Gambling is great business. The casino business is big and quite lucrative where millions upon millions of dollars are generated weekly. Every year, gaming revenues across the world yield more profits than the movie and music industry combined. Even the returns produced by all the 4 major sports leagues in the U.S is dwarfed by the income produced by the commercial casino industry.
Gambling is not just a common practice today; it has become a time-honored source of entertainment. But despite the huge numbers reported by casinos today, the number of actual casinos that remain open for business successfully is far less than one would expect. Over the past few years, several casinos have been shut down, which is both sad and angering for punters.
So why are casinos shutting down?
A lot of observers have been quick to blame the increased shut down of casinos on the mounting resort fees, paid parking, terrible gaming odds, as well as the array of nickel and dime strategies that are used commonly by casinos to encourage customers to part with their hard-earned cash. While these incremental charges and problems have certainly managed to chase away potential gamblers, some more reasons why casinos are shutting down include:
Increased competition
Over the past several decades, there has been an increased expansion in the construction of casinos, which means that just about every city now has a casino. Although the mantra ‘build it and they will come’ has always stood true for casinos, there has been a danger of oversaturation of casinos. When multiple casinos are available for interested punters in a small radius, the competition tends to be too high, which ultimately forces some casinos to shut its doors.
Escalating overall costs
You may or may not know this, but casinos cost a fortune to not only construct but to maintain as well. Add to that the fact that casinos must always make an effort to stay ahead of the curve when it comes to technology and the overall costs become crippling. If casinos fail to generate enough income to allow them to surpass competitors, then they are bound to close down sooner rather than later.
Red tape
You would be surprised to discover this but building a casino in any part of the world involves an insane amount of red tape. Not only do casinos have to deal with licensure issues, but they must also deal with the beverage control board before they can be approved for liquor licenses. Government regulations must also be met and proper hiring procedures followed.
There are so many moving parts involved in casino construction and the results are not always worth it. Failure to meet obligations often results in hefty and substantial fines for offenses. Without merging with rival casinos or restructuring, most casinos are usually forced to close their doors.
Casinos that no longer exist today
Trump Plaza Hotel and Casino
Trump Plaza Hotel and Casino, owned by Trump Entertainment Resorts, had filed several chapter 11 petitions before finally conceding defeat. Most casinos in Atlantic City are located in 2 primary sections; the Marina District which is located north of downtown and the Boardwalk situated along the beach.
Most of the casinos on the Marina area, including Borgata Hotel Casino and Spa (in-depth review here), Golden Nugget and Harrah’s, seem to be thriving. However, most casinos located on the boardwalk like the Trump Plaza Hotel and Casino have been shut down primarily because of inaccessibility.
The Trump Taj Mahal Atlantic City
When the Trump Taj Mahal was constructed in 1990, it was slated to be the biggest and best casino in the world. Touted as the 8th wonder of the world, the casino resort featured more than 2000 rooms, several restaurants and of course, a gaming space.
Shortly after opening its doors though, the resort started experiencing financial problems as Trump could no longer keep up with his repayments, which totaled $900 million per year. By 2014, the resort had filed for bankruptcy, but billionaire Carl Ichan stepped in to try and remedy the situation.
Even after Ichan stepped in, the Taj continued to languish in debt payments, until it was finally shut down in 2016 following problems with the employees’ union. When the property closed, it was purchased by Hard Rock, stripping the previously famous casino of ties with Trump. Hard Rock gave the casino a facelift worth $500 million before opening its doors in 2018.
Showboat Atlantic City
Showboat Atlantic City, formerly owned by Caesars Entertainment Operating Co. closed shop in August 2014 for lack of profitability. For many years, Atlantic City stood as the king of East Coast gambling but those days seem to be behind the city, as it struggles to make a comeback. The fading affluence of Atlantic City’s gaming has taken a toll on the city’s finances, which has in turn affected casino operations, including Showboat’s.
“According to Mike Anderson chief editor at VegasForAll, ‘’the arrival of new casinos in neighboring cities such as Pittsburg, Maryland, and Philadelphia has given gamblers more options than ever, which has made it harder for casinos in Atlantic City such as the Showboat to attract customers from the region’’.
Revel casino/ Ocean Resort
Revel Casino Hotel closed its doors in 2014 after just two years of being in business. Often referred to as the most jaw-dropping and costly failure in Atlantic City’s 40 years plus history of casino gambling, the casino shut down in hopes of reviving the city’s struggling gambling market.
By the time Revel was shutting down, the casino had never turned a profit. The casino had filed for bankruptcy twice and had been unable to find investors willing to buy the property. Revel’s problem, however, began long before construction was complete.
After the casino broke ground, it ran out of money soon after and by the time it was opening for business, it had been overcome by so much debt that it simply did not have sufficient revenue to cover the debts. After its closure, the casino attempted to make a comeback as the Ocean Resort Casino in 2018.
However, after just 6 months of operation, it was clear that the seaside resort’s financial troubles had returned. Today, the Ocean Resort Casino is on the verge of shutting its doors for the second time.
Online casinos
It’s not just land-based casinos that have found it difficult to keep their head above water either, it’s online casinos too. The online gambling industry in the U.S is only just starting to properly appear now, as more states begin to legalize it. But in Europe, online casinos have been available for years. The industry started off booming. Loads of different online casinos opened with a variety of themes and features. It was a playground for players who could pick and choose where they wanted to play with ease.
But new regulations have appeared in recent years which have made operating an online casino more difficult. This has led to revenues being cut considerably, which has inevitably led to many online casinos closing down. The UK is perhaps the best example of this. Just five years ago, British players had literally hundreds of good online casinos to choose from. These days, you can only really find a handful of top UK online casinos still in operation.
So you may think that online casinos have it much easier in many ways than land-based casinos. But they are definitely not immune to some of the issues we mentioned above.
Final word
In the past, casino operators seemed to be cruising but recent times have not been so kind to the casino industry. Whether this decline is temporary or the start of things to come remains to be seen. Hopefully, the future will be kinder to casino businesses.