Casino Management in Integrated Resorts

Desmond Lam

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9781138097483
• eBook ISBN: 9781351599344
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Casino Management in Integrated Resorts introduces students to the changing nature of casino businesses within the framework of an integrated resort or hospitality organisation.

In the new integrated casino model, casinos play an important role not only in revenue generation but in supporting the other amenities in the resort, including bars, restaurants, hotels and theme parks. This book brings readers up to speed with the challenges of managing a casino within this rapidly expanding gaming–leisure–tourism industry. It covers a range of essential topics, such as the basic psychology of casino gaming, the role and history of casinos within an integrated resort, staffing, floor design, table and slot game management, control and security, marketing and social impact.

Written in an accessible style, this book is suitable for readers with no prior knowledge of, or experience in, casino operations. It will be an essential introductory yet comprehensive resource for all those undertaking casino management courses.

Chapter
1Introduction

Gambling or, perhaps more appropriately, gaming is an activity that is generally accepted by our modern society and often involves the use of money to take risks so as to gain additional value. The activity is sometimes described as playing a game of chance that involves some elements of chance and/or skill. It can take various forms in different cultures and across time. Once thought to be a shady business, casino gaming has now become a legitimate and lucrative industry in an increasing number of countries, country states and jurisdictions. Besides casino gaming, there are many different legal forms of gaming, including state lotteries, sports betting, and horse and hound race betting.

Among the various forms of gaming, the world of casino gaming is big and rapidly expanding. Interestingly, many people may not know that the term ‘casino’ traditionally refers to a public hall for music and dancing. It is simply a leisure and entertainment venue for adults. Nowadays, however, modern casinos refer to places that offer gaming entertainment such as slot and table games, and other electronic table games or gaming machines.

The casino gaming industry is indeed an attractive generator of employment and economic income. In 2017, commercial casino gaming businesses provided more than 360,000 employment opportunities and contributed around US $9.2 billion in direct government taxes in the United States. Twenty-four states now offer commercial casino entertainment in various forms. The Asia-Pacific region, led by Macao and Singapore, is the largest casino gaming market in the world today. Macao, the only Chinese city with legalised casino gaming entertainment and integrated resorts, has 14 casinos and employs more than 100,000 people in its integrated resorts. Each year, Macao attracts more than 30 million visitors to its city. Its gross casino gaming revenue reached a whopping US $37.6 billion in 2018 (the highest in the world) and is expected to rise further in the coming years. While Macao reigns as the ‘king’ in global casino gaming, Singapore’s two integrated resorts command a highly respectable position in the global casino gaming market share.

Today, modern casinos in Las Vegas, Macao and Singapore are embedded within large compounds and packaged for stakeholders as integrated resorts. The concept of an integrated resort is that it is a multifaceted property that comprises a number of amenities like hotel rooms, food and beverage outlets, retail shops, meeting and entertainment spaces, and, most importantly, a casino. An integrated resort provides a composite of customer values, with each business unit complementing the others in order to achieve business synergy that would not be possible, or effective, if they were each a standalone unit. That is the beauty of an integrated resort, and it is also the reason why integrated resorts are becoming increasingly popular around the globe. In fact, modern integrated resorts can be found in many places worldwide including Las Vegas, Atlantic City, Macao, South Korea, Philippines and Malaysia. Japan is the latest country to legalise its casino industry with the potential of issuing three casino concessions, and industry observers are expecting the first Japanese integrated resort to open by 2025.

There is currently no clear definition of integrated resort in terms of its composition and/or percentage of composition of its various amenities. For example, is a resort that comprises a hotel and a casino considered an integrated resort, or is it one that includes a collection of entertainments, hotels and restaurants? Technically, both properties can be defined as an integrated resort; however, the public normally considers the latter to be equivalent to an integrated resort. Moreover, it is unclear whether a casino has to be a part of the definition of an integrated resort.

More recently, the term ‘integrated resort casino’ or ‘integrated casino resort’ has been used. The former is sometimes used to differentiate an ordinary casino from a casino based within an integrated resort, while the latter refers to a resort that has a casino within its complex. Nevertheless, a casino within an integrated resort will certainly add to the complexity of casino management. However, its (casino) major functions remain similar to a standalone casino.

As stated, the casino plays a pivotal role within an integrated resort property; it is often the major revenue generator for the whole property. In Marina Bay Sands, one of Singapore’s two integrated resorts, roughly 80% of its net revenues were generated by its casino. Nowadays, modern casinos are designed as part of an integrated resort with world-class entertainment events, shopping outlets, and food and beverage offerings. Many people visit integrated resorts for leisure purposes, such as to watch entertainment shows, have exciting experiences and enjoy hospitality services (e.g., luxury spas and Michelin-star restaurants). Meanwhile, visitors may also engage in gambling activities as part of their leisure experience. The integration of the casino into the rest of the amenities in the integrated resort, and vice versa, creates a multiplier effect that synergised the integrated resort business. All touchpoints between casino players and the integrated resort are important to help generate strong customer satisfaction and repeat visitation; personnel within the integrated resort, such as limousine drivers, hotel front office receptionists, food outlet waitresses, retail salespersons, VIP hosts and casino dealers, all play a critical part.

