Gaming executives say casino industry has reached saturation point

“New England is saturated,” said Penn National Gaming President Tim Wilmott. “The market is crowded in Ohio. It’s a little underserved in Florida.”

So what does that mean for companies in the business? Panelists said it means growth will occur by acquisition and mergers and possibly diversification into the online world. Even international markets are getting crowded, with Southeast Asia still the best option for new venues. Wilmott said it is a matter of time before Japan and South Korea also have casinos.

The CEOs agreed that Europe is already home to a mature casino industry and that Mexico and South America could be new frontiers. But the saturation of the industry has resulted in more longing looks at the online industry, even though it comes with a host of other issues. One of the biggest concerns about online poker had a familiar ring - will federal lawmakers ever get around to developing a national regulatory plan? 

Like most people attending the four-day 2013 Global Gaming Expo that was held this week, the CEO panel was pessimistic about the federal legalization of online poker.

Panelists were satisfied that the state-by-state regulatory strategy is the next best way to pursue the legalization of gaming in cyberspace. But with more states on track to legalize poker play after Nevada and New Jersey, another issue was raised. What effect will online play have on existing brick-and-mortar casinos? “That’s the one thing that keeps me up at night,” Wilmott said. “Right now, what’s going to happen is as clear as mud.”

Many industry leaders expect online gaming will create more bricks-and-mortar customers in the future, the way riverboat and tribal casinos expanded the market for Las Vegas in the 1990s.

Panelist Tobin Prior, CEO of Ultimate Gaming, Station Casinos’ entrant in the online poker world, expects the company to generate revenue and stimulate local play through cross-marketing. But what other ways are there to assure shareholders a healthy return on investment in the casino industry? Panelists said it’s in consolidation and mergers.

On that note, Pinnacle is wrapping up a us$ 2.8 billion acquisition of Ameristar Casinos. Other recent industry deals include Scientific Games’ acquisition of WMS for us$ 1.5 billion and Bally Technologies absorbing SHFL Entertainment for us$ 1.3 billion.