Archive for the 'Today's Global Gaming Review' Category

The Robot Invasion Takes another Beach

Vdara Hotel & Spa is a 1,495 all-suite hotel within the $8.5 billion CityCenter complex in Las Vegas. It opened in 2009, intent on being very modern and luxurious. Everything is top of the line and as contemporary as an iPhone X.  On July 9th, the property announced it had added two robots to its staff, becoming the second property in Las Vegas to use robots; 70 hotels around the world use robots.  The Vdara robots are working in room service, delivering morning coffee, a croissant and the day’s news paper to charmed guests who find them, oh, so cute. There are also robots pouring drinks in Las Vegas and an Indian casino in California is using robots as security guards.

It is a national trend, not just in hotels, but also in middle class houses everywhere.  The best known and most popular is the automated vacuum device Roomba.  It is an unpaid maid cleaning floors whenever it is told to clean, never tired, it doesn’t talk back, demand any compensation or forget to vacuum under the furniture.  It seems logical that one day, a version of Roomba will be employed in most hotels.  New technologies are also being used in other areas in hotels and casinos, such as hotel kiosks to check-in and out without the aid of a front desk clerk.  On the casino floor slot machines no longer require cash, eliminating a legend of employees to count, distribute and sell change.  Additionally, traditional casino games like blackjack, roulette and craps  are being dealt electronically; live dealer dealt games remain, but their realm is shrinking.  Live poker games still exist in Nevada casinos, but the vast major of poker played in the state is played on a slot machine.

Robots and automatons are being introduced all across the hospitality industry and the trend is certain to increase.  The reason is simple, it is cheaper than hiring a live person.  Todd Prince writing in the Las Vegas Review-Journal said the Vdara was renting the robots for $2000 a month, while the average member of the culinary union in Las Vegas costs the hotel about $16,500 a month, including unemployment and benefits.  Vdara says no employees are being replaced and the robots will only free the employees to do more complicated tasks than the robots can do. While that may be true today, it will not be true in ten years.  Besides the utility and economic viability of robots, they have another major advantage; they don’t strike for higher wages.

The major unions in Las Vegas have an estimated 57,000 members working in the casinos on the Strip and elsewhere in the city.  Each of the major gaming corporations has a separate contract.  In June many of those contracts expired. Since then some new contracts have been negotiated and ratified by the unions and other contracts are still being negotiated.  All of the negotiations take place under the shadow of the usual sworn rattling of union officials.  The threat of a strike in Las Vegas is a very powerful weapon.  None of the casinos wants to revisit the 67-day 1984 strike.  A strike is very expensive for the hotel-casinos involved and for the city of Las Vegas.  Las Vegas Casinos do not close during a strike, but it becomes very difficult to deliver service to the customers and many people refuse to cross picket lines. During the recent negotiations, demonstrating union members proudly shouted out: “Las Vegas is a union town!”

The power of the unions and the growing effectiveness of robotics are on a collision course.  Employee costs are among the largest expenses a casino-hotel has; the category is also more controllable than other categories such as debt and interest payments, utilities and taxes.  The driving force in the acceptance by casino management of slot technology was its use in reducing cash handling and the people needed for it.  So, far robot bartenders, security guards and room service waiters are more of a novelty than a practical replacement for a human employee.  However, the time is coming when those devices and others like them will be as cost efficient and effective as the ticket-in, ticket-out technology on a slot machine.  When that happens, the battle between the robots and the unions will begin in earnest.  Watching Roomba take over the routine cleaning of the American households, I think it may not be that far in the future.


Ultimately, Who is Going to Pay the Cost of Parking on the Strip?