Casino gaming within the context of integrated resorts provides a multitude of player values – entertainment, excitement, social and winning. Casino game play is entertaining. While a small percentage of the population may fall into pathology, most visitors to an integrated resort casino have no problem. Many customers do so simply for leisure. Modern casinos typically include many different games to keep their guests entertained – sic bo, baccarat, blackjack, roulette and electronic gaming machines.

Integrated resorts can bring huge economic benefits to a host destination. Such benefits may include local employment, resource sharing and direct taxes (gaming and non-gaming). Attracting visitors to a destination can result in incremental spending by tourists in the local communities. Ideally, an increase in visitors encourages complementary developments (i.e., more food and beverage outlets, attractions and other business activities), which in turn attract more visitors. The development of infrastructure to support increasing the number of visitors further boosts tourism revenue and attracts more people. For example, Macao’s long-term investment in infrastructure (with revenue generated from its casinos), such as the Taipa Ferry Terminal and Hong Kong– Zhuhai–Macao Bridge, makes it a more connected global city. This, in turn, will help bring in higher-spending visitors to the special administrative region.

In many jurisdictions, casino gaming is a major tax generator for the local government. In Macao, for example, gaming taxes (nearly 40%) contributed around 80% of the state’s total revenue in 2017 (Macao Statistics and Census Service, 2018). In the United States (the gaming tax rate varies from state to state), commercial casino gaming contributed US $9.32 billion in direct gaming tax revenue in 2017 (American Gaming Association, 2018). Integrated resorts also provide plentiful employment opportunities for local communities. Integrated resorts and their casinos in Nevada directly and indirectly employed more than 400,000 people (American Gaming Association, 2018). In Macao, more than 100,000 individuals work in its numerous integrated resorts, including around 60,000 in its various casinos (Macao Statistics and Census Service, 2018). In other jurisdictions like Singapore, its two integrated resorts support more than 40,000 jobs and employ around 22,000 people (Casino Regulatory Authority, 2012). Not only do integrated resorts help support the employment of the local community, they also often pay more. For example, casino employees in Macao are, on average, paid more handsomely than the median monthly income of the local population.

In this book, we will uncover and discuss further relevant issues about modern casino management in integrated resorts. To do so, we will first explore a brief history of gambling, casinos and integrated resorts in Chapter 2. The concept of casinos and casino gaming has evolved in the past decades. In Chapter 3, we delve into the roles of casinos in modern integrated resorts. Next, in Chapter 4, we examine in detail the psychology of gambling, including casino gaming. Chapter 5 will follow up with a discussion of casino floor design and servicescape. A central part of this book is to review basic concepts of casino operations. This will be covered in Chapter 6. After a review of how marketing or promotion is conducted in casinos (Chapter 7), a comprehensive assessment of the social impact of casinos and integrated resorts in Chapter 8 is included. Finally, we end this book with two additional articles about how to adapt to new work cultures.

Insights

Understanding the key success factors for global casino business

In July–August 2007, Christian Stadler published in the Harvard Business Review his research findings on the four principles of enduring success for companies operating mainly in the European context. His research revealed that great companies that have proven to be very successful over time demonstrate four key principles:

1. They have clear business priorities. They tried to exploit their opportunities and capabilities before moving into new areas.
2. They are adaptive and have diversified supply bases, products, customers and markets.
3. They learned from their previous mistakes to ensure that they do not make the same mistake twice.
4. They change cautiously with the times and trends.

These are basic principles for enduring success that must be adopted by integrated resorts operating in the ever-challenging global gaming entertainment industry, as the industry is currently experiencing unprecedented business expansion and greater opportunities, particularly in Asia. Asian jurisdictions like Japan and Vietnam have hoped that well-regarded international integrated resort operators like Las Vegas Sands, Wynn, MGM and Melco can help them to expand their offerings to the rest of the world – product offerings that are supposed to attract an expanded and diversified visitor base, leading to higher standards of living for their own residents.

To do so, integrated resort operators need to determine their business positioning and offerings, adapt to local culture and heritage, and readjust their strategies – gaming versus non-gaming, VIP versus mass market, focus versus expand, foreign imports versus local staff, etc. The time of exploration is over. Operators needs to work through the basics of doing business and stay focused on the offerings.

