internationalcasinoreview


“There’s a natural inclination in many organisations post-downsizing, for employees to duck taking a risk at precisely the time that innovation, creativity and prudent risk-taking are a priority. I question the focus because my recent observations are that outstanding customer experiences, whether it’s an outstanding concierge, croupier, restaurant manager and so on in Las Vegas, has more to do with smart employees doing things through their own volition and personal gratification than identifiable organisational change. I hear more comments that those changes are making life tougher, not easier for those people.”


James Berkeley of Berkeley Burke International thinks cost cutting can cut into profits even further


Governments must resist the temptation to tax casinos more


Whatever the moralists’ view of gambling, casinos are huge sources of employment, as well as of entertainment. Even with a fall in public revenues, says Hugh Sorrill, increasing casino taxes would be counterproductive.


keepingthebalance COMMENT


Many countries have noticed they are not getting quite so much from casinos, their cash cows, in the last couple of years. With the economy in many parts of the world still struggling to rise from its sick-bed, and governments desperate for revenues, there is a tempta- tion at many finance min- istries to add another few percentage points to gam- bling taxes or tweak tax thresholds down – we’ve seen it recently in certain Latin American markets, at the local and national level, as well as in Europe. Just a few more million, for the common good you under- stand.


Casinos - and gambling in general - are a seemingly soft target for governments: being highly regulated and with a well-worn trench between the front line of slots and tables and the fortress-like counting houses of public authorities, the decision is easily made and cheap to implement. Most people won’t notice


or care, glad for once that they are not in the firing line. Moralists who misunder- stand the nature and purpose of casinos will cheer on the holders of the public purse strings. There is a real sense that casino taxes are not simply a method of ensuring a fair contribution is made to finance society’s aims but also as some form of pun- ishment for the ‘sin’ of prof- iting from gambling - casinos in some jurisdic- tions are taxed more than


anything else, oddly most often in places where they are owned ultimately by the state anyway. For the religious, the par- ticipation in or offering of gambling is a no-no because it is ‘something for nothing’ and violates their view that gain must result only from work. But there are no nothings in the casino industry. What players buy with their stakes is entertainment, time in lux- urious surroundings, enjoy- ment of the many games on offer, the chance (impor- tantly) to win money, excel- lent food and drink (often heavily subsidised), and service by well-trained, attentive staff all in an adult environment. Out of the gaming revenues, after the government has taken a lot away, casinos must provide the heat and the light, pay the mortgage, maintain the premises and, at the very top of the list, pay the staff - who are the heart and soul of the casino experience. Hundreds of thousands of people depend on the casino indus- try and its suppliers around the world. That is not nothing. Casinos redistribute wealth far more efficiently than governments do. So with people spending less on their entertainment, especially at casinos, it makes no sense for finance ministries to squeeze any more taxes out - it can only result in the loss of jobs, for which the state and the rest of the economy will have to pay anyway. Quite aside from the unnecessary, and immoral, human misery unemployment causes, it’s simply robbing Peter to pay Paul and puts a brake on the money-go-round. To be fair, several jurisdic- tions, in Germany and France for example, have understood the argument and reduced casino taxes to more reasonable levels, allowing casinos to survive, to entertain and to employ.


Welcome to fabulous 2011?


With Las Vegas entering a period of no planned openings, five gaming analysts give their views on the year ahead for what is still the world’s most famous gambling destination.


“Newness, which has long driven Las Vegas growth, will not be part of the immediate future. Las Vegas may become yesterday’s news unless it can figure out a new way to rein- vent itself.”


Bill Eadington, director of UNR’s Institute for the Study of Gambling


“The numbers are going to start to look better because of what they are compared to. I’m cautious because I see minimal improve- ments in 2011.”


Macquarie Securities gaming analyst Chad Beynon


“We’re in a period of austerity. We’re deleveraging personally, paying down debt and unwinding the excesses of the last cycle. A trip to Las Vegas is still seen as somewhat extravagant, so the market is going to take time to come back.”


Hudson Securities gaming analyst Robert LaFleur


“In 2011, I think there will be some harvesting on many fronts based on the important seeds of meaningful cost-cutting measures that were planted last year. There is going to be some noticeable improvement, but whether or not that translates into significant profit recovery remains to be seen.”


Union Gaming Group Principal Bill Lerner


“I’m going to use a basketball analogy. The gaming industry has been playing defence, protecting the ball in their court as hotel supply increased. Now, the Strip casinos are on offense. They have the ball and can be aggressive in going after customers and con- sumers. We’re also going to see a shift in demand, which is also good for operators.”


Wells Fargo Securities gaming analyst Dennis Farrell


February 2011 •comment 51


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