Gambling is an old practice that people have used to make money by either betting on cash, cars or other forms of property. Earlier, the practice was considered illegal until recently when some states decided to make it legal after observing how profitable the business was. Whether gambling on life or one’s dollar, participants in a gambling session display their undoubted nature to take risks. Casinos make use of this instinct, the dinging and buzzing slot machines with glitzy décor and table games that create the impression of one’s transfer into a new place coupled with a peculiar experience. In the U.S gambling industry has had a rough time in maturing as compared to other industries such as the hotel business. It is until the year 1988 when legal casinos were allowed to operate in Nevada and New Jersey. The suppliers were few due to the ban that had been implicated on gambling and, as a result; supplier bargain was low. However, on the legalization, the business expanded exponentially in the Midwest as well as the South, to incorporate new investments in as far as Las Vegas. This came with an increase in supplier bargain as the suppliers continued to increase. Additionally, the bargaining power of the buyers also increased as many people responded to the lifting of the illegal ban. As time went by, more casinos were established and today, more than twenty states in America have legalized them. Due to this proliferation, revenues from gambling increased and the local government had a fair share of income coming from the gambling industry. Although, gambling has been allowed in a number of states, the government highly regulates the activities of the casino through licensing and taxation.
Just like most of the other industries, gambling in the U.S has been faced with increased competition, not only internally but also internationally. The new entrants in the gambling market have had a great impact on the competitive strategy of this market. This is not to mention, Macau, the part of China where gambling is legalized. As statistics has it, within the three months of the year 2008, Macau had generated 3.71 billion US dollars revenue from its casinos. This was more than what Atlantic City and Las Vegas both combined produced. Due to the high competition posed by Macau, the international properties in the region have caused a change in the industry in the United States. On the other hand, the largest slot machines supplier is headquartered in Nevada at Reno. After the concentration of the slot machine, the company resolved to expand through the development and acquisition of strategic alliances. As a result, the competitive strategy could be affected by the substitute gambling services offered on the internet. For instance in 2005, IGT assimilated a Canadian distributor who provided gaming services that were internet based. Strategic agreements were also made with the Chinese lottery market in the year 2007.
Despite the high decline expectations of the Casino revenues, sales on gaming machines were bound to increase due to the demand of the slot machines that were server based.
Buyers in the Casino come from all over the world. This can be established from the fact that they reach the casino gambling centers through airlines. This, however is limited to the large casinos known internationally. The American citizens also constitute many buyers of the casino gambling industry. Most of these buyers are comprised of the youth, some of whom are addicted to the game. These buyers buy tickets to the casino gambling centers as well as the gaming machines. The buyers in this industry have a medium bargaining power because a bigger percentage comprises of the youth. The youth may not have the capability to push for better services and reduction of prices. However, the few adults and the international buyers push for the better services and prices. Since they are not many, their power is limited and therefore they have a medium bargaining power.
Suppliers in the Casino gambling industry come from the Native American society. Licenses are limited to non-American natives thus restricting the ownership only to the Native Americans. On the other hand, non-American natives are offered with management roles of the property of these casinos. The suppliers provide with gaming centers, gaming facilities such as tables and slot machines. With the proliferation of the internet gambling, they also provide websites that bets can be made. Since most of these suppliers are Native Americans, the taxes imposed on them are not very high. Their competitors are also few, thus making their bargaining power extremely high. For instance, the IGT had their slotting machine concentrated and, therefore, had to shift to internet based gaming. This proves that the supply is less than the demand and at such an instance the suppliers’ bargaining power is always high.
Apart from the coin-fed machines, other firms like the bingo and the racetracks in Iowa and Delaware would wish to join the Casino gambling industry. Other international companies have also shown interest in joining the industry especially in Macau. However, there have been barriers to the new entrants. For instance, licenses cannot be issued to the non-American natives. This is according to the regulations of the American states. Additionally, these states regulate the casinos to the coin-fed machines and the table games. Taxation also regulates the market to a large extent. For instance, 10 percent taxation is provided for the local markets whereas in other markets it exceeds 20 per cent. This discourages investment in other markets indirectly and as a consequence, the number of casinos in other markets is restricted. Another threat that faces the new entrants into the casino gambling industry is a high competition from the pre-existing firms. These new entrants find it hard to keep abreast with the competition that these already established firms ensue. While the most aggressive ones are able to maintain, some end up closing down or reverting to other types of investments.
Substitute for the services offered is also common in the casino gambling industry. For instance, a high technology has come to revolutionize the gambling industry. Nowadays, with the introduction of internet gambling, people do not have to board airplanes and vehicles to move to the casino gambling centers. They can access them from their houses. This is because the gaming facilities are provided online, and bets can be made still over the internet. Additionally, these firms collude with the banks to effect the gambling transactions such that money can be sent to the winners via the internet. As a result, the physical absence of these participants in the gambling centers has caused changes in the industry. Since most of these centers are found in clubs, their absence causes a decline in the sales of the drinks offered in those clubs. The number of gamblers in the gambling tables also reduces significantly. Due to this shift to internet gambling, the buyers have low bargaining power since they hardly gain direct contact with the suppliers to be able to negotiate effectively for low prices and increased quality of services.Profits are minimized for the buyers but maximized for the suppliers.Sales, on the other hand, may rise significantly since the customers who initially could not reach the casino gambling centers can now access the services online.
This far the casino gambling industry can be defined as a group of competitors that offer gaming facilities where buyers gain profit by winning the games. Just like any other industry, the casino gambling industry has suppliers and buyers. However, unlike other industries, buyers in the casino gambling industry have an opportunity to gain profits by winning. The profit earned, has to be shared between the suppliers, the buyer and the government in the form of tax revenues. Participants in the gambling session are willing to take the risk since the highest chance available to them is the risk of losing money and property. This is because there are many participants in the game and the end only one is awarded. There are some firms that have been established in the gambling industry for long. For instance, Macau in China has existed for long and poses great competition to other firms in the world. The International Game Technology also has pre-existed in the market providing many computerized gaming facilities. Being the largest provider of the slot machines, the company is a major threat to the upcoming firms due to its high competitive power. Macau in China also offers great competition to the American industry. Competition in the casino gambling industry is, as a result, of these large pre-existing firms. They pose a high level of competition to the upcoming firms making them unable to thrive in the market (Case Study, 2014).
A couple of lessons can be learnt from the casino gambling industry. However, the most paramount lesson is the spirit of taking risk involved in the industry. In fact, the participants in the gambling industry stand a higher chance to lose than to gain. While some people bet on thousands of dollars, others bet on vehicles and other forms of property. It is vital to note that the industry participants are ready to lose or gain big. While the spirit of risk taking is encouraged especially among the young people who fear for the outcomes, it is extremely essential to take the risk in the investments where the chances of losing are greatly reduced. The evaluation of risk is paramount before undertaking any investment. However, the young and anyone else should not cower from taking risks in any field they show interest in. The fact is, one is made stronger and wiser after every failure. As Mark Zuckerberg notes, “the biggest risk is not taking any risk in a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks (Qoute, 2014).”
Qoute, M. Z. (2014, January 12). Risk Quotes. Retrieved from Brainy Quote: http://www.brainyquote.com/quotes/keywords/risk.html