Five Reasons Casinos Fail

Hospitality, Gaming & Leisure

September 5, 2013

The truth is that a more than a small percentage of casinos fail, but not from a bad run at baccarat.

Supply Considerations:
“Build it and they will come” was the Vegas mantra as a wave of new casinos caused travelers to flock to bigger and better mousetraps. Legalized gambling and new supply in Pennsylvania relegated New Jersey to the US’ third largest gaming destination, forcing a number of Atlantic City casinos to restructure - notably the Tropicana, Hilton and AC’s first casino, Resorts.

Licensing, Government Bureaucracy and Red Tape:
Licensing has always been a “wildcard” for casino developers. Hilton Hotels Corporation, one of the world’s largest hotel companies, was denied a gaming license by the New Jersey Casino Control Commission for alleged ties to organized crime, forcing Hilton to offload its $300M casino to Donald Trump.

Wall Street has a love-hate relationship with gaming. Following a leveraged buyout with partner Goldman-Sachs, Atlantis Bahamas Casino owner Kerzner was forced to hand the keys to lenders when the $2.5B loan could not be refinanced.

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