Companies in this industry operate gambling facilities or offer gaming activities, including casinos, casino resorts and hotels, bingo halls, lotteries, and off-track betting. Major companies include US-based casino operators Caesars Entertainment, Las Vegas Sands, and MGM Resorts, as well as GTECH (Italy), Galaxy Entertainment and SJM Holdings (Hong Kong), Tatts Group (Australia), and William Hill (UK).
Worldwide, gambling generates more than $400 billion in revenue, according to Global Betting & Gaming Consultants (GBGC). Major casino gaming markets include Australia, Canada, France, Macau, and the US. Driven by strong demand in Asia, worldwide gaming revenue could exceed $500 billion by 2015.
The US gambling, or gaming, industry consists of about 500 casinos, about 450 Indian casinos and bingo halls, and lotteries in about 40 states with combined annual revenue of about $85 billion.
Competitive Landscape
Demand for gambling is driven by consumer income growth and state spending. The profitability of individual companies depends on efficient operations and effective marketing. Large operators have the financial resources to make significant investments in facilities and efficient computer operations; they may also enjoy cross-marketing opportunities. Small gambling facilities can thrive by catering to local residents, who may not be able to afford travel to such gambling centers as Las Vegas or Atlantic City. The US industry is concentrated: the top 50 gaming companies hold about 60 percent of the market. The casino hotel market is even more concentrated, with the top 50 US firms holding 90 percent of the market.
Products, Operations & Technology
Gaming operators mainly provide a place or a means to play games of chance, where the odds of winning favor the "house." Popular casino games are slot machines (slots); video poker; and table games such as roulette, baccarat, blackjack, and craps (dice). The house take on slot machines varies, depending upon the denomination of the slot machine, but generally runs between 5 and 10 percent. The take on most table games may be higher, from 15 to 30 percent. State lottery games are mainly numbers games. State lotteries often retain between 30 and 40 percent of all money bet, according to the National Conference of State Legislatures.
The actual operation of a casino involves acquiring and servicing gambling machines, training and supervising dealers and cashiers, entertaining customers, and managing cash. Large game equipment manufacturers are International Game Technology and the Bally Technologies. Gambling operators are free to set the odds of winning at a particular game as long as they prominently post a pay schedule on the machine. Operating licenses for some casinos require the operator to pay the state a fee based on a percentage of gross revenues.
To attract and retain customers, some casino companies operate casino hotels that can accommodate large numbers of guests and that contain a variet.
Python Notes for mca i year students osmania university.docx
Companies in this industry operate gambling facilities or offer ga.docx
1. Companies in this industry operate gambling facilities or offer
gaming activities, including casinos, casino resorts and hotels,
bingo halls, lotteries, and off-track betting. Major companies
include US-based casino operators Caesars Entertainment, Las
Vegas Sands, and MGM Resorts, as well as GTECH (Italy),
Galaxy Entertainment and SJM Holdings (Hong Kong), Tatts
Group (Australia), and William Hill (UK).
Worldwide, gambling generates more than $400 billion in
revenue, according to Global Betting & Gaming Consultants
(GBGC). Major casino gaming markets include Australia,
Canada, France, Macau, and the US. Driven by strong demand
in Asia, worldwide gaming revenue could exceed $500 billion
by 2015.
The US gambling, or gaming, industry consists of about 500
casinos, about 450 Indian casinos and bingo halls, and lotteries
in about 40 states with combined annual revenue of about $85
billion.
Competitive Landscape
Demand for gambling is driven by consumer income growth and
state spending. The profitability of individual companies
depends on efficient operations and effective marketing. Large
operators have the financial resources to make significant
investments in facilities and efficient computer operations; they
may also enjoy cross-marketing opportunities. Small gambling
facilities can thrive by catering to local residents, who may not
be able to afford travel to such gambling centers as Las Vegas
or Atlantic City. The US industry is concentrated: the top 50
gaming companies hold about 60 percent of the market.
