- Crown Resorts required to commission the sale of land in Las Vegas.
- Comes after it’s been claimed that offline gambling accounts of 33% of the market share.
While the offline gambling industry remains active for now, there's no doubt that it continues to lose both traction and market share to the online market.
The UK market embodies this perfectly, with online gambling now generating a peak GGY (gross gambling yield) of £4.5 billion and claiming an overall market share of 33%. A similar trend is in evidence across the globe, with a number of operators being forced to reduce their offline commitments and realign their priorities.
In this post, we'll look at the recent experiences of Australian casino operator Crown Resorts and ask what this means for the industry as a whole.
What has Happened with Crown Resorts Recently?
After previously expanding into international markets, Crown Resorts has recently been required to commission the sale of a parcel of land in Las Vegas, Nevada. This land was listed with resale price of $370 million, with local operators set to compete in order to complete a purchase.
Even by itself, this sale may be enough to raise questions over the longevity of the land-based casino market (particularly from the perspective of international brands and investors). This is the latest in a string of disinvestments that the company have undertaken over the course of the last 12 months, with the group focused on realigning its priorities and targeting more lucrative marketplaces.
This has proved a painstaking process for the brand, who have endured a difficult time during the last 12 months. The operator sold its CrownBet business for $150 million earlier this month, for example, while they also ended their lucrative partnership with the entertainment brand Melco in May 2017. Then came a significant controversy in June, when 18 of the operator's employees were placed on trial by Chinese authorities on charges relating to gambling.
These individuals were later released following pressure from the Australian government in the summer, while the brand came under immense scrutiny as the drama unfolded.
The Last Word – Is this an Issue of Geography or a Sign of the Times for Offline Gambling?
According to James Packer, the CEO at Crown Resorts, these measures are largely the result of failed expansions into the international market. The Chinese detention scandal was at the heart of these failures, which in turn forced the business to reconsider its long-term strategy and amend its plans for the future.
The question that remains, of course, is whether this is solely an issue of failed international investments or also connected to a decline in the offline gambling sector? After all, the failure of these expansion efforts may also have a great deal to do with a decline in the demand for land-based casinos, as a growing number of players make the transition online. This is also a trend that will continue in the future, as operators begin to realign their focus online and ensuring that they dominate their domestic markets.
In terms of the most recent land sale, Crown Resorts will pocket a cool $325 million (with a further $45 million going to the majority owned subsidiary Alon Las Vegas Resort LLC). This will mark a watershed moment in the company's future development, while shining a light into the likely portents for the offline casino sector across the globe.