In the midst of the national hoopla around the legalization of sports betting, a minor, but intriguing, story from the Las Vegas Strip appeared. On June 7th, Wynn and Encore Resorts announced an end to parking fees for hotel guests and customers who spend more than $50 in the casino or in the restaurants.  So far, the change is unique to Wynn.  Long-time Las Vegas observers wonder if other resorts will join Wynn in reversing the trend in paid parking on the Strip. Parking fees are relatively new to Las Vegas.  In 2016 MGM became the first company to charge for parking, Caesars, Wynn and the Cosmopolitan followed suit.  The trend has not swept across the country yet, but if it is successful in Vegas it probably will begin to show up in other markets.

 The rationale seemed to be two-fold; too many people were using the free parking and not spending any money in the resorts; and/or the resorts needed to find a way to monetize the large and expensive structures built to accommodate visitors.  Besides, the argument went, the fees were minimal and customers expected to pay for parking because it is never free in any major city and it is much more expensive than in Las Vegas.

It is true that parking is expensive in cities.  Anyone driving a car to go out to eat, see a movie, or hear the philharmonic can expect to pay handsomely to park the car.  The resorts are correct; people do expect to pay to park, except of course in Las Vegas.  Customers in Las Vegas casinos have grown to expect many services will be free or very inexpensive to the gambler.  That model has been changing for years, especially on the Strip. Under pressure from investors and Wall Street analysts, room rates have gone up year after year, buffets and other restaurants are no longer bargain priced and a daily “resorts fee” was added to every hotel bill.  None of those changes were popular with the customer, but Wall Street applauded every quarter.  As a general rule, if Wall Street loves an idea, no one cares much what the customers think.  No one cares until the customers vote with their money, then people begin to listen.

Wynn Resorts did not exactly say customer complaints lead to dropping the fees, but the statement did not rule out that possibility:  “Our guests choose to stay with us because of the attention we give to perfecting every detail of their experience.  We have come to believe that charging additional parking fees is counter to the personalized service we provide. This new policy directly reflects the way we know our guests want and deserve to be treated.”  The company will continue to impose a resorts fee, but now parking is included in the resorts services.

In the big picture, parking fees at Wynn Resorts is small potatoes unless it indicates something more important. If Wynn is the only company to stop parking charges, the story ends there.  But if other companies do the same, it has much larger implications.  It makes perfect corporate sense to charge whatever the market will bear for every product and service that can be sold.  However, to the consumer, it is not quite as logical.  Resort guests usually have a budget that has to cover all the things a person intends to do as well as additional costs such as parking, taxes, resort fees and five dollar bottles of water in the hotel room.   When do those added costs diminish the guest experience, reduce the number of visits and cut down on the “fun” things, like gambling, that bring the guest in the first place?

That is a question that many observers have been asking in Las Vegas since the beginning of the corporate policies changes that lead to $5 dollar water, resort fees and lastly, parking fees.  Las Vegas locals have been saying for a long time that the increase in non-gaming revenues was coming at the cost of gaming revenues and in time that would begin to have a negative effect on the industry as a whole.  I don’t think parking fees are a tipping point for the industry. However, Wynn’s action does suggest there may indeed be a limit to added fees.  It just might imply there is a limit on how much a resort can charge people just to be on a property before those charges impact the core business.  The Wynn experience begs a basic question: who is ultimately going to pay the real price of parking, the customer or the casino?

The Illinois’ Gaming Bill Has Come and Gone for another Year

Gaming nearly took another giant leap forward in Illinois.  According to the Chicago Tribune, “It is something of an unofficial tradition in Springfield: As lawmakers inch closer to the end of the spring legislative session, a proposal to expand gambling pops up with the promise of generating tons of cash.”  On the day after the Memorial Day Weekend, a legislative committee heard a bill proposing six new casinos, slot machines at race tracks, Midway and O’Hare airports and an additional VLT in all locations where VLTs are authorized.  The committee listened for 90-minutes, but failed to move the bill forward.  The bill failed by a very thin margin of one vote.

