Online Gaming Industry Growing as Casinos Struggle

In a study, ComScore found that Online Gaming grew rapidly in 2008 because of a slow economy. Online gaming Industry is positioned as a substitute to expensive trips to Bric-and-Mortar casinos in Las Vegas, Reno and Atlantic City, and can benefit from ad revenue as well. Our own research shows that the Brick-and-Mortar Gaming Industry is struggling in the economic downturn.

Online Gaming Market Size

2008 growth rate: 27% year on year

2008 Market size: 86 million visitors

2007 Market size: 67 million visitors

source: comScore

Top gambling sites (comScore)

1. Yahoo Games (20% growth)
2. EA Sports (21% growth)
3. Disney Games (13% growth)

ComScore Study highlights

One company Spil Games saw growth in players of 269% in one year.

The Share of Time spent on gambling compared to total internet time is now at 4.9%, compared to 3.7 the year before. With more customers heading online instead of the casino and with customers spending more time on those sites, online sites seem to face positive growth conditions despite the downturn.

Brick and Mortar Insights, according to SIS International Market Research

The gaming industry is hurting because of the economic downturn. In Las Vegas, esteemed hotels like Luxor are offering rates as low as $49.95 (including mandatory telephone fee) from Sunday to Thursday, without any catches. Stratosphere is offering rates around $35. Their strategy is to fill the room (4000 rooms to be filled) and capitalize on the other higher fees (e.g. $5 atm fee, $3 bottle of water, $10 cocktail, $65 show).

Many people in Las Vegas are extremely worried about how tourists have stopped coming. Conferences are slowing, a major source of employment and revenue. Many are worried that Las Vegas’ prices are too steep, as prices had risen astronomically when times were good. Restaurants inside casinos charged $28 – $50 per entree, with buffets charging $21. Chris Angel’s magic show cost $65+, mirroring Broadway prices. They wonder if the prices will adjust.

One native of Las Vegas indicated how locals, who dabbled in the property bubble or who worked in the hospitality industry, have even picked up and left. This is similar to the situation in Dubai, where expatriate workers rushed to Dubai International Airport, leaving their rental cars with coffee inside to never come back, escape their debts and head home back to India, Pakistan Phillipines and Europe.

Even with those who have come lured in by the deals, many are not spending. Expensive restaurants are empty, while the buffets and food courts are packed. Cheap sports bars are faring better than trendy leather-chaired bars. Cabarets are near empty, and employees are having to pass out “free cocktail” coupons to attract more customers.

In a town overwhelmingly dependent on tourism, brick-and-mortar gambling and real estate, Las Vegas is facing a sea of economic woes.