The casino hotel market is even more concentrated, with the top
50 US firms holding 90 percent of the market.
Products, Operations & Technology
Gaming operators mainly provide a place or a means to
play games of chance, where the odds of winning favor the
"house." Popular casino games are slot machines (slots); video
2. poker; and table games such as roulette, baccarat, blackjack,
and craps (dice). The house take on slot machines varies,
depending upon the denomination of the slot machine, but
generally runs between 5 and 10 percent. The take on most table
games may be higher, from 15 to 30 percent. State lottery games
are mainly numbers games. State lotteries often retain between
30 and 40 percent of all money bet, according to the National
Conference of State Legislatures.
The actual operation of a casino involves acquiring and
servicing gambling machines, training and supervising dealers
and cashiers, entertaining customers, and managing cash. Large
game equipment manufacturers are International Game
Technology and the Bally Technologies. Gambling operators are
free to set the odds of winning at a particular game as long as
they prominently post a pay schedule on the machine. Operating
licenses for some casinos require the operator to pay the state a
fee based on a percentage of gross revenues.
To attract and retain customers, some casino companies operate
casino hotels that can accommodate large numbers of guests and
that contain a variety of entertainment, restaurants, and retail
stores in addition to the casino. A large hotel casino like the
MGM Grand Las Vegas has about 6,000 hotel rooms, suites, and
other accommodations; 2,000 slot machines; 150 table games;
theaters; restaurants; bars; and a number of retail stores.
Typically, around 70 percent of revenue at a hotel casino comes
from the casino, 10 percent from food and beverages, 10 percent
from hotel rooms, and 5 percent from retail stores, shows, and
other entertainment. While the trend in recent years has been
toward larger casino hotels in Las Vegas, the economic
downturn of the late 2000s generally slowed casino construction
in other markets.
Some casinos are located on land owned by legally designated
American Indian Tribes. Although these Indian casinos are
regulated differently, they are operated like other casinos,
usually under third-party operating contracts with regular
commercial casino operators. Typical operating contracts give
3. the operator up to 40 percent of net annual revenue and extend
for a term of five years or more. Although not directly regulated
by the state in which they operate, Indian casinos must have a
revenue sharing agreement ("compact") with the state.
States operate a variety of state lottery games, most of which
involve guessing a randomly drawn number. "Instant games" let
the gambler buy a ticket with a hidden number that can be
revealed by scratching off the covering. About 40 states operate
lotteries, with combined annual sales of about $20 billion. With
a "take" between 30 and 40 percent, lotteries typically return
less money to players than casinos do. To counter moral
objections, some states "earmark" the proceeds of lottery
operations for specific laudable social spending projects, like
education. Lottery tickets are sold through special computer
terminals that retail outlets rent from the state.
Technology
Slot machine operators collect information using
electronic game monitoring units (GMUs). In addition to games
themselves, the control of gambling operations relies heavily on
computer devices and programs to take bets, print tickets, track
revenue and payouts from individual machines, and perform
various accounting functions.
Internet gambling, especially online poker, enjoyed rising
popularity in the late 1990s and early 2000s despite federal laws
designed to curb illegal online gambling and interstate
wagering. The Federal Wire Act of 1961 has been used to ban
online interstate gambling and wagering on foreign web sites,
while the Unlawful Internet Gambling Enforcement Act of 2006
prevents banks and credit card companies from processing
transactions with those sites. However, a handful of states have
enacted legislation allowing real-cash online gambling within
their borders, with Nevada being the first to offer legal online
poker in 2013. Federal legislation has been introduced in
Congress to streamline regulation of Internet gaming, which
could boost the revenues of casino operations even while
increasing competition with their bricks-and-mortar locations.
4. Americans gamble about $6 billion on foreign gaming websites,
according to Forbes.
Slot floors are becoming totally cashless through the use of
ticket-in/ticket-out (TITO) technology. When cashing out,
players receive a ticket that can either be redeemed for cash or
be inserted into another slot machine for credits on the cash
meter of the new machine. Server-based games allow casino
operators to make changes to any slot machine on the floor
through a central, secure computer server. Casinos are also
embedding RFID devices in their chips to improve security and
track players.
Sales & Marketing
Promotional efforts for casinos and other betting attractions
target regional customers, who typically live within a three-hour
car ride of a betting attraction, and consist of radio ads and
highway billboards. Television and print ads target vacationers
who select "destination" resorts that provide a variety of
entertainment and activities, such as Las Vegas. Many casinos
play up their non-gaming entertainment, such as shows,
shopping, celebrity chefs, and luxurious accommodations.
