Continue to Bet on the Global Casino Industry: A Look at 2017 and Expectations for 2018
The global casino industry has staged continued growth for years, even in the face of adversity. Hiccups such as the 2008 housing crisis in the US, Europe’s debt crisis in 2010 and China’s financial crisis in 2017 have been offset by casinos being legalized in various countries across the globe. This industry has proved its resilience time and again.
The Persistence of the Casino Industry
In 2001, revenues generated by the global land-based casinos totaled around $220 billion. Global revenues crossed the $300 billion mark in 2004, and topped $400 billion by 2011. Stagnation set in between the years 2013 and 2014, and there was a minor dip in 2015. The casino industry then staged a convincing comeback, with revenues reaching a handsome $450 billion in 2016, with projections of almost hitting the $500 billion mark before 2020.
A report published by the US American Gaming Association (AGA) indicated that the government collected almost $9 billion in direct gaming taxes in 2016. Emphasizing the economic impact of a flourishing casino industry, the AGA report said that the taxes collected had “helped state and local governments across the country balance their budgets and fund education programs, make investments in infrastructure and keep essential services running.”
Many governments are recognizing the power of the casino industry, not just to generate taxes, but to fuel the tourism industry and boost economic growth.
Standing Tall Even Amid Tragedy
The casino industry’s persistence was tested not only by economic conditions and stringent regulatory frameworks, but also by tragedies. The Resorts World Manila in the Philippines was attacked by a gunman on June 2 last year, resulting in the tragic deaths of 37 people. The casino resort was asked by regulators to stop its gaming activities for further investigation of the attack. Gaming operations resumed in less than a month.
In October last year, a lone gunman opened fire on a crowd at the Las Vegas Strip. This incident, in which 58people lost their lives and 546 were injured, was the deadliest mass shooting by an individual. Las Vegas, too, didn’t lose too time to get back on its feet. A month after the incident, the annual Rock ‘n’ Roll Las Vegas Marathon was organized and held, albeit amid increased security.
Performance Across the Globe
Last year was highly eventful for the casino industry. Although the main regions of revenue generation continued to be Las Vegas and Macau, new markets emerged and gained traction.
Here’s a look at last year’s performance of various regions and their prospects for this year. Let’s begin with the US (very briefly) and then move onto Asia, which will probably remain the center of action in 2018.
United States of America
Casinos in Nevada generated total revenues of more than $26 billion in the 2017 fiscal year, with the Las Vegas Strip contributing close to $18 billion of this. Atlantic City performed exceptionally well, and is expected to continue growing this year.
Asia: Prospects Look Brighter, and Brighter
Every major casino company has its eyes set on Asia, as it’s the world’s most populous continent.
China’s casino revenues rose more than 19% in 2017 to $33 billion.Although there was much noise around building non-gaming attractions to boost Macau’s tourism industry, growth was fueled by VIP revenues.
Growth in China’s casino revenues is expected to decelerate in 2018, said a research note published by brokerage firm Sanford C. Bernstein Ltd.
While China continues to be the biggest casino market in Asia, the prospects of other markets in the continent cannot be ignored. In fact, with Macau facing regulatory hurdles, Asia’s emerging casino markets received a fillip.
The proximity to China, makes Vietnam’s casino prospects brighter. A recent regulatory change that allows foreign investors in Vietnam could result in major developments in the country’s casino industry this year.
Another country that seemspoised to benefit from Macau’sregulatory woes is the Philippines. With improved diplomatic relations between the two nations and regulatory crackdown on the Chinese casino industry, more people are expected to travel from China to the Philippines to enjoy casinos. In fact, this year may finally witness the long-anticipated sale of casinos by the Philippines government to private companies.
Japan legalized casinos a couple of years back, with the aim of boosting its tourism industry. This country has a major advantage – its huge population of some of world’s wealthiest people. However, regulatory hurdles (restricting casino licenses, limiting floor area and levying a mandatory entrance fee) have hampered growth and will probably continue to do so.
Russia had probably dug its own grave around a decade back, by closing all casino and gambling venues. Although the country later opened some gambling zones, the world’s major casino operators have shown little interest in the region.
Singapore’s casino industry is dominated by Las Vegas Sands Corp (Marina Bay Sands resort) andGenting Singapore Plc (Resorts World Sentosa). The casinos are benefiting from an inflow of Chinese visitors, which currently constitutes Singapore’s largest tourist arrivals. There’s optimism surrounding Singapore’s casino industry, backed by increased patronage and a return of high rollers.
Prospects of Malaysia’s casino industry are also bright, with the recent opening of VIP gaming areas and the upcoming opening of the 20th Century Fox World Theme Park, expected by end of this year.
There’s a great deal of optimism surrounding India, given its massive working-age population, which is predicted to rose to 869 million by 2020, according to a recent EY report.India is progressing fast, and one can hope that regulators wake up to recognize the value the casino industry can add to the country’s economic growth.
In all, 2018 would likely be a good year for the global casino industry and associated sectors, against the backdrop of a more robust global economy.
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