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Raising the stakes: Competition from Asian casinos will shape the industry’s future

The global financial crisis and resulting recession negatively affected the casino industry’s performance. Following three consecutive years of low revenue growth, the industry is expected to improve in 2011-12, as it benefits from more robust domestic and international economic growth. Industry revenue is expected to increase 0.8% in 2011-12 to $4.8 billion. Over the five […]

feature-vegas-200The global financial crisis and resulting recession negatively affected the casino industry’s performance.

Following three consecutive years of low revenue growth, the industry is expected to improve in 2011-12, as it benefits from more robust domestic and international economic growth. Industry revenue is expected to increase 0.8% in 2011-12 to $4.8 billion.

Over the five years through 2011-12, industry revenue is expected to increase at an annual rate of 0.2%. However, new challenges are emerging, particularly from interest rate rises and intensifying competition from new casino establishments opening across Asia.

Since the global financial crisis, interest rates have risen, resulting in consumers reducing their spending on entertainment, including in casinos. There may be some substitution between spending on gambling and spending on food and beverages in casinos. Gaming machine revenue is expected to hold up better than table betting, due to the smaller bets required for coin machines.

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Competition from new casinos established in Macau and Singapore, and proposed by some other countries in Asia, is expected to be fierce, particularly for international high rollers. Macau’s growing power as a global gambling centre may be reduced however, by new restrictions from the Chinese Government on the minimum gambling age and travel to Macau.

In 2011-12, there are expected to be 13 industry establishments, with no new entrants expected in an already saturated market. Casinos will employ about 18,627 people in 2011-12, a 3.1% rise from the year before, due to improving growth in revenue and profits, as economic conditions brighten. Over the next five years, industry revenue is expected to decline an annual average of 1.0%, to reach $5.05 billion in 2016-17.