States typically advertise lotteries through local billboards and
radio spots.
Because most gamblers lose money, gambling operators try to
make the losing fun, presenting gambling as entertainment that
is worth the price. Casinos use player’s club programs to award
gamblers points toward rewards, while allowing the casino to
monitor the playing habits of individual gamblers, which helps
them design individualized marketing incentives. Other
incentives include “comps,” in which high rollers (bettors who
spend a lot of money in a casino) are given free drinks, food,
accommodations, or other perks to ensure their loyalty.
Finance & Regulation
Casinos have to manage a large cash flow because players buy
chips with cash and winnings are paid in cash. Receivables may
be high because players may not pay their debts in a timely
manner, or may not be able to pay their debts at all. Many
5. casinos offer markers, or personal warranties that customers are
good for their debts. Although most customers must settle up
before they leave the casino, some companies may make
allowances for certain players. Capital investments in buildings
and equipment are high, both because gambling equipment is
expensive and because casinos and casino hotels must
frequently be refurbished to attract gamblers.
About $35 billion of annual revenue is taken in by commercial
casinos, $25 billion by Indian casinos, and another $20 billion
by state lotteries. (For gambling companies, "revenue" is the
total amount bet minus winnings paid to gamblers.) Most
casinos are small, limited by the size of the surrounding
population.
US gambling operations are state-regulated. Until gambling was
legalized in Atlantic City in 1976, casinos operated only in
Nevada. In many states, casinos must be located on riverboats, a
requirement that effectively restricts the size of operations.
Regulation is largely aimed at preventing organized crime from
association with the industry, which is attractive because of the
large cash flow. State regulators must approve all games played,
but gambling operators are free to set the odds of winning a
particular game.
Indian casinos are regulated by the National Indian Gaming
Commission (NIGC) under the Indian Gaming Regulatory Act
(IGRA), which sets rules defining eligible Indian tribes, their
relationship with states, and requirements for oversight of
gambling operations.
International Insights
Gambling in all forms generates more than $400 billion in
revenue worldwide, according to Global Betting & Gaming
Consultants (GBGC). As casino gaming and other forms of
gambling continue to expand in new markets, specifically in
Asia, the industry could exceed $500 billion in sales by 2015.
Casinos and lotteries each account for about 30 percent of the
worldwide gambling industry. Other popular forms of gaming
and wagering include gaming machines outside casinos (20
6. percent), and horse racing and other wagering (10 percent).
The world's largest casino gambling markets include Australia,
Canada, France, Macau, and the US. Major companies outside
North America include GTECH (Italy), Tatts Group (Australia);
Galaxy Entertainment and SJM Holdings (Hong Kong); and
William Hill (UK). Some large US casino companies also have
international locations or investments in overseas gambling
operations.
Australia has a thriving gaming industry that includes casinos,
lotteries, sports betting, and various forms of racing. Melbourne
and Sydney are home to some of the country's top casino
destinations. The lottery business includes both government-run
games and those contracted to private operators. Macau, a
special administrative region (SAR) of China, has become
the world's largest gambling market thanks to heavy investment
from both domestic and international casino developers.
Emerging markets in the Asia/Pacific region, including
Singapore, Vietnam, the Philippines, South Korea, Thailand,
and Taiwan, offer potential for future growth in traditional
casino gambling. Japan is considering legislation that would
permit casino gambling ahead of the country's hosting the
summer Olympic Games in 2020. Major growth is also taking
place within the online gaming sector. Interactive gambling is
expected to exceed $40 billion in revenue by 2015, according to
H2 Gambling Capital.
Expansion of Asian casino gambling markets could put
additional competitive pressure on the rest of the global
industry. Developers in markets such as Macau and Singapore
are opening Las Vegas-style casinos to attract both local and
international gamblers. Casinos in North America and Europe
may face increased competition as they try to attract tourists
from Far Eastern markets. The new Asian casinos may
eventually attract tourists away from the US and EU countries.