The sponsors of the bill did not provide any scope to the expansion and neither did the articles in the Sun and Tribune.  However, it is possible to make some guesses. There are currently 9,920 slot machines in the ten existing casinos in the state. The proposed six new casinos could be expected to add 5,952, but of course a casino in Chicago could easily support two or three times that number of machines. There are three horse racing tracks in Illinois. Using the same averages they could add 2,976 slot machines.  In total, there are 6,458 locations currently operating VLTs; that brings the number of additional slot machines and VLTs proposed under this bill to 15,386.  Currently in Illinois there are 28,942 VLTs and 9,920 slot machines; the new total would be 54,248, an increase of 44,248 since the first VLTs were installed in 2012.  The VLTs have reduced casino revenue by more than 30 percent in those six years, so you can imagine how the existing casinos feel about any plan for further expansion.

One supporter of the bill had little sympathy for the casinos, State Senator Terry Link said, “I think this is a win-win situation for everybody, and for those who have a little bit of a problem, I’ll just say one thing: Suck it up, because you are still going to make money in this industry and you know you are.”  He said they are always building new casinos in Las Vegas and no one is going out of business.  Senator Link’s attitude is typical of lawmakers around the country. In their minds casinos make so much money that nothing bothers them – not the tax rate, the size or location restrictions or the competition.  It is very dangerous thinking for the gaming industry.

This year, it appears the industry in Illinois dodged the bullet once again; but when the same bullet is fired every year, eventually it will hit its mark.  There is no avoiding the repetitive introduction of new legislation; it is a fundamental element in the democratic process.  Casinos always have to be on their guard and employ lobbyists to represent their point of view.  Expansion is a very complex issue and the owners and managers of casinos are on both sides of this issue. So, for example, if a company thinks it has an opportunity to put a casino in Chicago, it would support the legislation, even if it had a casino in another part of the state.  The major casino companies have supported expansion in New York, Florida, Maryland, Massachusetts, Texas, Georgia and Virginia.  Additional casino gaming expansion in any of those states will or has hurt existing casinos in nearby states.

There is no easy solution to this challenge, but I would suggest a couple of ideas.  First, even if legislation appears to be a benefit, look closely at the details.  High tax rates, casino license fees and onerous operating restrictions will become intolerable in time.  Even if the property is initially profitable, conditions will change.  The economy may go into recession or the legislation may go back to the well and raise taxes or add competition, all of which have happened to the casinos in Illinois.  Second, do not make plans as if the casino were being built in Las Vegas; most, if not all, jurisdictions in the United States are volatile and unstable in the long-term as Illinois, Indiana, West Virginia and Pennsylvania illustrate.

The democratic process is at the very core of our society, it gives us freedoms both personal and economic that are difficult to match under other systems.  But it does have some built-in, unintended consequences, such as the recurrent legislation; once a bill is passed into law it creates a fixed state, but one that is defeated does not necessarily stay defeated; it can return over and over again.  Every time the legislature meets it pays to be on guard, in pursuit of money or personal agendas lawmakers can be relentless.

The Supreme Court Pulled Out the Cork and the Genie Is Loose

On Monday, May 14th, the United States Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) of 1992.  The law prohibited sports betting except as conducted by the lottery in Oregon, Delaware, Montana and in casinos in Nevada.  New Jersey had sued, claiming the law violated the tenth amendment state’s rights clause: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The court agreed with New Jersey.  In writing for the majority, Justice Alito stated:

The legalization of sports gambling requires an important policy choice, but the choice is not ours to make.  Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not. PASPA ‘regulate[s] state governments’ regulation’ of their citizens, New York, 505 U. S., at 166. The Constitution gives Congress no such power. The judgment of the Third Circuit is reversed.”

