THE GAMING INDUSTRY: TIMES OF EXPANSION AND COMPETITION

The gaming industry includes revenues from wages at race and dog tracks, lotteries, casinos, legal

bookmaking, card rooms and Indian reservations. Commercial casinos $($i$.$e$.,$ for$-$profit gambling enterprises not

including those run by Native American tribes$)$ accounts for about $37\mathrm{.}1\%$ of all legalized gambling revenues,

higher than any other form of gaming activities. Total number of commercial casinos units in the U$.$S$.$ is

roughly five hundred. Despite the past growth in this industry, casinos are still regarded in a negative light in

the U$.$S$.--$ a quarter of Americans view them unfavorably and many states see them as an industry that leads to

crime and corruption. In addition, several new challenges now exist for casino companies that are likely to

result in lower profits. These include limited openings of new geographic market, increased competition, and a

new form of threat through internet gambling sites.

The constraint in geographic expansion has been because few new states have approved casino type

gambling. As of $2022,$ casino gaming is permitted in $26$ states and two U$.$S$.$ territories, with most units

concentrated in the West, Plains and Southwest regions of the U$.$S$.$ These regions represent $44\mathrm{.}5\%,17\mathrm{.}7\%$ and

$15\mathrm{.}1\%$ of business locations, respectively. Some eastern states such as Maryland, Maine, Massachusetts, and

New York have increased their share of industry revenue in the past five years as new casinos have opened. Las

Vegas is still the top one gambling hub of the U$.$S$.$ There are approximately $144$ casinos in Las Vegas in

addition to smaller facilities with video poker machines.

The growth in developed, rather than, new, locations has forced operators to find ways to make their

facilities unique. Special themes and attractions are the main ways to differentiate one casino from the next. For

example, the Las Vegas strip has casinos set in ancient Egypt, a pirate ship, and a medieval castle. The

attraction differentiations tend to be expensive for casino operators. Some casinos focus on groups of customers

by geographic region, such as Boyd Gaming, which targets residents of Hawaii. Casinos also compete on slot

machines and jackpot prizes. It is important for companies to have significant and frequent changes to slot

machines and games to continue to attract patrons. Many new machines are now cashless $($i$.$e$.,$ they use tickets

or cards instead of coins or notes$),$ which makes it easier for patrons to play.

Tourism trends greatly affect casino revenue. Rising domestic travel benefited the industry over most of

the past five years, until $2020,$ when the effects of the COVID$-19$ pandemic dragged down revenue for the

period overall. The number of domestic trips by US residents has decreased an annualized $0\mathrm{.}1\%$ over the five

years to $2021.$ Over the five years to $2026,$ however, the industry revenue is expected to jump as consumers

resume travel and economy improves.

The industry has a low level of market share concentration. The top three players account for an

$2$

estimated $24\mathrm{.}9\%$ of industry revenue. Many operators have multiple establishments with a large workforce, but

with relatively low revenue generated at each location. The industry also has small operators, with $17\mathrm{.}6\%$ of

industry operators employing fewer than $20$ people. Many of the major players have started to increase merger

and acquisition activities to expand into new states and to introduce additional services. As several acquisitions

are proposed for the five years to $2026,$ market share concentration is likely to continue increasing moving

forward. Another characteristic of the industry is the increase in joint ventures, typically between a large casino

company and a group of local partners. Different assets, such as real estate ownership, access to capital,

management experience, and political connections are combined in these alliances.

Consumers$$ demand for more interactive forms of entertainment, such as live shows and concerts, will

likely pose a threat to casino operators. Particularly, a new form of threat has appeared in the form of internet

betting. According to a Topline Findings report, $7$ million of Americans play online poker for real money at

least once per month. However, long$-$term effects of this form of gambling will depend on the likelihood of it

being controlled or deterred by regulation. Currently, casino operators must comply with extensive gaming

regulations, either at the state or county level. The laws, regulations, and supervisory procedures are concerned

with preventing unsuitable persons from having influence or involvement with