G2E Conference Summary: Key Takeaways

At this year’s Global Gaming Exhibition and Conference, TMG staff attended over twenty conference sessions, covering issues such as gaming on the Internet, U.S. and Asian gaming expansions, operations models for revenue maximization, player tracking and marketing programs, and the state of financing for gaming projects.  This blog post includes a few key takeaways from such discussions.

Capital Investment in Gaming

Throughout the conference sessions and our discussions with gaming executives, it became apparent that capital is currently available for existing gaming operators.  However, during this recovery period, debt leverage needs to be lower for commercial lenders to be comfortable.  Across the board, the scale of capital investments is expected to remain lower than in pre-recession times.

Social Media

Simplifying the myriad of communications and streamlining the social media experience for conference attendees was the G2E Mobile“App”.  Developed with Konami, the mobile device application put the entire conference in your hand.  Conference organizers were able to send direct messages to attendees, as well as to live-stream all conference mentions in the Twitter universe.  The integration of the conference with social media such as Twitter was reflective of the gaming industry as a whole, as smartphones now allow casinos a way to send real time offers to their patrons.  In his Conference Keynote, James Murren, CEO of MGM Resorts International urged the gaming industry to monetize social media now.

New Forecasting Models to Improve Operations

One of the more interesting sessions at this year’s G2E was led by Chris Anderson of the Cornell School of Hotel Administration.  He and the other panelists pointed out that revenue management begins with a simple demand model that only focuses on inventory (RNA) and demand for the day, but does not consider length of stay.  However, length of stay is a very important variable in a casino revenue management model because the implications of a guest staying at a casino hotel are not one-dimensional.  More complicated revenue management models consider length of stay, constrained and unconstrained demand, and market mortality (guests not captured).  The revenue management model best suited for casinos is one that allows for maximum gross operating profit on a per room available basis.  Achieving this type of modeling is possible, yet it requires investment in IT and databasing, and can only be achieved in incremental steps from more simple revenue management models.

Gaming on the Internet

Existing land-based casino operators see iGaming as an opportunity to create a new experience that immerses patrons into an experience that could not be had before.  Further, it initiates people who are unfamiliar with casino gaming, potentially leading to new customers at bricks and mortar casinos.  According to MGM Resorts International’s James Murren, the “next big thing” in the gaming industry will be the collision of casino gaming and video gaming experiences.

Gaming on the Internet is set to be commoditized, and governments will have to think competitively when setting tax rates.  If operators are taxed too highly in one jurisdiction, they will have the ability to move to one with more favorable rates.  In the end, the cost of taxes will be passed on to the customer.

For more, please see the previous G2E Conference Summary blog post: iGaming Congress. 

Contributed by:

Nicholas Farrae

Analyst, Economics & Gaming

Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

G2E Conference Summary: iGaming Congress

This year’s G2E was as exciting and enlightening as any before it.  As an industry, gaming has been steadily recovering from the dramatic declines of 2008 and 2009, and new growth opportunities are presenting themselves.  Possibly the greatest potential for growth exists in the igaming sector. This blog post is a quick summary of the discussions and conclusions of igaming and legal experts on this emerging market.

How Big is the Market?

The worldwide online gaming market is currently around $32 billion annually, with approximately $13 billion generated in Europe, $9 billion from Asia, and the remainder from North America and the rest of the world.  Legalization in the United States will undoubtedly grow the total pot, but there is no widespread agreement on what those revenues will be.  Some experts have estimated that the U.S. poker market could result in tax revenues of $6-15 billion annually, creating 60,000 jobs in our economy.

Path to Legalization

Online gaming is flourishing worldwide, however poker is the most palatable game for legalization in the United States right now.  Much as last year, industry experts disagree on the route for its legalization – whether it will happen on the federal level, or whether individual states will take action first.  Were online gaming legalized on the federal level, a new regulatory body would likely have to be created.  If it were legalized on a state-by-state basis, existing gaming commissions cold oversee the operators.  This year’s panelists and experts believe that New Jersey will have online casino gaming soon, not just poker, and that Iowa could be the next state to legalize Internet poker.

Who Will Get Licenses?

Much discussion at this year’s G2E centered on who the potential licenses will go to – to those companies based outside of the U.S., or those that are U.S. based.  The general consensus was that U.S. based companies have a greater chance for licenses, but that European-based companies will play a key role in providing software and support for the legal sites.

What Can Licensees Expect?

Gaming operators and legislators are currently in negotiations on the details of any bills, but the gaming companies represented at G2E expect to pay around a 16% tax on net deposits or similar fees in exchange for the ability to advertise their sites.

Contributed by:

Suzanne P. Leckert

Director of Gaming, Feasibility & Land Use Analysis

suzanneleckert@tmg-consulting.net

Next G2E blog post:  Summary of new opportunities for land-based gaming in the U.S. and Asia

Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

Upcoming Conferences

TMG Staff are active in their respective fields, regularly participating in industry conferences and continuing education programs.  Over the next few months, TMG staff will be attending:

  • American Public Transportation Association (APTA) Annual Meeting & EXPO 2011: October 2-5, 2011; New Orleans, LA
  • Global Gaming Expo 2011 (G2E):  October 3-6, Las Vegas, NV
  • Lorman Education Series “Public Contracts and Procurement Regulations”: October 14, 2011,  Kenner, LA
  • American Council of Engineering Companies Fall Conference: October 19-22, Las Vegas, NV
  • New England Gaming Summit: November 14-15, Mashantucket, CT
  • CCAA 35th Annual Conference on the Caribbean and Central America: November 30-December 2, New Orleans, LA

Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.