The entire gaming industry had been eagerly awaiting the decision for weeks.  The court heard oral arguments in December and from the questioning, most observers believed a repeal of PASPA was a foregone conclusion.  In anticipation of a favorable decision, twenty states have already proposed or passed legislation to regulate sports betting; and Ladbrokes, Paddy Power, William Hill, DraftKings and FanDuel have been preparing to enter the market.   The court’s ruling was good news for the industry as a whole and for all of the states looking for new sources of taxation.  I don’t think it was good news for Nevada casinos.  Some people supporting the court’s decision have said that legal sports betting in other states would have no impact on Nevada, I respectfully disagree.  I remember clearly all of the casino executives in Atlantic City opining that slot machines in Pennsylvania would have no impact on Atlantic City. “Bah, those won’t be real casinos and people will still come here for the real thing.”  Well, we know how that worked out.  In the 1950s, a ground-breaking study concluded that shoppers do not drive past one store to drive farther to another unless that store has some product or service the closer one lacks. Nothing that has happened in the last 60 years in gaming refutes that conclusion.

However, the unfettering of wagering on athletic contests cannot be put in the same category as any other in the history of gaming.  I have never seen anything concerning gaming to compare with the attention the Supreme Court’s opinion has drawn nationwide.  In every jurisdiction, organization, media outlet and corporation with the slightest connection to sports or gambling there are people with opinions on the impact of the court’s decision.  It seems that no two people agree on the subject.  Literally hundreds of articles appeared in the first five days after the ruling was issued.  The articles and theories cover the gamut from the regulatory structure each state will need to who will profit and how the integrity of the games will be insured.  Most of these questions will have different answers in each state and at the moment the possibility of federal guidelines and restrictions cannot be discounted. Some legislation has already been introduced in Congress and more will follow.   It is also certain that the major leagues will be lobbying at both the state and national level for an agenda that benefits them.

It will take a very long time before all of the questions are answered.  The National Gaming Regulatory Act passed in 1988 and there are still some unanswered questions in Texas, Massachusetts and Virginia for example.  No one in 1988 imagined that Indian gaming would grow to the size it has or produce the billions of dollars of gaming revenue that are currently generated by Indian gaming. The estimates on revenues from a legal sports industry begin at $50 billion by 2020 to over $150 billion by 2025.  If those estimates are even close, sports betting is set to join casino gaming, lotteries and Indian gaming as the major sources of gaming revenue in the United States. Sports betting will probably never reach some of the extreme $150 billion estimates, but there is little doubt that it is set to become an extremely important part of the gaming industry, the sports media and the games themselves. Opponents think wagering on sports will corrupt the games and the athletes.  Gambling on sports may not erode the integrity of athletic contests or the participants.  However, it is going to alter drastically the landscape of gambling, sports and the media coverage of sports.  The games will never again be the same.  Whether the changes will be good or bad for all concerned, we will just have to wait and see.


Atlantic City Pushes the Restart Button

On May 26th, Resorts, the first casino in Atlantic City, will celebrate its 40th anniversary.  As if to celebrate that event, two new casinos are scheduled to open on June 26th.  Actually they are not new casinos, rather reincarnations of failed casino-resorts. Hard Rock is replacing the Trump Taj Mahal, which entertained its first gamblers in April, 1990 and closed its doors in October, 2016.  Ocean Resorts is going to bring the former Revel back to life. Revel opened in 2012 and closed in September, 2014.  Both properties have pasts filled with financial woes and trips to bankruptcy court. The new owners are hopeful, believing this time will be different. This time, Hard Rock and Ocean Resorts have some advantages over their predecessors.  Most importantly, neither has the debt the properties previously carried and each of them has had the advantage of hindsight in remodeling and developing a strategy plan.

However, Hard Rock and Ocean Resorts face one problem every casino in Atlantic City has, competition.  That was not the case forty years ago pn May 26th,1978 when Resorts Casino-Hotel opened.  It was a day filled with hope and optimism with no hint of the changes to come. Resorts was overflowing with people eager to gamble.  The future for Atlantic City was clear; with a hundred million people within a two hour drive it would be a thriving gambling center to rival Las Vegas.  I remember exactly where I was that day.  I was in Reno, Nevada opening the Comstock Hotel Casinos; our future too seemed bright that day, although we did not have nearly as many customers as Resorts, we were very busy.   No one in New Jersey or Reno foresaw the expansion of gaming that was ten years away.  Although we might have suspected something would happen once gambling started to spread outside of Nevada.  When the casinos opened in Atlantic City, other states began to look more serious at gaming as a revenue source.   It took ten years for casinos to move into to other states, but once the move began it was unstoppable.

