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Casino and Casino-style Gambling - US - November 2008

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Overall industry revenues expected to increase each year through 2012
Sales in large markets decline as smaller markets and tribes take share
Commercial segment dominates industry but growth is decelerating
Tribal segment growing rapidly
Racetrack casino segment relatively small but poised for continued strong growth
Growth of card room segment declines along with popularity of poker
Sales down in Atlantic City, flat in Vegas but growing quickly in Gulf Coast
Rise in proportion of 55+, more affluent consumers and cheap flights drive growth in commercial segment
Harrah’s and MGM continue to dominate industry
Casinos have high appeal to affluents
Higher-income, young adults report going more often last year than before
Casino gaming varies by gender, dining and shows most popular non-gaming activities
Casino-goers see gambling in positive light; although a third agree gambling is addictive
Financial concerns and location discourage many from visiting
Asians more likely to visit casinos
Cluster analysis identifies highest-value segment of casino-goers
INSIGHTS AND OPPORTUNITIES
Provide visitors with their favorite activities while appealing to locals
Figure 1: Hobbies engaged in by casino visitors vs. non-visitors, February 2007-March 2008
Provide spontaneous adventure
Figure 2: Attitudinal differences between casino visitors and non-visitors, February 2007-March 2008
Consider getting in the wellness business
FAST FORWARD TRENDS
Trend 1: FSTR and HYPR
A generation bred on (and for?) speed and intensity
Working with the web
Instant customization
Trend 2: Extreme Living
Our desire for exploration and intensification of experience
Taking extreme to new heights
MARKET SIZE AND FORECAST
Key points
The industry grew in 2007 but growth is decelerating
Figure 3: U.S. casino sales, at current prices, 2002-12
Figure 4: U.S. casino sales, at inflation-adjusted prices, 2002-12
COMPETITIVE CONTEXT
Key points
Atlantic City and Las Vegas struggle with economic downturn—as well as competitors from other markets
Atlantic City
Las Vegas
Convenience drives growth of tribal and racetrack segment
SEGMENT PERFORMANCE
Key points
New locations—and convenience—fueling growth of the tribal segment
Figure 5: Number of U.S. locations, by industry segment, 2006 and 2007
Tribal casinos on track to surpass commercial operations
Figure 6: U.S. casino revenue, segmented by facility type, 2006 and 2008
SEGMENT PERFORMANCE—COMMERCIAL CASINOS
Key points
Commercial casinos dominate the industry but growth is decelerating
Figure 7: U.S. commercial casino sales, at current prices, 2002-12
Figure 8: U.S. commercial casino sales, at inflation-adjusted prices, 2002-12
SEGMENT PERFORMANCE—TRIBAL CASINOS
Key points
Tribal casinos driving industry growth
Figure 9: U.S. tribal casino sales, at current prices, 2002-12
Figure 10: U.S. tribal casino sales, at inflation-adjusted prices, 2002-12
SEGMENT PERFORMANCE—RACETRACK CASINOS (RACINOS)
Key points
Sales at racetrack casinos growing rapidly
Figure 11: U.S. racetrack casino sales, at current prices, 2002-12
Figure 12: U.S. racetrack casino sales, at inflation-adjusted prices, 2002-12
SEGMENT PERFORMANCE—CARD ROOMS
Key points
Card room sales slow as interest in poker declines
Figure 13: U.S. card room sales, at current prices, 2002-12
Figure 14: U.S. card room sales, at inflation-adjusted prices, 2002-12
ONLINE GAMBLING
Internet gambling likely to remain (mostly) illegal for the near term
About one in five internet users have visited an online gambling site
Figure 15: Incidence of online casino gambling, and games played, August-September 2008
GEOGRAPHIC DISTRIBUTION
Key points
Geographic locations
Figure 16: States that participate in casino gambling, December 2007
Mississippi and Iowa show strong growth
Figure 17: Consumer spending on commercial casino gaming, by state, 2006 and 2007