Growth in interactive gaming could mean additional revenue for
traditional casino operators that offer online games under
established brands. Interactive gambling expansion could also
7. mean new growth opportunities for markets such
as Malta and Gibraltar that encourage online technology
companies. The expanding online gaming industry may face
regulatory challenges in some markets. Internet gambling on
websites served by companies located in other countries is
currently a contentious issue in the US.
Regional Highlights
In the US, the largest casino markets include Nevada ($11
billion total spending); Pennsylvania and New Jersey ($3
billion); and Indiana, Louisiana, and Mississippi ($2 billion)
according to the most recent state data compiled by the
American Gaming Association. Tribal casinos in California and
northern Nevada lead the nation in revenues, with $7 billion.
Some states don't allow casino gambling and many states
restrict casino advertising. States that generate the most revenue
from lotteries include New York, Florida, and California.
Human Resources
Most employees in the gambling industry work at casino hotels
as regular hotel employees, who provide housekeeping and
janitorial services, work as servers, or provide security. Casino
employees who work the gaming activities need licensing by
regulatory authorities and require special training. The average
hourly industry wage is moderately lower than the national
average, although casino dealers get high pay.
Due to lower wages and a reliance on part-time
employees, turnover in the leisure sector can be significantly
higher than average. The injury rate for gambling industries is
about 25 percent higher than the national average.
Industry Employment Growth
Bureau of Labor Statistics
Average Hourly Earnings & Annual Wage Increase
Bureau of Labor Statistics
Quarterly Industry Update2.16.2015
Opportunity: Support Grows for Legalized Sports Betting - The
8. debate over whether to expand legal sports wagering in the US
is gaining momentum following a record year for sports
gambling revenue. While total earnings at Nevada casinos
declined in 2014, the industry saw gains in revenue from sports
betting, which reached $227 million, a bump of about 12
percent from 2013, according toThe Las Vegas Review-Journal.
Illegal gambling is also on the rise: The American Gaming
Association (AGA) estimates that about $3.8 billion in illicit
bets were placed on the 2015 Super Bowl, compared to about
$115 million collected legally by Nevada sports books. The
gaming industry is asking Congress to crack down on unlawful
gambling, which causes casinos to lose business. To recapture
some of that lost revenue, some stakeholders are advocating for
legalized sports wagering at the federal level, which proponents
claim would generate new revenue for states, create jobs, and
protect customers. Executives of two of the largest independent
sports book companies in the US claim that expanding legal
sports gambling would benefit the industry as a whole, and not
just within Nevada. The AGA has not yet taken an official
position on legalization and is gathering input from its
members.
Industry Impact - Legalized sports wagering would generate a
significant boost in revenue for sports book companies, which
would welcome new business from customers who previously
placed bets illegally. Some Nevada casinos are still evaluating
the potential consequences of federal legalization, which would
disrupt their effective monopoly on US sports
betting.11.17.2014
Challenge: China’s Casino Revenue Declines Sharply - Casino
revenue in Macau, the gambling hub of China, fell by almost 25
percent in October 2014 compared to the same month last year,
marking the largest decline in the territory’s history. Macau’s
gaming establishments had been riding a five-year hot streak
until recently, reaching a peak revenue of $4.8 billion in
February, according toThe Wall Street Journal. But the
industry’s fortunes reversed this summer after the Chinese
9. government launched a widespread anti-corruption crackdown
that led to fewer visits from wealthy Chinese VIPs. Other
factors such as tighter visa restrictions and a slowdown in new
resort openings may have also contributed to the downturn,
which many analysts expect to worsen through early 2015.
Casino resort companies have also taken a hit in the stock
market, as the share prices of major companies including MGM
China, Galaxy Entertainment, and Wynn Macau have each
dropped more than 20 percent since the start of the year.
Industry Impact - Companies that operate casinos in Macau
should be prepared for slower business in the months ahead, but
some analysts predict the industry will bounce back with
consumer spending on the rise and several new casinos
scheduled to open in 2015.8.25.2014
Challenge: New Jersey Online Gaming Disappoints - Hopes that
online gaming would revitalize New Jersey's gambling industry
so far have not been realized. Legalized by the state late in
2013, online gaming was expected to generate $300 million in
revenue in its first year and provide a much-needed boost to
struggling Atlantic City casinos. But as of mid-2014, online
gaming in New Jersey had generated only $63 million; full-year
estimates for 2014 revenue have been reduced to about $120
million, according to mgamingwatch.com. Meanwhile, casinos
in the state continue to founder. In August 2014, the Revel
Casino Hotel announced plans to close the next month amid
poor revenue and a tough competitive environment, according
to The Wall Street Journal. The Atlantic Club closed in January,
and the Trump Plaza and Showboat casinos plan to shut down
later in 2014.
