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Kevin Smith

Tragedy Could Affect Market Share for Land-Based and Online Gaming

17 September 2001

In the wake of the horrific terrorist attack levied against the United States last week it may seem cold and callous to predict which industries or industry sectors will be hurt more in the aftermath, but it's only natural to take an analytical look at various situations.

It's also well worth noting that the tragedy has provided a perfect example of how drastic the differences really are between land-based casinos and those found on the Internet.

Last week IGN spoke to numerous online sportsbook and casino operators. Sportsbooks took a tremendous hit in the wake of the attacks as events from all over the globe were canceled. With the cancellation of baseball, football, golf and auto racing in America, as well as wall-to-wall television news coverage, online casinos actually saw a spike in their business.

Operators predicted the increase in the amount of people being at home during the week and looking for an outlet to get away from the coverage.

The long-term effects of the attack on the interactive gaming industry still remain to be unseen, but if this past weekend's activities in the land-based gaming capital of the world is any indication, things could be a lot worse.

The Las Vegas Sun reported in Monday's edition that many of the Strip's mega-resorts had occupancy rates as low as 50 percent over the weekend. Normally hotels are at 100 percent during fall weekends.

The easy explanation for the lack of business could be a general lack of faith in the commercial air traffic system after terrorists hijacked planes and used them to plow into the World Trade Center and the Pentagon.

These types of restrains, relying on people to travel usually many miles to get there, don't apply to the online world and in fact may lend to more business on the Internet.

The motion picture industry saw a tremendous boom following the crash of the stock market in 1929 and the ensuing depression that spread through the country. Although money was hard to come by, people could escape their down trodden lives for a couple of hours, all for the price of a nickel.

It's no great secret that in times of trouble and stress people often turn to activities of entertainment and leisure. Those who like to gamble, but yet aren't fully confident to travel by air, may turn to the Internet to take their minds off of things, even if only for an hour or two.

Although all of America has endured a great deal of pain and suffering from the attacks, the land-based gaming industry could suffer more than its Internet counterpart if a drawn-out war on terrorism unfolds, as many experts are predicting.

According to the Las Vegas Convention and Visitor Authority an estimated 250,000 tourists transcend on Sin City a day; 46 percent of them arrive by plane and help generate a $31.5 billion-a-year tourist industry.

If that market saw a 5 percent decrease in visitors, or 12,500 people a day, it could have a lasting effect on the city. According to a CVA survey last year each visitor to Vegas spent $711 on non-gambling items, while the 85 percent who gamble spent an average of $665 a visit. Combine these two sources of revenue, and a small percent of visitors, roughly 5 percent, can generate a lot of money--about $3 million a day.

While it may seem trivial to contemplate the effects of a devastating attack on America to the gambling industry, the possibilities are real and worthy of discussion.

Online operators have long since discovered they don't have to worry about providing cocktail waitresses in tight and skimpy outfits or building nice steak houses adjacent to their gaming floor to enhance their players' visits like brick and mortar facilities do.

The beauty of online casinos has always been the ability to play blackjack in your bra, poker in your panties or bet on a baseball game in your boxers. Players don't need to board a plane or tour bus to get to the casino.

No online operator wanted to see his or her business increase last week, but it did. No one wanted to see hotels on the Strip over the weekend sitting half empty, but they were.

Equally, no one wants to see America enter into a war that lasts long term, but it may. And if a long international war lies ahead, it may be a long time before the casual traveler feels safe and confident in going into the air for a leisurely weekend at the craps table.

They may instead turn to the Internet for a temporary escape. They may not want to, but they could.

Tragedy Could Affect Market Share for Land-Based and Online Gaming is republished from
Kevin Smith
Kevin Smith