The National Indian Gaming Regulatory Act passed was passed in 1988; and it was followed by authorization of some form of casino gambling in Indiana, Iowa, Mississippi, Louisiana, Colorado and South Dakota.  At the same time, each new jurisdiction that added gaming, added competitive pressures to the existing jurisdictions.  Forty years ago in Reno, competition meant the casino down the street, not in another state. In Reno, casinos with enough access to cash added rooms and amenities, while the smaller ones slowly withered on the vine.  By 1996, Reno casinos knew the enemy was not their neighbor, but casinos located on an Indian reservation or elsewhere.  It is strange to think about it now, but the Comstock had regular customers who lived in New York, Chicago, Detroit and every other major city in the country.  Not surprisingly those people stopped coming to Reno when they had casinos closer.  Reno lost over 20 casinos since 1988 and regardless of the Tesla effect and the new economy, Reno will never again be a casino city; it is a city with casinos.

Atlantic City has suffered approximately the same fate as Reno, but it took longer.  Until 2007 it was on a roll and gaming revenues grew year over year, every year.  In 2006, Pennsylvania started adding slot machines and that coupled with the Great Recession brought a dramatic change to the Boardwalk.  Atlantic City casinos began a downward spiral that would eventually lead to the closing of five casinos by the end of 2014.  After those casinos exited the market, the remaining casinos have been slowly recovering with the help of online gaming that now accounts for over 10 percent of the city’s gaming revenue total.  Hard Rock and Ocean Resorts might usher in a new era, what some are calling a rebirth.  Of course, the two new casinos will not make the dozens of casinos in the surrounding states go away.

The Hard Rock brand provides at least one reason to be optimistic,.  The company is promising to grow the market with the power of its brand and with its world-class entertainment experience.  Hard Rock says that unless it can attract new customers to the city, it will fail. Without new customers, there will be nine casinos fighting over the same customers that seven have fought over for the last four years.  That is the fear of many analysts, and with good reason.  No casino in twenty years has been successful in growing the market.  Revel’s successor, Ocean Resorts is not even promising to expand the customer base. The developer, Bruce Deifik, is quoted in the Press of Atlantic City saying, “There’s no doubt that Hard Rock and our project will take some business from other houses. That’s just the way the world works. But I believe that over two years, three years, collectively we can raise the level. A rising tide lifts all ships.”

When Revel opened, the developers thought it would grow the market and if not it would command enough market share to survive; that strategy did not work.  Finding a better strategy is the challenge for Hard Rock and Ocean Resorts.  If the new casinos do attract new customers to Atlantic City, then all ships will rise with the tide.  However, if they do not, Atlantic City will see a repeat of 2012 when one casino after another closed.  There is hope in Atlantic City for a different outcome, but for that to happen something needs to be different.  The competition is going to remain and even increase.  Expanding the customer base and attracting new visitors is the only way to change Atlantic City’s future.  It is not 1978, but to succeed, Hard Rock is going to need to generate as much buzz and interest among gamblers as Resorts did 40 years ago.  It will take all of Hard Rock’s star-power to reset Atlantic City.

Macau is becoming a Rest Stop on the Great Silk Road

It is earnings season again and the casino reports from Macau are good.  Wynn, Sands, MGM, SJM and Melco all reported double digit increases in revenues and profits for the first quarter. The total gaming win for the city was up 20.5 percent to $9.6 billion for the quarter; April was up 27.7 percent to $3.18 billion.  The city is coming back from the disastrous and by now infamous crackdown on VIP gamblers.  The dark hour in 2014 when Chinese President Xi began his crackdown on graft and corruption almost seems a dream as we near the fourth anniversary of that dire moment in June, 2014.  However, there are still traces of its impact on the casino industry.  While revenues have increased steadily for several years,  the casinos generated $33 billion in 2017, 26.2 percent less than the $45 billion in 2013.

