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Casino Revenues Slow in Macau/ Internet Gambling Expands in the U.S., Business and Industry Trends Analysis

Major casino resort cities face daunting competition from online gambling and, in the U.S., from a wide variety of Indian reservation casinos and local or regional casinos based on riverboats and land venues.  While Las Vegas bounced back relatively well from the recession of the late 2000s (with 2015 casino revenue remaining relatively steady in 2015 at an estimated $6 billion), its competing city on the East Coast, Atlantic City, New Jersey, has fared poorly, with many of its major casinos recently closing or taking bankruptcy.  By one count, gross casino revenues in Atlantic City declined by more than 50% from 2006 through 2015.  Revenues for 2015 were $2.56 billion, down 6.5% from 2014.  Adding insult to injury, New Jersey lawmakers introduced a bill in early 2016 that would expand casino gambling in the northern part of the state.

Elsewhere in the U.S., a number of casinos are closing their doors due to oversaturation.  The Harrah’s casino in Tunica, Mississippi closed in June 2014, while the Atlantic Club Casino Hotel was shuttered in January.  Since 1988, the number of U.S. states with casino gambling has risen from two to 39, and gaming revenue in several states is not proving as lucrative as voters had hoped.  In Ohio, for example, gaming revenue was expected to generate $1.42 billion per year when voters approved four casinos in 2009, but 2013’s revenue was only $821 million, with underperformance continuing through 2015.  Despite these problems, a plethora of new, Las Vegas-style resorts are under construction and slated to open over the near- to mid-term in various American locales.

In America, legal gambling of all types is estimated by various sources to be about a $90 billion per year industry.  The American Gaming Association places gross gaming revenue (the amount wagered minus winnings returned to players) at legal casinos, racetracks and lotteries in the U.S. at $37.9 billion during 2014, surpassing the 2007 peak of $37.52 billion.  These numbers do not include gambling on Indian reservations or other alternative venues.  In Las Vegas, the city’s downtown area, which in recent years was eclipsed by the development of the Strip, has seen significant development, including the luxury D Las Vegas Casino Hotel in the middle of the area’s main attraction, the $70 million Fremont Street Experience, an open air canopy of computerized lights and sound systems that span five city blocks.  Several new projects are in the pipeline, including a 3,500 room, $7 billion, Asian-themed Resorts World Las Vegas (scheduled to open in 2016 or 2017) and a $1.3 billion retractable-roof arena and all-suite hotel project called All Net Resort Las Vegas (scheduled to open in 2017).

The biggest news in the casino industry has been in Asia.  The booming casinos in Macau (part of China) surpassed Las Vegas in revenue for the first time in 2007 and grew rapidly through 2013.  The former Portuguese colony, which reverted to Chinese rule in 1999, enjoyed soaring gambling revenues and a continuing stream of new resort and casino properties, including Melcro Crown Entertainment Ltd.’s $3.2 billion Studio City hotel and entertainment complex which opened in late 2015.  However, as a result of China’s anti-graft crusade and its recent austerity measures (in addition to its slowing economy as of 2016), Macau’s gambling revenue dropped 2.6% to $44 billion in 2013, and the decline continued through 2014.  Revenues in 2015 fell dramatically to $30 billion.

Macau is the only place in China where gambling is legal, and it attracts millions of mostly Chinese visitors.  Major properties include the Las Vegas Sands Corp.’s 13.3 million-square-foot Sands Cotai Central casino and resort complex, which opened in two phases in 2012, and the Galaxy Entertainment Group Ltd.’s 5.9 million-square-foot integrated resort project, Galaxy Macau, which broke ground on an addition that includes a 10,000-seat arena in mid-2013.  Both are located in the relatively new district called Cotai.  Sometimes referred to as the “Cotai Strip,” the area is separate from the Macau peninsula where a number of casinos and hotels (such as the Wynn Macau, the MGM Grand Macau and 20 casinos created by gambling developer Lawrence Ho) are already in operation.  Unfortunately for developers, Macau was in the midst of a $20 billion expansion at the close of 2015, while facing dismal revenue declines.

Meanwhile, Singapore saw the opening of its first casino resort in 2010.  The massive, waterfront property called Marina Bay Sands offers 2,560 guest rooms, a shopping mall and a convention center, in addition to a casino.  The new property has been extremely successful, and its unique buildings are already iconic to Singapore’s skyline. 

Until recently, Internet gambling in the U.S. was illegal.  However, the Department of Justice in December 2011 reversed its position that Internet gaming and lotteries were not legal.  The ruling opened the door for significant earning potential for states that have legal online gambling.  As of 2014, a small number of U.S. states had legalized it.  The state of New Jersey signed a law in early 2013 that allows Atlantic City casinos to run web sites that accept bets on blackjack, slots and poker.  The law requires bettors to be physically present in the state (verified by GPS technology), but bets can be placed from any device with an Internet connection throughout New Jersey.  Other states are expected to follow with their own Internet gambling initiatives, however, the American Gaming Association announced in May 2014 that it was dropping its support for the legalization initiative.  Association officials sited disagreement among casinos that made it difficult to move forward.

Meanwhile, online gambling generates billions of dollars yearly, largely through peer-to-peer betting, or wagering directly against another player as opposed to betting against the house.  A firm known as, the result of the 2011 merger of PartyGaming and bwin, is a Gibraltar-based company and one of the largest online gaming enterprises, with approximately 768,000 real money players.  The firm’s sites include, and for game players and, and for sports betting. was acquired by GVC Holdings for $1.71 billion in 2015.

The next big thing in gambling may well be wireless hand-held gaming devices and gambling via cellphone.  Nevada was the first state to allow the use of the devices, which afford gamblers the ability to play video poker, blackjack, roulette and other games on hand-held units in public areas of casinos such as bars, restaurants and pools.  There are also a number of non-U.S. companies that offer gambling online via cellphone, including GVC Holdings.  Another mobile gambling firm of note is Casino Tropez Mobile, which offers downloads of software for games such as roulette, Baccarat, video poker and blackjack that are played on cellphones.



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