Industry Impact - The struggles in New Jersey may result in
more cautious gaming investment in states where gambling
options are plentiful. More than half of all residents in the
Northeast live within 25 miles of a casino, compared to 10
percent a decade ago, according to The New York
Times.5.26.2014
Challenge: US Could Be Oversaturated with Casinos- Some of
10. the 39 US states that allow casino gambling have seen revenues
fall recently. The reason? Industry watchers blame the decline
on lingering effects from the late 2000s economic crisis and a
growing nationwide glut of casinos, according to
BloombergBusinessweek. Since 2007, gambling revenues on the
Las Vegas Strip have fallen 4 percent; New Jersey revenues fell
more than 40 percent. Gambling revenue is down more than 25
percent in Mississippi. In many cases, too many casinos are
competing for too few gamblers. As a result, some casinos have
simply closed their doors. Revenues dropped in February 2014
for the sixth consecutive month in the four largest Midwest
gambling states - Indiana, Missouri, Illinois, and Michigan. So
far in 2014, gambling sales in Las Vegas are down 12 percent.
Additionally, experts note that gambling participation tends to
skew blue-collar and middle-income, groups that are still
struggling financially.
Industry Impact - Gaming companies may want to hold off on
expansion plans until economic conditions improve, given
falling US casino revenues and ongoing financial struggles
among some key gambling demographics.Critical IssuesDemand
Linked to Economic Cycles - Gambling revenue is affected by
the health of the economy, including the growth of personal
income. During the recession of the late 2000s, casinos were
hurt by the decrease in consumer spending and the tightening of
credit markets. The latter affected the ability of companies to
make capital improvements or expand operations. Las Vegas
was particularly affected; the number of layoffs and home and
business foreclosures in Nevada was among the highest in the
US.
Dependence on Regulators - In states where gambling is legal,
state commissions oversee gaming companies and have broad
powers over their activities. State legislatures can easily raise
tax rates on gambling machines. Continued industry growth
depends on favorable legislation.
Business Challenges
Capital-Intensive- Companies have large capital investments in
11. facilities and gaming equipment and usually a large amount of
debt. Gambling companies routinely spend more than 10 percent
of annual revenue on capital investments. To grow, companies
typically need to raise substantial funds. Many companies have
a high debt-to-equity ratio and are exposed to interest rate risk.
Competition from Internet Gambling- Although illegal except
for horse racing in most states, Internet gambling involving
offshore companies has grown rapidly in recent years. In 2011
the US Department of Justice issued a ruling that the Federal
Wire Act of 1961 bans sports betting and but not other forms of
online gaming. That decision paved the way for legal online
gambling in the US. In 2012, Delaware passed legislation that
legalized online gambling; Nevada and New Jersey passed
similar laws early in 2013.
Bad Publicity from Compulsive Gambling- Gambling operators
make most of their profits from regular gamblers, and much of
their marketing is geared toward encouraging people to gamble
more. To counter perceptions that they prey on compulsive
gamblers, operators (including state lotteries) have more
proactively addressed problem gambling, portraying compulsive
gambling as a medical issue and funding treatment programs. In
addition, many Americans object on moral grounds to the spread
of gambling, perceiving it as a morally debilitating activity that
also fosters theft, fraud, and other crime, and as linked to
prostitution and drug use.
Business Trends
Capital-Intensive- Companies have large capital investments in
facilities and gaming equipment and usually a large amount of
debt. Gambling companies routinely spend more than 10 percent
of annual revenue on capital investments. To grow, companies
typically need to raise substantial funds. Many companies have
a high debt-to-equity ratio and are exposed to interest rate risk.