The casino industry in Macau may not be back to the all-time record revenue levels, but with monthly increases averaging over 20 percent this year, it would be difficult to find fault with the current state of affairs.  Since 2014, Macau casino operators have invested over $15 billion dollars in building new resorts and updating the existing ones.  Most of that investment was planned before the crackdown, but from today’s perspective one might think the resorts had been designed with Chinese President Xi Jinping’s long-term goals in mind.  Besides ridding China of graft and corruption, Xi is intent on making China an economic world leader.  As part of that plan, China is building a worldwide trade network Xi is calling the Belt and Road, sometimes called the New Silk Road; Macau has a role in that strategy.  Xi does not want the city to be the gambling hub of Asia; he wants Macau to be a magnet for international tourism and foreign currency.  The multi-billion-dollar resorts of Wynn, Sands, SJM and Melco built fit perfectly into that role. To demonstrate loyalty to Xi’s goal, casino operators are eager to re-spin the investment strategies as being designed for tourists traveling the New Silk Road.

Regardless of the original intent or the current narrative, the new mega-resorts are starting to have the impact Xi wants.  SJM’s first quarter results illustrate a shift in revenue from VIP to mass-market gamblers. In the common definitions of the market, VIP gamblers are the hardcore, high rollers willing to bet millions of dollars on the turn of a card.  The mass-market gamblers are causal players, tourists with a few bucks to spend gambling for entertainment.  SJM reported $93.1 million in profits for the first quarter, a 25.8 increase.  SJM’s revenue from VIP business decreased by 1.1 per cent amounting to $621.7 million and mass market gross gaming revenue grew 9.5 per cent to $731.3 million.  The change in the amount of money being wagered is reflected in the game mix; in the first quarter, there were 284 VIP tables, 31 fewer than the previous quarter; while there were 1417 mass-market tables, an increase of 42 games.

 SJM is not alone in the switch from VIP to more causal gamblers.  The next casino to open is Melco’s Morpheus Tower, an addition to its City of Dreams.  In another of those twists of irony in gambling circles in Macau, the CEO of Melco is Lawrence Ho, a son of Stanley Ho.  SJM was founded by Stanley Ho and was the first legal casino operator in Macau. Ho and his partners invented the VIP and junket business in the city. Stanley Ho represents the history of Macau and Lawrence is its future.  In Lawrence’s new tower there will not be any VIP table games.  The Morpheus Tower instead will cater to tourists and casual gamblers.  The main purpose of the new tower is not to add gaming, but to add rooms and other amenities, just the kind of thing to warm Xi’s heart.  In general, quarterly earnings conference calls now focus much more on the other forms of revenue and the growing tourist segment of the business and downplay the VIP segment.  Even though SJM reported more mass market than VIP for the entire market, VIP revenue is still the highest. It is and will remain very important to casino companies, but it will not get the attention in public it once did.  The casino licenses in Macau are all coming up for review and renewal and pleasing the Chinese central government is going to be an important part of that process. The corporate narratives will certainly figure into the licensing equation.

The switch in revenue sources and narratives in Macau has been surprising, given the state of affairs just four years ago.  China has a state-managed economy rather than a free market economy which means that what China wants, China gets. “Welcome to Macau your friendly stopover on the wondrous Silk Road.”

Caesars in Dubai: A Camel’s Nose under the Tent?

