External Industry Analysis

External Industry Analysis

By: Kyle Brown

1. Industry Characteristics

Casino gambling is one of the most common types of entertainment in the U.S. and many other countries. Casinos are usually built in conjunction with hotels, restaurants, retail shopping, and other tourist attractions. It also provides facilities for hosting live entertainment events and sporting events (Investopedia 2011).

The industry has been growing very fast in the past few decades in relation to its size worldwide. It has a large impact to the U.S. economy which includes attracting tourists traveling to the U.S. for gambling, creating a large number of job opportunities, and paying enormous tax dollars to the government at the federal, state, and local levels. During the year 2010, the commercial casino industry employed about 375,000 people earning around $13 billion in wages, making it one of the biggest industries in the U.S. (Investopedia 2011).

Casinos are one of the main contributors to the U.S. economy contributing a total of $32.5 billion in 2010. With the subprime and resulting global crisis, the revenue in the sector decreased 4.7% in 2008, this trend continued through 2010. American consumers who go to casinos have begun to be careful regarding the money they spend. Their trips are shorter and they now are careful not to spend too much on other forms of entertainment like shows or restaurants.

2. Driving Forces of Change

Political/Legal – It is expected that political/legal factors will have an overall positive effect on the future growth of the casino industry. Regulations differ by state governments. This creates more opportunities for new casinos to start their businesses as there will be an increase in licenses issued. So it will be expected that there will be an increase in the competition within the industry for better prices, services, and infrastructure (Benston, 2007). Equally important, it will lead to increases in the level of economic growth...