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Brick and Mortar Casinos Reevaluate Their Business Model

As we have mentioned before in previous articles, the online casino industry has seen an increase in business since the being of the Coronavirus Crisis. Many of the reputable online sites are reaping the financial rewards of this pandemic because of the closing or limited access to the brick and mortar casinos. But as the pandemic continues and the large publicly owned casinos such as MGM Grand continue to loss money, many of these behemoths are starting to focus on the opportunities in the online market. According to the Wall Street Journal, August 16, 2020, the revenue for these companies has dropped as much as 97% in the last quarter compared to 2019.

The US Market and the Future of Online Casinos

Much of the attention for online play has now focused on the US market which has somewhat of a checkered past with gambling online, especially poker. In the past many of these land-based casinos were reluctant to focus online as they believed it would siphon off the brick and mortar casinos. Unfortunately, there is no “action” at all at these large casinos, and most of their former customers are either refraining from gambling altogether or trying their luck with online play.

The reality is such that no matter how quickly the pandemic and subsequent quarantines end, the long-term prospects for these businesses are not good. As a matter of fact, most of these casinos will feel the effects for years to come, as will cities such as Las Vegas. The question must be asked:

What do these casinos plan to do to survive?

“It is not the strongest of species that survives, nor the most intelligent, but the one most responsive to change” Charles Darwin

And change is what’s needed for these brick and mortar casinos to survive. Currently there are only 6 US States that allow online gambling of any type. With only 12% of the States offering this opportunity it might seem to be a fool’s errand for these casinos to focus on online play. Although the reality is that money talks, and when States such as Nevada and New Jersey are losing a huge portion of their tax revenue, you can guarantee there will be change.

By the beginning of 2023 approximately 70% of the States will have some form of online gambling. But with the Lobbyists of these large corporations working on politicians in these States, we will no doubt see this number increase in the coming years. High unemployment and low tax revenues is anathema to any State politician, so you can be assured that as revenues sink the politicians will be looking for alternatives.

The Future of Online Gambling in this Economic Climate

You cannot keep a city like Vegas open with only 50% occupancy rate in the Hotel/Casinos. As of September 1, 2020, the rate is much less than 50% and will stay like this for months and years to come. The largest of the Casino Operators have no choice but to expand their business into online gambling and compete in an industry where their experience is somewhat limited.

The Brick and Mortar casinos and the companies that run them will be welcome by serious competition from the established Online Casinos and will find that online gambling is not as easy as it looks. Regardless, with the financial strength of many of these casinos, I am quite sure that they will be successful, especially if more States allow online gambling.

The future for Land-Based Casinos as well as many other businesses is not written in stone. But if these Casinos want to survive, they will need to adapt to the current climate of gamblers staying at home and keeping away from the big crowds.