Eldorado Resorts, Boyd and Penn National are extending their footprints across the nation at every new opportunity.  But for the next tier up, the mega-casino companies, Caesars, Wynn, Sands and MGM there are not enough of those opportunities to be found within the national borders.  They are scouring the globe for possibilities.  Japan is probably at the top of each list; everyone is interested in the island nation.  However attractive Japan might appear to be, it is very, very slow in developing.  In the meantime, Vietnam and possibly the Philippines might offer some promise. However, after fifteen years of dramatic gaming expansion in Asia, the opportunities for casino developments measured in billions of dollars, is also limited.  At least one company, Caesars, does not want to wait for Japan. It does not appear to be excited about the Philippines and instead it is casting its net in a wider circle than the Pacific Ocean region.

The most recent announcement from Caesars concerns Mexico; the corporation intends to put a $200 million resort in Puerto Los Cabos.  The resort is small by Caesar’s standards, but it serves another purpose.  The Mexican resort will not have a casino, but a casino-less resort is becoming Caesars’ international strategy.  It has declared an intention to expand into resorts unadorned with gambling’s glitter. The non-casino resort option opens up many countries that do not allow casino gambling, yet.

Another of the countries that Caesars is entering without a casino is Dubai.  It will be joining MGM in the Bluewaters Island development. Bluewaters is a man-made island just off the coast of Dubai.  So far,  $2.7 billion has been invested in the development.  It includes a Ferris Wheel 210 feet tall, a rope climbing platform, both the highest is the world, 15,000 planned residential units and 200 retail and restaurant outlets.  The designer wants to mix tourists and residents in a unique international cultural environment.  Like the resort in Mexico, the resorts in Dubai will be non-gaming.   The ministry of culture wants no confusion on that point and issued a statement to that effect immediately after Caesar’s announcement of its pending opening later this year.

Dubai is reshaping its economy away from oil making tourism an important component of the country’s plan.  Tourism will require some adjustments. Dubai is a Muslim country and while not as conservative as Saudi Arabia, it is far from being a secular state like Egypt, Syria or Libya.  However, Dubai does make allowance for foreigners and non-Muslims by allowing them to buy alcohol and pork among other things.  It is not much of a stretch to think that in time Dubai will permit gambling for non-Muslims.  I am inclined to think Caesars and MGM are both making a small side-bet on gambling becoming legal.  If Dubai were to legalize gambling for non-Muslims, the companies in the best position to take advantage of it would be Caesars and MGM.  Caesars would also be positioned to optimize its resort in Mexico in the same way.

The importance of non-gaming revenue is the new narrative in the gaming industry.  Both Caesars and MGM are working diligently to illustrate the relative insignificance of gaming revenues in the overall picture to the investment and banking community.  It is true that Wynn, Las Vegas Sands, MGM and Caesars all book more revenue from the other categories than they do from gaming.  But no one would deny that the gaming is important. It may not be the tail that wags the dog any longer, but gaming does produce cash flow unmatched by the hotels, restaurants or retail outlets.  And yet, for Caesars and the others the only real growth and expansion opportunities that are going to exist in the near future are for resorts.  If some of those resorts can have a bit of gambling later on, so much the better, but if not, the resorts will still be built.

The growing economies of India and China are also factor into the expansion of tourism resorts.  Hundreds of millions of people from those countries are packing their bags and setting out on adventures.  The UN World Tourism Organization reported that Chinese tourists spent $261 billion in 2016 and the number is increasing every year by double digit percentages.  Recently, Dubai made visas for Chinese tourists easier to obtain.  In the first nine months following the change, tourism from China grew by 49 percent. China is now fourth as a tourism source for Dubai.

Caesars and MGM are important to Dubai’s plan to reshape its economy around tourism.   Caesars wants to expand into international markets and Dubai wants to attract international tourists. And it just might be at the crossroads of these plans that gambling could find a place. China is a major focus of the new economy.  Chinese tourists and the famous propensity of the Chinese to gamble could help both Caesars and Dubai meet their objectives.  Today Caesars Bluewaters is non-gaming, but it could just be the proverbial camel’s nose under the tent.  Once the camel gets its nose into the tent, the rest of the camel is sure to follow.


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