Competition from Internet Gambling- Although illegal except
for horse racing in most states, Internet gambling involving
offshore companies has grown rapidly in recent years. In 2011
12. the US Department of Justice issued a ruling that the Federal
Wire Act of 1961 bans sports betting and but not other forms of
online gaming. That decision paved the way for legal online
gambling in the US. In 2012, Delaware passed legislation that
legalized online gambling; Nevada and New Jersey passed
similar laws early in 2013.
Bad Publicity from Compulsive Gambling- Gambling operators
make most of their profits from regular gamblers, and much of
their marketing is geared toward encouraging people to gamble
more. To counter perceptions that they prey on compulsive
gamblers, operators (including state lotteries) have more
proactively addressed problem gambling, portraying compulsive
gambling as a medical issue and funding treatment programs. In
addition, many Americans object on moral grounds to the spread
of gambling, perceiving it as a morally debilitating activity that
also fosters theft, fraud, and other crime, and as linked to
prostitution and drug use.
Industry Opportunities
New Games- Because slots, video poker, and other machine
games are essentially computerized video games, developing
new games and formats is easy. Gaming manufacturers, such as
Bally Technologies, tend to introduce several new models each
year and often hire video game designers from the consumer
video game industry. Although many new models are cosmetic
variations on existing games, new games of chance are also
being introduced.
Wide-Area Progressive Gambling Systems- Gambling machines
can be electronically linked so that every bet on each machine
contributes to a "progressive" jackpot until one player wins.
Pooling the wagers from many machines allows bigger jackpots,
which attracts players. Progressive systems are more profitable
to the house than stand-alone machines.
Frequent Gambler Rewards Programs - Consolidation in the
industry has been driven partly by operators' desire to market
13. multiple gambling locations to a core of dedicated gamblers.
Various types of reward programs allow loyal gamblers to
accumulate credits for visiting other company casinos.
Gamblers in other states, for example, are encouraged to visit
flagship company casinos in Las Vegas.
Managing Indian Casinos- The proliferation of casino and other
gambling operations, mainly on Indian reservations, has created
opportunities for existing companies to sell their operating
skills on a fee or percent-of-revenue basis to the new casino
owners, who typically have no experience in casino
management. Management operating fees of 25 to 35 percent of
revenue are typical.
Emerging Markets - Rapid gambling revenue growth is Macau
in recent years has prompted other countries in the Asia/Pacific
region to consider the liberalization or expansion of gaming
laws. Japan is exploring legislation that could establish casinos
ahead of the 2020 Summer Olympics. Other countries in the
region that are expected to be sources of future growth include
the Philippines, South Korea, Thailand, Taiwan, and Vietnam.
Executive InsightChief Executive Officer - CEO
Expanding Operations
While gaming revenue drives casino operations, visitors are
increasingly attracted by larger properties with lavish
entertainment, large hotels, and gourmet restaurants. As state
laws have changed to allow gambling, casino operators have
expanded into non-traditional gambling locales and grown
bigger in existing properties, such as in Las Vegas and Atlantic
City. Harrah’s and MGM have both increased their geographic
reach and concentration in Las Vegas by opening new
properties.
Supporting Industry Legislative Efforts
The gambling industry is heavily regulated and future growth
depends on favorable state legislation. Companies join industry
associations to lobby state legislatures regarding tax rates on
gambling machines, the size of operations, and requirements for
14. gaming facilities to be offshore – riverboat gambling – and
other issues. Las Vegas operators, fearing loss of the small-bet
but high-frequency gamblers, are facing competition from
landless tribes, as Indian casinos become a larger presence in
California.Chief Financial Officer - CFO
Raising Capital for Refurbishment
Casinos need large amounts of capital to update and refurbish
properties, add new facilities, and modernize existing ones.
Companies rely heavily on the ability of resorts to generate
enough cash to fund maintenance and future development.
Companies incur large amounts of debt to fund major expansion
or acquisitions.
Controlling Cash Flow
Gambling operations result in large inflows of cash, requiring
special controls. Casinos have long used locked cash boxes on
casino floors and independent workers to count currency intake.