2007 was the first year gross revenues exceeded $1 billion in seven markets
Figure 18: Top 20 U.S. casino markets, 2006 and 2007
Las Vegas
Atlantic City
Chicagoland
Gulf Coast and Mississippi River
MARKET DRIVERS
Key points
Increase in over-55 segment likely to drive future sales
Figure 19: Population aged 21 or older, 2003-13
Rise in proportion of households with incomes more than $100K fuels growth
Figure 20: Median household income, 2005 and 2007
Flights to Vegas on the decline but prices remain low
Figure 21: U.S. national airfare averages, Q2 2006-Q1 2008
Figure 22: U.S. lowest average airfares in U.S., by destination, Q1 2008
Slightly higher consumer confidence level among gamblers could help shield industry from effects of economic downturn
Figure 23: U.S. average level of consumer confidence, gambler vs. non-gambler, February 2007-March 2008
Figure 24: Consumer Sentiment Index, March 2007-March 2008
LEADING COMPANIES
Key points
Caesar’s Entertainment and MGM Mirage continue to dominate the commercial segment
Figure 25: Net revenues among top commercial casino operators in the U.S., 2005 and 2007
Harrah’s Entertainment Inc. and Caesar’s Entertainment Corp.
MGM Mirage
Boyd Gaming Corp.
Penn National Gaming, Inc.
BRAND QUALITIES
Luxury and non-gaming activities are critical as casinos seek to broaden their appeal and attract new customers
Harrah’s pitches experience packages, many of which do not involve gaming
Luxurious pampering
INNOVATION AND INNOVATORS
Bringing in the tourists with promos: The case of Allegiant Airlines
Automated games
RFID technology
ADVERTISING AND PROMOTION
Key points
Overall ad expenditures rose among top brands in 2007
Figure 26: Media expenditures of leading casino hotel brands, 2006 and 2007
Loyalty cards and comps key to in-house marketing efforts
Themes in television advertisements
The gambling pitch
Figure 27: Mustachioed man talk poker ad, 2008
Figure 28: People win casino games: you'll always have the time of your life ad, 2008
Value for money
Figure 29: Hottest Slots and Vegas-style jackpots ad, 2008
Figure 30: Turn your points into free slot play ad, 2008
Luxury accommodations and famous acts
Figure 31: All that’s missing is you/Pure nightclub, 2008
CASINOS IN GAMBLING CONTEXT
Key points
Young adults over-index on video card machines while lottery has high appeal to Baby Boomers
Figure 32: Annual frequency of casino visiting, lottery and video machine playing, by age, August-September 2008
Casino visitors more likely to play the lottery
Figure 33: Likelihood of buying state lottery tickets, by casino visitors and non-visitors, February 2007-March 2008
CASINO VISITS
Key points
The affluent are more likely to visit; gamblers from lower-income households visit more often
Figure 34: Incidence and frequency of casino visits, by type/location, by household income, February 2007-March 2008
Tribal casinos have appeal to the over-55 segment
Figure 35: Incidence and frequency of casino visits, by type/location, by age, February 2007-March 2008
CASINO VISITS THIS YEAR, COMPARED TO LAST
Key points
Target the affluent for loyalty programs
Figure 36: Frequency of casino visits compared to a year ago, by HH income, August-September 2008
Young visit casinos more than they did in the past
Figure 37: Frequency of casino visits compared to a year ago, by age, August-September 2008
Males more likely to have visited more often this year
Figure 38: Frequency of casino visits compared to a year ago, by gender, August-September 2008
ACTIVITIES AT THE CASINO
Key points
Slots machines, blackjack and video poker are hot games
Figure 39: Games usually played at the casino, by gender, August-September 2008
25-34s are a key demographic: target them with online classes
Figure 40: Games usually played at the casino, by age, August-September 2008
Affluents tend to engage in more activities
Figure 41: Other activities participate in at the casino, by household income, August-September 2008
Young adults have a greater interest in nightclubs, sightseeing and shopping
