Casino Suppliers Deal With the End of Land Gambling Expansion
What has been apparent to many observers is being stated publicly this week by many of the executives attending the Global Gaming Expo in Las Vegas. New construction and developments in the casino industry, a constant staple for the last decade and more, are grinding to a halt.
Not only does this mean an end to expansion, it also alters the business model for companies supplying casinos. Companies such as International Game Technology, the world's largest manufacturer of slot machines, will no longer find giant new casinos calling to purchase thousands of devices.
IGT has responded by attempting to shrink its workforce while avoiding layoffs. The company is offering both early retirement and severance packages, hoping to cut as many as five hundred employees, roughly eight percent of the total number of workers.
Development of new and innovative machines becomes the goal of slot makers, rather than producing more of existing models. With casino budgets being squeezed tighter, the challenge to find better and more efficient ways to entertain gambling patrons is intense.
All businesses that run on selling equipment and products to casinos will have to re-think their strategies, both streamlining their own companies and adapting to a different market. The future seems likely to maintain the status quo, rather than returning to explosive expansion.
MGM Mirage chief financial officer Dan D'Arrigo said, "I don't see any new development coming to this market for the next five to seven years." Harrah's Entertainment CEO Gary Loveman stated, 'The arms race that has characterized the business over the last several years might have to de-escalate."
