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Online casinos financial report Vs land based casinos (Page 1 of 2)
In this article I will analyze these two industries, trends, regulations, profits and overall status.
It is clear that there is a battle going on between the online casinos to land based casinos. I took for example one of the biggest and strongest land based casinos – MGM ( $7.7 B) and one of the successful online casino company-888 Holdings ($1 B).
These companies are good examples since they are leaders and reflect the industry very well.
The war started a long time ago but I think it escalated in 2006 with the coalition of anti-gambling conservatives, together with Las Vegas interests and law enforcement which forced the government to ban online gambling.
Analysts estimated, at that time, that the amazing success of online casinos was over. Traded online casinos went down and everybody thought they were finished but it turned out to be the biggest mistake ever. Since then, land based casinos have been losing their power to online casinos.
Countries all over the world have realized that it is better to regulate online casinos rather than ban them because people will always find ways to gamble and to play the casino and banning them loses millions in taxes.
Take for example MGM
MGM together with Dubai world fund (which is a government investment fund. Its assets under management are excess of $100 billion and the revenue was $10.6 billion to in 2006) are short of funding in their $3.5 billion ( still pending) project “CityCenter” in Las Vegas due to the reluctance of the banks to give such a big loan to the project. German Deutchebank and Suiss Credit are among those banks.
The raising of finance for e $3.5.billion projects should have been completed
by end of June 2008. The cost of the project is $100 million a month.
“At present, no company in America has been able to borrow such sums from the banks” said James Maren, President of MGM Mirage in an interview with Bloomberg TV.
Just look at the trading charts of MGM. Earnings per share went down nearly 50 for the last year due to a decrease in players and a decrease in earnings.
There are several reasons for this:
First, the economy is in bad shape, gas prices are constantly rising, inflation is rising and US debt is more than $9.4 trillion and rising $1 billion a month. The stock market is also not doing well.
Second, it has become very expensive for Americans to travel to Vegas. When you pay more than $4 a gallon, you don’t drive and you don’t fly, simply because you rather save this money then spend it on traveling.
Third, online casinos are on the rise and taking a lot of players from them. With fast internet connections, smart and sophisticated online casinos and huge numbers of casinos guides, you have everything you need you need to optimize your bet.
888 HOLDINGS
888.com is one of the successful online casino operators on the web. It trades on the London Stock Exchange; market value is about $1 billiard.
Lotteries Set to Go Online
Lotteries Set to Go Online
The worldwide market for lotteries is hugs and over 200 jurisdictions around the world have official lotteries. In 2009 industry experts say that total global lottery revenues totaled about $240 billion USD. In the US where most states have lotteries total sales amounted to $52.4 billion in 2009 and are expected to rise in 2010. Lotteries also spend a lot of money on marketing and spend about $5 billion annually on advertising and promotions around the world. Most lottery jurisdictions implemented lotteries to supplement tax revenues and in the US most states spend lottery revenues on education or social services. Many jurisdictions have come to rely on lottery funds to support various government functions. During the current global recession lotteries have provided governments with much needed funds to fill empty state coffers.
Lottery ticket sales have increased by a modest 2% a year compared with double digit growth for casino and online gambling. In the US legislation has been introduced that would re legalize online gambling and provide the government with another revenue stream. In the US gambling sites are incredibly popular including lottery sites. Should federal law be changed it will clear the way for online lottery ticket sales which at present are blocked by vague regulations regarding online gambling. Online marketers stand to benefit from changes in the law as lotteries spend millions to promote their games online.
Thanks to the recession lottery ticket sales have slowed but there are other factors contributing to the slowdown in lotto ticket sales. Offshore gambling sites are siphoning off revenue from lotteries as more Americans go online to gamble and play foreign lotteries. In addition most lotteries have not introduced new games in years and player boredom has contributed to a decline in ticket sales. Mega jackpot lotteries such as Powerball and Mega Millions spark player interest when jackpots reach hundreds of millions but for some reason many lottery players are not interested in everyday jackpots of $20-$30 million and ticket sales fall.
Lottery demographics show that most regular lotto players are aging and for some reason many state lotteries have not been able to attract a younger player base. Thanks to flagging many states have had to cut marketing budgets resulting in flagging ticket sales. Most lottery industry experts say that allowing state lottery ticket sales in the US would result in an increase in sales. In Europe and New Zealand online lottery ticket sales have been popular with players and most players say convenience is a major factor in online lotto ticket purchases.