Companies use computers to monitor slot machine use and
payouts, and enhance cash controls. Information systems are
installed to analyze individual gaming machines and deviations
from expected performance.Chief Information Officer - CIO
Developing New Games
The public becomes bored with gaming machines and expects
new models of slot and poker machines periodically. Companies
use computer technology to develop video poker and wide-area
games that connect several machines, allowing progressive
payouts that are larger and more popular with the gaming
public. Computer gaming machines allow gambling in places
other than casinos. Many companies are installing cashless slot
machines due to their increased reliability, decreased servicing
requirements, and reductions in counting operations.
Improving Casino Infrastructure
The infrastructure to operate major casinos is large and
complex. Casino operations rely heavily on computerized
programs to take bets, print tickets, track revenue and payouts
from machines, and maintain historical data on machine
performance. Companies have installed yield management
15. systems to maximize occupancy and room rates at casino hotels.
Some casinos have automated surveillance and security systems
and integrated them with machine-monitoring systems.Human
Resources - HR
Training Casino Employees
Employees working in gaming activities must be approved by
regulatory authorities and require special training. Companies
conduct intense gaming training that sometimes includes
substantial on-the-job training under close supervision before
new employees are allowed on casino floors. Casino operators
provide continual training and refresher courses for gaming
employees in both gaming operations and public relations, as
customer service is a mainstay in this hospitality and service
industry.
Hiring and Retaining Management Employees
Recruiting and retaining management is critical to providing
superior customer service in the gaming industry. Competition
for qualified management personnel is intense, and companies’
ability to attract and retain such staff is important. Companies’
promotional opportunities include allowing junior management
personnel to function in significant positions at Indian casinos
operated by the company under contract. Service in these
contract positions can make the employee eligible for a bonus
and sometimes a percentage of revenue. Such opportunities
offer a good training for junior management.VP
Sales/Marketing - Sales
Making Gambling Fun
Increasing competition offers the public a greater variety and
location of facilities to gamble. Casinos increasingly promote
themselves as destination resorts offering fine dining and
entertainment in addition to gambling. Resorts promote a
complete resort and entertainment experience, marketing
partnerships with championship golf courses, staging sporting
spectacles and offering major shows and acts.
Attracting Corporate Customers
Despite a downturn in business travel, and an unwillingness of
16. corporations to hold business meetings in resort locations, many
casinos are marketing to the convention and business travel
segment. Business travel improves hotel occupancy, increases
restaurant use, and increases gambling and entertainment
revenues. Websites often tout casino hotels’ meeting and
convention space.
Executive Conversation StartersChief Executive Officer - CEO
What expansion plans does the company have?
Visitors are increasingly attracted by larger properties with
lavish entertainment.
Does the company expect expansion of gambling in more states?
The gambling industry is heavily regulated and future growth
depends on favorable state legislation.Chief Financial Officer -
CFO
Can the company fund capital improvements with internal
funds?
Casinos need large amounts of capital to update and refurbish
properties
What new controls on cash is the company considering?
Gambling operations result in large inflows of cash, requiring
special controls.Chief Information Officer - CIO
What new types of gaming machines is the company planning?
Companies use computer technology to develop video poker and
wide-area games.
What computer system upgrades is the company planning?
Some casinos have automated surveillance and security
systems.Human Resources - HR
What training programs does the company have for new
employees?
Employees may train in simulated casino situations.
How does the company retain key operating managers?
Competition for qualified management personnel is intense.VP
Sales/Marketing - Sales
What new promotional programs does the company plan?
Casinos increasingly promote themselves as destination resorts.
17. What corporate-oriented programs does the company offer?
Casinos market themselves to smaller businesses as rewards
programs.
Financial Information
COMPANY BENCHMARK TRENDS
Quick Ratio by Company Size
The quick ratio, also known as the acid test ratio, measures a
company's ability to meet short-term obligations with liquid
assets. The higher the ratio, the better; a number below 1
signals financial distress. Use the quick ratio to determine if
companies in an industry are typically able to pay off their
current liabilities.
Financial industry data provided by MicroBilt Corporation
collected from 32 different data sources and represents financial
performance of over 4.5 million privately held businesses and
detailed industry financial benchmarks of companies in over
900 industries (SIC and NAICS). More data available by
subscription or single report purchase
at www.microbilt.com/firstresearch.
Working Capital Turnover by Company Size
The working capital turnover ratio, also known as working
capital to sales, is a measure of how efficiently a company uses
its capital to generate sales. Companies should be compared to
others in their industry.
