Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Insanity

Why the Casino Stock Market Struggled in 2018 and What to Expect in 2019?

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2018 was a challenging year for casino gaming. Industry giants like Melco Resorts, Las Vegas Sands, Wynn Resorts and MGM Resorts were knocked off. The Sands’ share price was down 25%, MGM’s – 23% and the Wynn’s – 30%. The reason is that all of them have casinos located in Macau, where the gambling industry is seeing a slowdown. Interestingly, such a decline in casino stock prices hasn’t been caused by the economic collapse.

On the other hand, companies like Microgaming, NetEnt and their online games attract more players from year to year. In the meantime, the interest in land-based casinos is decreasing. It negatively affects stock prices and discourages investors. Fortunately, the experts have managed to find the reasons for such changes.

The Current State of the Casino Industry

The two key locations of the gaming industry, Macau and Vegas, are losing their popularity. The former, which was once called “the future of gambling”, hosts numerous amazing casinos such as Venetian, Golden Dragon, Wynn Palace, etc. They had attracted thousands of visitors, but in 2018 things dramatically changed. Macau casinos reported a 5% drop in revenue – the decline that hadn’t been seen since 2016.

At the same time, MGM Resorts International and Caesars Entertainment located in Vegas, reported “the soft numbers” for the summer of 2018. The number of Sin City’s visitors was falling and eventually showed a 3.1% decline when compared to 2017.

However, in both cases, the novelty factor wasn’t taken into account. The excitement has disappeared and the visitors no longer want to go to the land-based casinos. Online gambling websites are becoming more and more popular, and can even indicate the end of the era of brick-and-mortar casinos.

Online Casinos have become the biggest Single Sector in the United Kingdom

Now, online casinos have become the biggest single sector in the United Kingdom and enjoy around 34% of the total gambling yield. In addition, the UK government doesn’t miss the chance to get tax revenues from the online gambling industry.

More countries are trying to act in the same way as the UK. To boost their economy, they are striving to attract international gambling operators to their market. In the USA, 4 states have already officially legalized online gambling. It caused a fast growth of the online casinos’ share prices.

The Majority of Gamblers prefer Online Casinos over the Land-Based Ones

There are several reasons why the majority of gamblers prefer online casinos over the land-based ones:

  • The resort fees are too high. It’s difficult to imagine the world where people would be attracted by high fees. That’s why many players prefer gambling online, because they don’t even need to leave their own house.
  • Paid parking. This is another aspect, which may scare the customers away from brick-and-mortar casinos. However, some of the famous gambling houses, such as Wynn Resorts, started reconsidering their parking policies.
  • A limited selection of games. People like innovations and this fact works with the gambling industry as well. In the Internet, people can find more exciting games and even try them for free.

  • The lack of themed slots. Slot machines are the most popular choice among gamblers. Obviously, online casinos attract more customers, because gamblers can access thousands of different branded slots after the click of one button.

Offline casinos are often built near shopping malls and entertainment centres, where every family member can have fun. But, now Las Vegas visitors spend their time and money in restaurants instead of playing casino games due to the aforementioned reasons.

At the same time, online casinos offer live gambling experience and easy access to a wide selection of games. Besides, they provide their clients with pleasant bonuses.

What to Expect from the Casino Stock Market in 2019?

2018 was no success for land-based casinos. However, the investor interest in them is still high.

Financial analysts claim that Macau casino stocks are worth buying and advise to hold onto them for a long term. Also, researcher Sean Zhuang admits that there will be a single-digit growth for Macau’s casino industry.

Furthermore, Las Vegas has faced similar slowdowns before and it has managed to overcome them. For example, the crisis of 1955 was caused by the large amount of new gambling venues. It caused the bankruptcies of many casinos. At the same time, it was a motivation to build the Las Vegas Convention Center. The city has not only met the crisis but also became even more popular.

Although operators expect a slight decline in revenues this year, experts say that now is a great chance to invest in the casino stock market. Besides, the investors can still pump into online gambling websites – luckily, the casino list is extensive and is growing day by day. Some of the reputable brands are William Hill, Ladbrokes, 888, etc.

Conclusion

The casino stock market was struggling in 2018, but it doesn’t mean it is not able to recover. Many experts still predict the growth of the casino stocks in 2019 and 2020.

Definitely, there must be a clear strategy, which will focus on attracting a new generation of clients and retaining the existing ones. Interactive slots, VR/AR gambling apps and other innovative solutions can help the casino industry grow in 2019.