Commercial real estate can be a tricky field to master. Unlike residential real estate, which is subject to the whims of the economy and buying trends, commercial real estate depends on these things, plus many others, such as interest rates, market performance, supply, and demand. Besides, commercial real estate is made of many sub-sectors, each functioning by its own rules, which is why real estate agents typically choose to focus on one type of commercial property. Casino real estate, for example, is one of the most complex sub-sectors, and if you want to include it in your portfolio, you’ll find that it has particularities and moving pieces that do not apply to other fields. The past year has been complicated for real estate, and the rate at which venues have closed down to make room for their online equivalents had many agents wondering if they should change their strategy. But does this apply to casino real estate too? Are casino venues still profitable, or have they been rendered obsolete by online casinos? And, if you do decide to focus on casino real estate, what factors should you keep in mind?
Online casinos have made some land-based establishments obsolete.
Like all other non-essential commercial venues, casinos had to close down for several months and, when that happened, online casinos managed to save the industry. Of course, casino online platforms already had a solid user base, so it comes as no surprise that the transition was quite seamless. Plus, the average online casino became much more feature-packed and user-friendly and, overall, the industry did a pretty good job at adapting to the new requirements. It should also be pointed out that the number of mobile gamers increased in 2020 from 1.2 billion to 1.75 billion people, so the rise of the mobile gaming industry also had a role to play, especially among young consumers.
For people who loved going to physical casinos, switching to the online counterpart was a natural next step. Not only was this counterpart safer since there was no more interacting with other people, but the experience was just as vibrant and exciting as the traditional one. Platforms such as OnlineCasinoEmbassy came up with attractive new features, not only in terms of games and interfaces but also in terms of security. As it turns out, technology has reached a point where it can replicate just about every physical experience, and playing in a casino online can feel just as engaging and interactive as the real thing.
Due to all these factors, land-based casinos ended up trailing behind. By the time they were allowed to re-open, many of them couldn’t attract new players anymore because people had become so used to the online version. Some of them managed to break even, but this was usually the case with big household names and nationwide chains. Experts estimate that the industry will eventually recover, but it will take at least three years until things return to normal. In countries such as Thailand, which is currently undergoing a pronounced digital transformation process, gaming entertainment is expected to be represented by online platforms for years to come. If you’re looking for a Thai casino, chances are you will find better options on the Web than among brick-and-mortar casinos.
The casino online alternative also created a new breed of player: the casual player, who doesn’t necessarily want to leave home to play some slots or blackjack, and who would rather go on their phone to play a few games. And, since this new consumer will soon become representative of the market, that could influence the marketing strategies of land-based casinos.
Can casino real estate still be profitable? Yes, but you have to consider several factors first.
Does the rise of digital gaming mean that you should no longer leave any room for casino real estate in your portfolio? Well, not necessarily. Casinos can still be profitable, as proven by the markets in the US, France, Germany, and some countries in Eastern Europe, but you have to pay attention to several factors to make sure that people want to rent or buy your property:
- Location. The closer the casino is to a touristy area, the better. That’s why the casinos located in or next to resorts perform the best. These resorts already have shopping centers, bars, pubs, and other entertainment areas, so they are more likely to attract traffic.
- Economic outlook. The region’s economic prospects play a major role in the activity and prosperity of land-based casinos. For example, gambling does tend to be more popular in developing areas, but they also do well in states such as Nevada, which has a strong travel industry, and casinos are a vital part of the local culture.
- Casinos near hotels are safer investments. While standalone casinos can be profitable on their own, they are riskier than casinos that are on the same premises as hotels or malls.
- Regulatory environment. Unfortunately, the legislation will always play an important part in the activity of land-based casinos, and countries such as the US have very strict regulatory environments that are subject to change at any time. Once you get into casino real estate, you have to get used to the idea that a new bill can always be introduced.
- Architecture. When people have the option to join a casino online, architecture can be one of the factors that make them return to land-based venues. Casinos in historical areas, or located in interesting, historic buildings are more likely to attract users. People can come there just to look around and take a few photos but end up staying for the atmosphere. One warning though, is that historic buildings can be difficult to restore and maintain because they need adequate zoning and planning permissions.
In states such as Las Vegas, things are much less complicated because the casino properties here are so profitable that they can easily withstand a period of crisis and bounce back stronger than ever.
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