Financial industry data provided by MicroBilt Corporation
collected from 32 different data sources and represents financial
18. performance of over 4.5 million privately held businesses and
detailed industry financial benchmarks of companies in over
900 industries (SIC and NAICS). More data available by
subscription or single report purchase
at www.microbilt.com/firstresearch.
Current Liabilities to Net Worth by Company Size
The ratio of current liabilities to net worth, also called current
liabilities to equity, indicates the amount due creditors within a
year as a percentage of stockholders' equity in a company. A
high ratio (above 80 percent) can indicate trouble.
Financial industry data provided by MicroBilt Corporation
collected from 32 different data sources and represents financial
performance of over 4.5 million privately held businesses and
detailed industry financial benchmarks of companies in over
900 industries (SIC and NAICS). More data available by
subscription or single report purchase
at www.microbilt.com/firstresearch.
COMPANY BENCHMARK INFORMATION
NAICS: 7132, 72112
Data Period: 2013
Last Update April 2015
Table Data Format
Mean
Company Size
All
Large
Medium
Small
Size by Revenue
Over $50M
19. $5M - $50M
Under $5M
Company Count
1818
9
27
1782
Income Statement
Net Sales
100%
100%
100%
100%
Gross Margin
88.4%
89.3%
87.5%
84.4%
Officer Compensation
3.6%
3.3%
3.5%
4.8%
Advertising & Sales
2.8%
2.7%
2.7%
3.3%
Other Operating Expenses
73.6%
74.4%
73.4%
69.9%
Operating Expenses
79.9%
22. (Click on any ratio for comprehensive definitions)
Quick Ratio
1.01
1.09
0.81
0.80
Current Ratio
1.43
1.53
1.20
1.15
Current Liabilities to Net Worth
23.5%
21.0%
31.1%
34.5%
Current Liabilities to Inventory
x7.58
x7.02
x9.48
x9.09
Total Debt to Net Worth
x0.82
x0.72
x1.06
x1.36
Fixed Assets to Net Worth
x1.12
x1.05
x1.23
x1.58
Days Accounts Receivable
12
12
13
7
23. Inventory Turnover
x8.01
x7.03
x8.88
x13.05
Total Assets to Sales
85.7%
87.7%
89.3%
73.9%
Working Capital to Sales
4.7%
5.7%
2.7%
1.6%
Accounts Payable to Sales
1.4%
1.4%
1.6%
1.2%
Pre-Tax Return on Sales
4.2%
4.7%
3.5%
2.3%
Pre-Tax Return on Assets
4.9%
5.4%
3.9%
3.1%
Pre-Tax Return on Net Worth
8.9%
9.3%
8.1%
7.3%
Interest Coverage
24. x2.23
x2.30
x2.03
x1.99
EBITDA to Sales
13.3%
14.3%
12.1%
9.5%
Capital Expenditures to Sales
5.4%
5.9%
4.9%
3.7%
Financial industry data provided by MicroBilt Corporation
collected from 32 different data sources and represents financial
performance of over 4.5 million privately held businesses and
detailed industry financial benchmarks of companies in over
900 industries (SIC and NAICS). More data available by
subscription or single report purchase
at www.microbilt.com/firstresearch.
EVALUATION MULTIPLES
Gambling
Acquisition multiples below are calculated using at least 7 US
private, middle-market (valued at less than $1 billion) industry
asset transactions completed between 5/2012 and 3/2013. Data
updated annually. Last updated: November 2014.
Valuation Multiple
MVIC/Net Sales
MVIC/Gross Profit
MVIC/EBIT
MVIC/EBITDA
Median Value
0.2
25. 0.6
1.3
1.3
MVIC (Market Value of Invested Capital) = Also known as the
selling price, the MVIC is the total consideration paid to the
seller and includes any cash, notes and/or securities that were
used as a form of payment plus any interest-bearing liabilities
assumed by the buyer.
Net Sales = Annual Gross Sales, net of returns and discounts
allowed, if any.
Gross Profit = Net Sales - Cost of Goods Sold
EBIT = Operating Profit
EBITDA = Operating Profit + Noncash Charges