New Year Brings Challenges, Opportunities

As 2013 fades in the rear-view mirror, a new year is upon us, bringing with it hopes for more solid economic footing and a chance to see the gaming industry fire on all cylinders.

As one of our prognosticators (Frank Fantini) pointed out in the 2014 Gaming Industry Forecast, gaming stocks far outperformed the overall market last year as investors looked forward to promises of a brighter future, despite weak financial performances. Now, the fate of those stocks in 2014 rests on their execution of those promises.

2014 also carries with it plenty of uncertainty, as that solid economic footing is as far from a sure thing as hitting a five-team parlay card. At least Congress finally got down to business in December and passed a two-year budget deal that ended months of uncertainty over short-term fixes and the potential for another government shutdown.

But while that’s a good thing, the average Joe still isn’t feeling all that warm and fuzzy about the economy. Worry about higher insurance premiums under Obamacare and feeling less secure than in the past about jobs and wages, they may hold on a little tighter to their wallets, especially when it comes to discretionary spending. That may mean competition for existing market share ratchets up a notch or two.

Then there’s online gaming. With Nevada, Delaware and New Jersey up and running, others, including California, Pennsylvania and Illinois, are among those predicted to perhaps follow suit. In addition, 2014 may be the year we see movement between existing online gaming states to sign a compact allowing interstate gambling.

This is also the year everyone will be watching the litmus test in New Jersey for whether online wagering grows the gaming pie and helps the brick-and-mortar business or just cannibalizes it.

Meanwhile, Las Vegas Sands Chairman Sheldon Adelson will be spending millions to fight legalized online gaming at both the state and federal levels.

That stance may make for some interesting meetings for the American Gaming Association (AGA), whose official stance is in favor of legal, regulated online poker in the U.S. and which recently welcomed new members Station Casinos, Wynn Resorts and Churchill Downs into the fold. Station Casinos is a majority owner of Ultimate Gaming, which operates online wagering in Nevada and New Jersey. Las Vegas Sands also belongs to the association with its President Michael Leven serving on the AGA board.

In making the announcement, AGA President and CEO Geoff Freeman called the addition of those three new members “a critical step in the AGA’s evolution as a representative of the entire gaming industry. We will continue to be passionate advocates for the enormous value the gaming industry provides, and there is increasing support for our agenda.”

The AGA’s 2014 agenda includes promotion of the value the gaming industry provides to local communities, enhancements to the regulatory process that promote greater efficiency and innovation, and a crackdown on entities that engage in gaming in an unlicensed and unregulated manner.

Whatever happens this year, rest assured we will do our best to help you make sense of it. To get a jump on what’s ahead in 2014, check out what your peers, industry observers and other experts have to say in CEM’s annual Gaming Industry Forecast.

Peter Mead,
Casino Enterprise Management

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