Figure 42: Other activities participate in at the casino, by age, August-September 2008
ATTITUDES TOWARDS GAMBLING AMONG CASINO VISITORS
Key points
Perceptions of gambling similar across income groups
Figure 43: Attitudes towards gambling among casino visitors, by HH income, August-September 2008
Men, younger respondents relate gambling with lifestyle
Figure 44: Attitudes towards gambling among casino visitors, by age, August-September 2008
ATTITUDES TOWARDS GAMBLING AMONG NON-CASINO VISITORS
Key points
Concerns about wasting money on gambling discourage potential visitors
Figure 45: Reasons for not visiting a casino, by household income, August-September 2008
Teach young adults about the games to build confidence
Figure 46: Reasons for not visiting a casino, by age, August-September 2008
RACE AND ETHNICITY
Key points
Asians are a lucrative segment for casinos
Figure 47: Incidence and frequency of casino visit, by type/location, by race/Hispanic origin, February 2007-March 2008
Blacks are heavy lottery players while Asians are much less likely to play
Figure 48: Annual frequency of casino, lottery and video machine, by race/Hispanic origin, August-September 2008
Cost and convenience most commonly cited reasons for not going to a casino within all race/ethnicity groups
Figure 49: Reasons for not visiting a casino, by race/Hispanic origin, August-September 2008
Gambling has higher appeal to acculturated Hispanics
Figure 50: Incidence and frequency of casino visits, by type/location, by language preference, February 2007-March 2008
CLUSTER ANALYSIS
Lifestyle Players
Occasionals
Just the Basics
Cluster characteristics
Figure 51: Casino visitor clusters, August-September 2008
Figure 52: Annual frequency of casino visiting, lottery and video machine playing, by casino visitor cluster, August-September 2008
Figure 53: Games usually played at the casino, by casino visitor cluster, August-September 2008
Figure 54: Other activities participate in at the casino, by casino visitor cluster, August-September 2008
Figure 55: Frequency of casino visits compared to a year ago, by casino visitor cluster, August-September 2008
Figure 56: Attitudes towards gambling among casino visitors, by casino visitor cluster, August-September 2008
Cluster demographics
Figure 57: Casino visitor clusters, by gender, August-September 2008
Figure 58: Casino visitor clusters, by age group, August-September 2008
Figure 59: Casino visitor clusters, by HH income, August-September 2008
Figure 60: Casino visitor clusters, by race/Hispanic origin, August-September 2008
Methodology
CUSTOM CONSUMER GROUPS
Key points
Visitors to border town casinos go more often
Figure 61: Number of casino visits, by casino location, February 2007-March 2008
Those who embrace gambling as part of their identity play a broader range of games
Figure 62: Type of games played, by those who have visited casinos more in the last year, and those who think gambling is for people like them, August-September 2008
Concerts, shopping, sightseeing, and nightclubs/bars have especially high appeal to lifestyle gamblers
Figure 63: Other activities participated in at the casino, by those who have visited casinos more in the last year, and those who think gambling is for people like them, August-September 2008
SIMMONS COHORT ANALYSIS
Affluents and young newlyweds more likely to visit casinos
Figure 64: Incidence and frequency of casino visits, by type/location, by select cohorts, February 2007-March 2008
APPENDIX: OTHER USEFUL CONSUMER TABLES—A GENDER COMPARISON
Figure 65: Incidence and frequency of casino visits, by type/location, by gender, February 2007-March 2008
Figure 66: Other activities participate in at the casino, by gender, August-September 2008
Figure 67: Attitudes towards gambling among casino visitors, by gender, August-September 2008
Figure 68: Reasons for not visiting a casino, by gender, August-September 2008
APPENDIX: TRADE ASSOCIATIONS

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