Is casino real estate a lucrative opportunity?

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Las Vegas may be known for having some of the most profitable casino real estate properties, but it’s not the only city where the gaming market is thriving. The land-based casino market is growing at an accelerated pace in many regions of the world, which means that, if you are a commercial real estate agent, you may want to consider adding these properties to your portfolio.

But first, let’s have a look at the industry as a whole and what it means for the future of commercial real estate.

Physical casinos still account for the largest share of the casino industry.

Although online gaming has grown tremendously in the past year, and it will continue to do so in the future, physical casinos still account for the largest share of the industry, and experts forecast that this will not change soon.

First of all, despite the convenience and online gaming, most enthusiasts still prefer the charm of a brick-and-mortar casino. This applies especially to users of ages 45+, who are more comfortable with the traditional format or prefer combining playing casino games online with visiting traditional casinos.

Secondly, after the industry slowed down in 2020 as a result of pandemic restrictions, we’re about to witness a resurgence of physical casinos as soon as the restrictions loosen and people feel safe being in crowded indoor spaces again.

Overall, America’s commercial casino industry is a veritable giant, and that should be something of interest to every real estate agent on the lookout for opportunities. In 2019, the US commercial casino industry employed over 360,000 people and generated $10.16 billion, according to data from the American Gaming Association.

Things are similar in Europe.

According to the European Gaming & Betting Association (EGBA), the European casino market generates over 47% of the total gaming revenue, and, interestingly, online casino gaming only accounted for 17.5% of the market. Europe is a leader in casino entertainment, and most people still prefer enjoying casinos in the traditional way. All over Europe, there are countless examples of successful casino chains that add local flavor, such as Jacks Casino in the Netherlands. These casinos not only bring a lot of revenue to the local economy but also influence the real estate market by creating new opportunities.

Digital products have surpassed their offline equivalent in almost every industry. So what made casinos different? Well, the biggest difference here is that brick-and-mortar casino owners have successfully managed to adapt the physical experience and boost visitor engagement. To a certain degree, online casinos didn’t take over physical ones because they capitalized on their unique strengths. Most fans didn’t stick with only one of the two. Instead, they chose online gaming for convenience and went in person to a casino when they wanted to experience something different and more engaging.

So, if you’re a real estate agent and were wondering if casino properties would one day become obsolete, that’s not the case. The industry will continue to thrive in the following years, despite the advent of online entertainment.

Plus, there’s another factor you need to consider: in some regions, casino real estate is booming because they’re an integral part of the local tourism. In the US, the best examples are Atlantic City, Las Vegas, and Reno. If you work in one of these cities, including casino real estate properties in your portfolio is almost always a certain hit – we’re saying “almost” because there will always be other factors to consider, such as the location of the casino and the other businesses it’s surrounded by.

In Europe, Jacks Casino is an excellent example. These casinos have a lot of locations around the Netherlands, and all their buildings look very different, from old historical buildings to new, modern ones. These locations are centers of interest not only for locals but also for tourists, who enter the casinos out of curiosity and stay for the thrill.

Which physical casino locations make the most profit?

Brick-and-mortar casinos are lucrative in general, but not all properties are the same. Some factors can make a huge difference in terms of profits so, before adding a property to your portfolio, consider the following:

  • Where is the casino located? As a general rule, casinos in central areas attract the most traffic from tourists, whereas those farthest from the city center are more popular among locals.
  • Is the casino part of a hotel complex? These properties are the most profitable because they attract tourists.
  • What other businesses are there next to the casino? In general, casinos that have restaurants, bars, night clubs, and malls next to them tend to have the highest returns.

What about residential properties next to casinos?

If casino commercial real estate is almost always a sure win, things tend to get more complicated when talking about the residential properties next to them. If you have homes or apartments next to a casino, their price might drop. For example, in the US, if a casino opens in the neighborhood, the value of the residential properties there can decrease by 2-10%. That’s because casinos attract other businesses and may be perceived by residents as more of a nuisance.

However, things are a little different with Airbnb’s. If an apartment is located in a popular complex right next to the city center, or any other area that’s popular among tourists, it’s not uncommon for people to buy it and then rent it out or post it on Airbnb. For example, Cyprus gets a lot of tourists during the summer, and those tourists stay for over two weeks. They’re typically affluent seniors who want to relax during retirement, and, for them, renting an apartment for a month in a sunny destination is the perfect idea for a summer vacation. As always, location is crucial. As a professional, you know best what the outlook of the market is, so use those insights to estimate what kind of clients the property will attract.

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