Online Gambling Threatens Brick-and-Mortar Casinos

The American consumer is changing the way they shop, spend, invest, and purchase recreation. Some buy boats, but many just rent a boat for when they need it. Short-term car rentals are replacing car sales. The malls are a dying way to shop with greater selection and better service available online. Virtual stores are replacing big box stores.

Will the same thing happen to the gambling industry? Notice I didn’t say casino industry; I believe it is just a matter of time that online gaming will replace the giant casinos. I read recently that Las Vegas has over 162,000 hotel rooms. One has to wonder if the recent shootings in Las Vegas will have an impact on the number of people who will visit the brick and mortar in a casino of Las Vegas or other cities? Will event planners move away from outside venues?

The casino operators will fight to the end to protect their business from being taken over by online gaming. The reality is that the consumer is rapidly changing and if you want to see the future of the brick and mortar of the gaming industry just look at Atlantic City New Jersey. Five casinos have closed, and people have lost their jobs, and the city has lost significant revenue.

Bloomberg ran a story on the gaming industry and looked at The Harrah’s casino in Tunica, Mississippi. To attract gamblers the casino features a spa, three pools, a golf course, and a shooting range. With all the amenities that Harrah’s thought would surely attract gamblers, they didn’t. The northern Mississippi casino industry saw gaming revenue shrink to $738 million last year from $1.2 billion in 2006. So with the decline in revenue Caesars Entertainment closed the resort, putting as many as 1,300 employees out of work. “There’s just too much supply in that market,” said president of Caesars’s central markets division John Payne. “The Harrah’s has not been profitable for a while.”

There is no question that there is an excess of supply of casino buildings in America, so the question is do we have too many buildings and not enough gamblers or are the gamblers doing something different? Let me see if I can scare the brick and mortar owners. At the end of March, Star Group Inc. announced its Q4 and 2016 results, highlighting that it had more than 108.1 million customer registrations at the close of the quarter and received revenues that were 6 percent higher than what was generated during the same quarter one year prior. While poker-related revenues decreased from the previous quarter, casino and sports book revenue accounted for 25.8 percent of Star Group Inc. quarter.

108.1 million registrations and they didn’t build a single 4,500-room hotel to hold their casino. The brick and mortar guys are trying to roll back the clock and trying to go back to the days when everybody who wanted to gamble had to go to a casino. The protection of their franchise started the Restoration of America’s Wire Act (RAWA). This provision is an extension of the Federal Wire Act of 1961.

How about one more history lesson for us? Lobbyists originally drafted this attack on the Federal Wire Act for billionaire casino mogul and Republican donor Sheldon Adelson, who wanted to shield his Sands Casino Empire from the free market competition on the Internet.

The first version of Restoration of America’s Wire Act was formally introduced by U.S. Senator Lindsey Graham (R-South Carolina) and Congressman Jason Chaffetz (R-Utah) in March of 2014. Sen. Tom Cotton got involved last year too, bringing his gambling ban to the floor just days after Adelson donated $20 million to the Senate Leadership Fund that was supporting him.

I hope that this legislation will not make it to the floor for a vote. If it looks like it will come up for a vote I encourage you to call your Congressmen and Senator and tell them to vote against the bill. The world is full of examples of the old guard trying to push back the progress of man. If people want the right to buy what they want, where they want, when they want then the same should be true of gambling. I wonder what the highest and best use for a closed casino hotel could be?

Dan Perkins is an author of both thrillers and children’s books. He appears on over 1,100 radio stations. Mr. Perkins appears regularly on international TV talk shows, he is current events commentator for seven blogs, and a philanthropist with his foundation for American veterans, Songs and Stories for Soldiers, Inc. More information about him, his writings, and other works are available on his website, DanPerkins.guru. To read more of his reports — Click Here Now.