Examining National Trends to Predict the Future of Gaming in Florida
By Marc Stephen Shuster Partner, Berger Singerman | August 03, 2014
Co-authored by Etan Mark, partner in Berger Singerman's Miami office and co-manager of the Dispute Resolution Team
The scope of gaming's impact on the hotel industry depends upon whom you ask. If you're a mom and pop independent, a small franchisee, or you operate Disney (or another company where gaming can have a negative impact on your bottom line), you would most likely conclude that casinos are threats and/or competitors. That potentially includes competition for clientele, direct revenue, and indirect revenue. As you'll read in our expert panelists' comments, for example, lost convention revenue is a significant piece of this equation.
In stark contrast, many big hotel chains hope to see gaming come their way, and even join forces with the casino companies. From a revenue standpoint, there is no greater partner than a casino occupying your first floor, with your hotel rooms directly above the action. In hospitality, there are very few things which, at least superficially, seem to make more sense. When you compare traditional hotels and casino properties, you can understand that the customer bases can be vastly different. This has the double effect of increasing a given customer segment (locals, residents of neighboring states, and, potentially, national and international clients), while possibly diminishing other segments at the same time (e.g. those with moral objections to gambling).
The critical factor our panelists address is geography. All the positives in the world can be ineffectual, if your property is in an area where there is casino saturation and rapidly declining revenues. Nowhere is that more applicable than in Atlantic City, where casino revenue has plunged from a high of $5.2 billion, in 2006, to $2.86 billion last year. With severe competition from Pennsylvania (now the nation's number two casino market after Nevada) and additional casinos opening in New York and Maryland, the writing is on the wall in New Jersey. As of the authoring of this piece, it's being reported that 25% of Atlantic City's casinos could be shut down by the fall of 2014. Even a market giant like Caesars Entertainment is reportedly closing the doors on the iconic Showboat Atlantic City Hotel and Casino.
Here at Berger Singerman, we have a unique perspective, having handled casino bankruptcies and restructurings in some of those saturated states, and various casino matters in our home state, Florida, which is, arguably, the most under-penetrated gaming state in the U.S. We thought it would be a great idea to bring together a couple of our colleagues, along with three renowned casino operators/consultants, and explore the paradox that is the future of gaming in Florida, and the future of gaming in America.
The moderator of the panel, and the individual responsible for assembling this stellar group of panelists, is my colleague, Etan Mark. Etan's recent discussion of the future of Florida gaming, in his Miami Herald article, "The Gaming Drizzle on the Horizon," attracted a lot of attention, and was a significant precursor to the creation of this panel, in conjunction with the host of this event, HistoryMiami, the premier cultural institution committed to gathering, organizing, preserving, and celebrating Miami's history as the unique crossroads of the Americas. Etan's bio is featured at the end of this article, and his introduction of our esteemed panelists leads off this inside look at the captivating intersection of hospitality, entertainment, politics, and powerful local and national constituencies:
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