Market Analysis – 90151901 – Casinos

Executive Summary

The global casino market is valued at est. $155 billion and is recovering robustly post-pandemic, driven by the resurgence of tourism and the expansion of integrated resorts. A projected 3-year CAGR of est. 4.5% indicates steady growth, though this is tempered by increasing regulatory scrutiny and competition from online gaming (iGaming). The single greatest opportunity lies in leveraging the "experience economy," where casino resorts are evolving into all-in-one entertainment destinations, creating new value propositions for corporate MICE (Meetings, Incentives, Conferences, and Exhibitions) spend.

Market Size & Growth

The global casino market is experiencing a significant rebound, with a strong focus on integrated resorts that combine gaming with luxury lodging, dining, and entertainment. Growth is fueled by market liberalization in new regions and a strong recovery in global tourism. The Asia-Pacific region, particularly Macau and Singapore, remains a critical growth engine, alongside the resilient North American market.

[Source - Global Hospitality Analytics, Q1 2024]

Top 3 Geographic Markets: 1. United States (led by Nevada and expanding regional markets) 2. Macau (SAR) 3. Singapore

Key Drivers & Constraints

1. Demand Driver: Resurgence of MICE & Tourism: Post-pandemic "revenge travel" and the return of large-scale corporate events are primary demand drivers. Integrated resorts are prime beneficiaries, offering comprehensive infrastructure for conferences and entertainment.
2. Regulatory Driver: Market Liberalization: The legalization of sports betting across numerous U.S. states and potential new casino licenses in markets like Japan, Thailand, and the UAE are creating significant growth corridors.
3. Constraint: ESG & Regulatory Scrutiny: Heightened focus on responsible gaming, anti-money laundering (AML) compliance, and local community impact is increasing operational costs and reputational risk.
4. Constraint: Competition from iGaming: The rapid growth of online casinos and mobile sports betting presents a structural threat, diverting a segment of the addressable market away from land-based properties.
5. Cost Driver: Labor & Input Costs: Rising wages for hospitality staff, coupled with inflation in food & beverage and utility costs, are compressing operator margins.

Competitive Landscape

Barriers to entry are extremely high due to immense capital intensity (resort construction costs often exceed $2 billion) and a complex, politically sensitive licensing and regulatory framework.

⮕ Tier 1 Leaders * Las Vegas Sands Corp.: Dominant in Asia (Macau, Singapore) with a strong focus on the high-margin MICE and mass-market gaming segments. * MGM Resorts International: Diversified global portfolio with a major presence on the Las Vegas Strip and a rapidly growing digital/sports betting arm (BetMGM). * Caesars Entertainment, Inc.: Largest U.S. footprint by number of properties, leveraging a powerful customer loyalty program (Caesars Rewards). * Wynn Resorts, Limited: Positioned as a premier luxury brand, commanding top-tier pricing in both Las Vegas and Macau.

⮕ Emerging/Niche Players * PENN Entertainment: Aggressively integrating digital media (Barstool Sports, theScore) with its regional casino portfolio. * Galaxy Entertainment Group: A leading operator in Macau focused purely on the Asian market, with a significant development pipeline in the region. * Boyd Gaming Corporation: Strong focus on U.S. regional markets and the Las Vegas locals segment. * Hard Rock International: Expanding globally with a unique brand identity, leveraging its music and entertainment heritage.

Pricing Mechanics

For corporate procurement, pricing is a complex bundle of services, not a single commodity rate. The primary negotiation revolves around MICE contracts, where the casino's goal is to drive "total wallet," including on-property gaming, dining, and entertainment. The price build-up consists of negotiated room blocks, food & beverage minimums, venue rental fees, and ancillary resort fees. Pricing is highly dynamic, influenced by city-wide occupancy, event calendars, and the perceived value of the client's attendees (i.e., their propensity to gamble).

Suppliers may offer significant discounts on rooms and meeting spaces for groups that can commit to a certain level of F&B spend or demonstrate a history of high on-property spending. The three most volatile cost elements for operators, which indirectly influence negotiated rates, are: 1. Labor: Hospitality wages have increased est. 15-20% since 2021. [Source - U.S. Bureau of Labor Statistics, 2024] 2. Food & Beverage: Key inputs like proteins and grains have seen wholesale price volatility of +/- 25% in the last 24 months. 3. Energy/Utilities: Electricity and natural gas costs have fluctuated by as much as 40% in peak seasons.

Recent Trends & Innovation

• Cashless & Digital Integration (2023-2024): Major operators are rolling out cashless gaming floors, allowing patrons to fund slot machines and table games via mobile apps. This enhances data collection for personalization and improves operational efficiency.
• Focus on Non-Gaming Revenue (2023-2024): Las Vegas Sands' sale of its Vegas assets (March 2022) to double down on MICE-heavy Asian markets underscores the industry pivot toward more stable, non-gaming revenue streams like conferences, entertainment, and luxury retail.
• Sports Betting Expansion & M&A (2022-2023): The continued legalization of sports betting in the U.S. has fueled partnerships and M&A, such as PENN Entertainment's acquisition of the remaining stake in Barstool Sports (February 2023) to capture a younger demographic.
• Emerging Market Development (2024): The United Arab Emirates (UAE) has established a federal authority for regulating gaming (September 2023), paving the way for the $3.9 billion Wynn Al Marjan Island resort, expected to be the first with a gaming license in the region.

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina's casino landscape is currently dominated by two tribal-owned properties operated by Harrah's (Caesars Entertainment): Harrah's Cherokee and Harrah's Cherokee Valley River. Demand is strong, driven by tourism from neighboring states (GA, TN, SC) and the large Charlotte and Raleigh-Durham metro areas. However, capacity is limited to these tribal locations. The key development is the ongoing legislative debate around authorizing commercial casinos and video lottery terminals. A recent bill to approve up to four new commercial casino sites (failed in 2023 but likely to resurface) highlights significant political and public division. If passed, it would dramatically increase local capacity and competition, but also introduce new tax revenue streams and complex zoning/labor challenges.

Risk Outlook

Actionable Sourcing Recommendations

1. Pursue Total Value Contracts. Shift negotiations from room rates to total on-property spend. By providing suppliers with clear data on your group's estimated F&B, entertainment, and retail spend, you can leverage this "total wallet" to secure 15-20% deeper discounts on core MICE costs like venue fees and room blocks. This aligns with the supplier's primary objective of driving traffic to the gaming floor and other amenities.

2. Diversify with Regional & Emerging Markets. Mitigate pricing pressure in primary hubs like Las Vegas by evaluating Tier 2 markets for major events. Operators like PENN and Boyd offer competitive MICE facilities in regional U.S. locations. For future planning, monitor legislative progress in North Carolina and Texas. Securing "first-mover" status with a new resort can lock in favorable terms before the market matures and demand drives up prices.