In the long term, adaption is still the keyword. Operators need to adapt to their environment and the wishes of the local government. Those that refuse to admit the changing of the tides will suffer, not in the short term, but as time passes. Already, locals have started to take sides. Just as customers for any jurisdiction become increasingly knowledgeable and sophisticated, all thanks to free competition (which provided a backbone for customer education), local residents and governments have become more mature. As governments and residents slowly understand their needs and vision, their demands for the concessionaires will increase over time. Operators who fail to recognise these needs and vision will falter over time. A balance must be struck between internal and external demands. That balancing act will take time to learn and master, but will eventually pay off. This is provided that one adheres to the first three principles of enduring success. Integrated resort operators who do not will surely suffer over time.

• 1) Exploit, 2) Adapt, 3) Learn and 4) Change with the tide – this is the way forward for the global casino gaming entertainment industry.

Chapter
2History of gambling, casinos and modern integrated resorts

The world of gambling has come a long way. Whether it is a game of chance or skill, gambling is an act of risk-taking in return for some value. Typically, gamblers derive several values out of the activity: entertainment, excitement, monetary, social and so forth. Gambling, in different forms, has been very much a part of human history and is performed in most parts of the world today. It is probably the only human activity that is practised by all cultures and across all times. Evidence of humans gambling has been found from the early days of ancient civilizations in Egypt, Rome and China. Keen Chinese gamblers engaged in wagering activities throughout China’s documented history. Ancient Chinese historians recorded the wagering of different types of games as far back as the first documented Shang dynasty more than 4,000 years ago. Numerous ancient Chinese rulers, who thought gambling activities would disrupt social peace and harmony, often imposed strict regulations and even anti-gambling laws. Despite these measures to control (and ban) them, gambling activities proliferated over time throughout China.

Nowadays, eager gamblers, or rather consumers who purchase gambling products, can be found everywhere around the world. While lottery purchase and betting is allowed in most modern cities, casino gaming is legal in only some countries, such as the United States, Canada, the United Kingdom, South Korea, Macao and Singapore. Despite its small geographical size, Macao is currently the biggest gaming market in the world. Millions of gamblers pack into its modern casinos each year. Macao’s annual gross casino gaming revenue has ballooned from US $2.3 billion in 1997 to more than US $37.6 billion in 2018. Japan, which only recently passed a bill to legalise integrated resorts with a significant (~3% of total building space) casino gaming component, plans to follow the rest of the world. The first Japanese casino is expected to come into operations as early as 2025.

In reality, the history of wagering by humans is said to date back to the Stone Age – although wagering objects like dice have only been dated to a few thousand years ago. During that time, the Greeks threw objects known as astragali; these objects were somewhat similar to modern dice and featured the heel bones of sheep. In China, gambling houses were widespread in the first millennium BC, and betting on fighting animals was common in that period. Lotto games and dominoes (precursors of the modern pai gow game) appeared in China as early as the 10th century. Playing cards first appeared in the 9th century in China and then spread to Europe. In other Far East countries like Japan, documented records trace gambling as far back as the 14th century.

Commercial casinos in Europe, the earliest form of modern casinos, can be dated back to the 1500s in northern Italy. In 1638, the Ridotto was established in Venice to provide a controlled gambling environment amidst the chaos of the annual carnival season. Casinos started to spring up all over continental Europe during the 19th century, while at the same time in the USA much more informal gambling houses were fashionable. Poker, the most popular US card game associated with gambling, is said to have derived from the Persian game As-Nas, which dates back to the 17th century.

One of the earliest games still played in today’s modern casinos is the two-player card game baccarat. A version of baccarat was cited as early as the 1400s, when the game travelled from Italy to France. Roulette, as we know it today, was invented in the gambling houses of Paris in the 18th century and gradually became a very popular table game across Europe and the United States. But there is a slight difference: the ‘European roulette’, with a single zero only, is popular in Europe and Asia, and the ‘American roulette’, with a zero and a double zero, is common in the United States.

Brief gambling history of the United States of America

As a nation built by migrants, the USA has a relatively brief, but spectacular, history of gambling. In fact, the first slot machine in the world was invented in San Francisco by Charles Fey in 1894. Fey used car components to create a machine with three reels. Each reel had ten symbols (e.g., hor...

Table of contents

• Cover
• Half Title
• Series Page
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Preface
• 1 Introduction
• 2 History of gambling, casinos and modern integrated resorts
• 3 The role of the casino in an integrated resort
• 4 Psychology of gambling and casino gaming
• 5 Casino floor design, servicescape and service quality
• 6 Basic casino operation concepts
• 7 Marketing casino gaming
• 8 Social impact of integrated resorts
• Additional article I
• Additional article II
• References and further reading
• Index