THE GLOBAL CASINO INDUSTRY 1

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The Global Casino Industry

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Kayla Caraker

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GEB4891
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Professor Hawkins
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 THE GLOBAL CASINO INDUSTRY 2

The Global Casino Industry

For decades, the casino industry has been continuously rejected by many countries

around the world. Recent re-evaluations have led to drastic changes in the casino industry. This

case analysis will explain the changes that are happening and the problems that have emerged in

this industry. The Porter’s Five Forces Model will be used to analyze the issues the casinos are

facing and the routes they have taken to address these issues. Finally, the case analysis will

provide additional recommendations that can help alleviate and solve these problems.

Problems

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The US has dominated the casino industry, with Las Vegas and Atlantic City being their

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top performers. Visitors have flocked from all over the world to see these two extravagant cities.

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They purely had no competition when it came to number of different casinos, lavish properties,
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and unique cultures attached to each property. Recently, the US casino industry has been

challenged and threatened by emerging new competitors, which has led to a decrease in revenue.
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Porter’s Five Forces Model

Intensity of Rivalry

States in the US and countries all around the world have legalized gambling, resulting in
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a growth in the number of casinos. Many competitors are increasing the rivalry with building

lavish properties or offering the same services as current competitors. These new growing
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locations include countries: Singapore, Philippines, Malaysia, South Korea, and Australia. One
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location, in particular, has become a major threat to the Las Vegas and Atlantic City revenues.

Macau’s location, expansion, and large revenue has increased the competition and threatened Las
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Vegas and Atlantic City’s business.

The Bargaining Power of the Buyers

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At this point, the buyer’s bargaining power is high. The buyer has little to no switching

costs, which gives them the ability to switch to another casino that offers the same products and

services. In return, casinos want to prevent losing their customers to their competitors, especially

their high rollers that comprise of a large percentage of their revenue. This leads the casinos to

find incentives to attract and attain customers, and to stand out from their competitors. For

example, Solaire in Manila was “willing to send a private jet to pick up big spenders from all

across China” (Dess & Sauerwald, 2021). Casinos have also created loyalty programs and offer

complimentary perks including rooms, food, beverages, and shows (Dess & Sauerwald, 2021).

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The Bargaining Power of the Suppliers

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On the other hand, the suppliers’ power in this industry is low. Most suppliers offer the

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same or similar services. Since there is not much differentiation, suppliers are forced to contend
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with others because the availability of substitute products is high. High rollers also decrease the

amount of power the suppliers have because high rollers are rare and contribute to a large portion
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of the supplier’s revenue.

Threat of Substitute Products and Services

There are a few substitutes that threaten the casino industry. Horse race betting, online
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gambling, and lottery tickets are all alternatives buyers can use to supplement gambling. Many

people are not able to afford fly to a certain destination for a gambling experience. Instead, they
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look for closer, more affordable options. With technology quickly developing, the popularity of
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online gambling is on the rise. When gambling is at the buyer’s fingertips, this gives them the

opportunity to gamble more often and spend more money. Ultimately, the rise in technology is a
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high threat to the casino industry. Casinos will be losing a large amount of revenue in hotels,

food, beverage, and sales because less people will be traveling just to gamble.

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The Threat of New Entrants

Currently, the threat of new entrants is high. The existing barriers to entry are low and

little reactions are coming from existing competitors. It would be easy for new competitors to

come in and replicate what casinos are doing right now. Although the threat is high, some casinos

are trying to increase the barriers of entry to prevent new competition from coming in. Las Vegas

is trying to create larger economies of scale by conducting extensive renovations of their current

properties and by developing “an $8.5 billion mini-city spread over 67 acres that includes luxury

hotels, condominium units, restaurants, and shops” (Dess & Sauerwald, 2021).

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Recommendations

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Subsequently, over the past three years the casino industry has decreased in revenue. To

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prevent a further decrease in revenue, the industry is focusing on the younger customers who
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want more than just a gambling experience. Casinos are now adding entertainment shows along

with spas, dining, and drinking. I believe casinos should go a step further to reach customers who
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cannot afford to travel to casino locations and provide a better user-friendly experience for the
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younger, more technologically savvy customer. To differentiate a casino from its competitors,

they should make a loyalty program that also can be used through an app. This app should also
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include their own form of online gambling to target those who cannot travel and give them the

opportunity to earn rewards and their loyalty as well. For those who travel to gamble, the app
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should also have a feature for a customer to link their credit or debit card for a couple of reasons.
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It is an easier user-friendly way of payment. Anywhere they go they can pull out their app, the

staff can scan their member or credit card barcode, and they can instantly pay. In the app, they
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can also keep track of their reward points. In addition, the app should also have a map of the

casinos, shops, restaurants, bars, and hotels that are included in the loyalty program and

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 THE GLOBAL CASINO INDUSTRY 5

directions on how to get to them. This way, the casino is maximizing their revenue, by

incentivizing customers to spend money at these contracted places. I believe these

recommendations would make a casino stand out in their industry by reaching out to the online

gamblers and attracting the younger generation in every way possible.

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 THE GLOBAL CASINO INDUSTRY 6

References

Berry, T., Morgaine, B., Landau, C., Koharchick, B., & Lisa Furgison. (2020, July 10). How to

Do a Swot Analysis for Better Strategic Planning. Retrieved August 30, 2020, from

https://articles.bplans.com/how-to-perform-swot-analysis/

Dess, G. G., & Sauerwald, S. (2021). Strategic management: Text & cases (10th ed.). New York,

NY: McGraw-Hill Education.

Introduction: Analyzing a Case Study and Writing a Case Study Analysis. (2003, January 24).

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Retrieved from

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