantic City, Mississippi as these markets become more aware of this segment’s value.
Hotel-room growth, use as marketing tool in both hub and spoke locations.
Increasing alliance between commercial gaming operators and outside investors, as well as between commercial and tribal operators.
Increasing pressure for openings, expansions of Asian markets, and growing cross-market play between Asian and Las Vegas casinos.
Monetization of non-gaming assets, including on-site retail, dining and entertainment.
Next generation of Las Vegas casinos, creating full-service metropolitan centers, with multiple brands at multiple price points at one location.
Networking of slot systems at new casinos, with continued resistance to widespread server-based gaming at existing properties, based on pricing, other concerns.
Renewed focus on stepper slots, simpler bonus rounds in new generation of slot machines.
Significant expansion of gaming in central and eastern Europe, at selected resort destinations that would serve as tourism hubs, which along with continued expansion in Asia, Latin America and elsewhere will put added pressure on U.S. regulators to ensure that international licensing standards are adequate.
Tribal gaming’s expansion into commercial casino markets, and management contracts with other tribal casinos.
Adding table games to slots-only markets, leading to the “spirograph” effect in which markets are forced to compete by expanding their offerings.
Opening of new Asian markets, expansions in Macau.
Communal gaming, in which multiple players can play in same bonus round.
Continued development of luxury housing, second-homes in combination with, or adjacent to gaming properties.
Development of “hub-and-spoke” business model, with sister properties in central, feeder markets.
Continued conversion of race tracks to racinos.
Next generation of Las Vegas casinos, creating full-service metropolitan centers.
Evolution of gaming companies into entertainment providers.
Private equity firms asserting control over gaming management.
Growing partnership between gaming, high-end retail -- and the marriage between retailing and casino loyalty programs.
Growth of conventions in destination markets.
International Game Technology’s “Guaranteed play” for slot customers, which guarantees players a minimum amount of time on slot machines.
Hotel-room growth, use as marketing tool.
Increasing reliance by states on high-tax, franchise business model with protected geographic areas.
Acceptance of server-based gaming, and adoption of new technology in stepper slots to facilitate server-based gaming.
Outsourcing of food-and-beverage, partnership with signature restaurants.
Racino evolution from slots-only to slots and tables live or electronic.
Reaching younger, more diverse demographics.
Remote, hand-held gaming.
Tribal operators pursuing management contracts with other tribal casinos.
Wide-spread acceptance of RFID chip tracking and wager recognition in table games.
Accelerated expansion of U.S.-based companies overseas.
Asia's continued growth.
Communal gaming, in which multiple players can play in same bonus round.
Continued cashless evolution, electronic funds transfers.
Continued consolidation among operators, suppliers.
Continued conversion of race tracks to racinos.
Continued push for tax rates above 50 percent in new jurisdictions, coupled with push-back by operators against high tax rates.
Evolution of gaming companies into entertainment providers.
Expansion by tribal casinos, private equity firms into commercial operations.
Growing federal resistance against Indian tribes seeking casinos off reservation.
Growth of conventions in destination markets.
Gulf Coast reconstruction to create a true southern destination resort experience.
Hotel-room growth, use as marketing tool.
Increasing tax rates, or introducing gaming with high tax rates.
New technology in stepper slots to make them downloadable-ready.
Outsourcing of food-and-beverage, partnership with signature restaurants.
Racino evolution from slots-only to slots and tables live or electronic.
Reaching younger, more diverse demographics.
Retail, spa development.
Tribal operators pursuing management contracts with other tribal casinos.
Wide-spread acceptance of RFID chip tracking and wager recognition in table games.
Accelerated expansion of U.S.-based companies overseas.
Asia's explosive growth.
Continued cashless evolution, electronic funds transfers.
Continued consolidation among operators, suppliers.
Continued conversion of race tracks to racinos.
Convergence of lottery, commercial gaming industry, growth of central systems.
Development of player-tracking table technology.
Downloadability, changing slot companies from manufacturers to software providers.
Evolution of gaming companies into entertainment providers.
Expansion by tribal casinos, private equity firms into commercial operations.
Growth of conventions in destination markets.
Hotel-room growth, use as marketing tool.
Increasing tax rates, or introducing gaming with high tax rates.
Outsourcing of food-and-beverage, partnership with signature restaurants.
Poker's popularity, use as marketing tool.
Pressure to speed regulatory approvals.
Racino evolution from slots-only to slots and tables live or electronic.
Reaching younger, more diverse demographics.
Renewed popularity of table games.
Retail, spa development.
Sports betting as potential competitive weapon.
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