Inspired by Gerald Davis’ Managed by the Markets, I wrote an LVBP column about similarities between gaming companies and other ones. My bold suggestion is that the gaming industry is more like than unalike others:
As big as the companies that run Las Vegas casinos seem in this town, they're really on the small side compared with the corporate giants that dominate major national industries — the ones pundits say are “too big to fail” just as poor management and declining demand push them to the brink of failure.
Casino companies tend to follow the pack, doing what the bigger companies do. So to get a handle on what's coming to the Strip, we should look at the trends that have been shaping corporations throughout the world.
The first is finance: Most of the companies running casinos today have taken on huge debt to finance new construction, acquisitions, or taking the venture private.
Being heavily leveraged isn't necessarily a smart business decision, but many companies have found themselves in similar situations. The reason? Relatively cheap money that banks were lending, plus a stockholder imperative to maximize short-term profits and thus drive the stock price higher. Thus, rapid expansion and debt accumulation became a logical, if not always sensible, strategy.
You can click through and read the whole thing.
To me, the corporate/financial aspects are the least interesting part of gambling (I’d rank it third, after operations/CCTV and marketing), but the general public seems far more interested in reading about this aspect of the business. Partially it’s because far more people are investors in gaming companies through stocks and bonds than are interested in the nuts and bolts of how casinos operate.
But there are, luckily, some folks who are fascinated by the operational side of things. I’m talking to a few of them at the Player Development Summit today, in a session I’m doing with Bill Zender on research and ethnic marketing.
On Tuesday, there’s a session called “21st Century Casino Marketing Tools That You Probably Aren’t Using Yet” I hope will tie into with Chuckmonster’s discussion of sponsored conversations.