The Economist Corner: Millennials and Casinos
According to The Economist the casino industry-Las Vegas, Atlantic City, state gambling and Indian casinos-has a problem: aging clientele.
Slot machines which account for most of the gaming revenue in this country are not generating the profits they once did because millennials in particular are not playing them like their parents.
I think this idea that millennials are not following the patterns of previous generations is true across the board in all industries isn’t it? Why would there be so many articles over the last few years about how to capture the millennial dollars? Why would Whole Foods create 365 or Ahold Bfresh if they didn’t feel they had to change the manner of merchandising and product offerings in order to get in sync with this generation?
While Sheldon Addelson and Steve Wynn have successfully transformed Las Vegas into a convention and entertainment destination as well as created extremely successful venues in Macau to take advantage of the Asian desire to gamble, the industry as a whole is suffering around the country.
Some people like a gentleman named Mark Frissora who came from Hertz and now runs Caesars Entertainment are trying to change the experience-attract the millennials by changing the experience and the focus on the gambling instruments that typically dominate the casinos by creating a “casino within a casino.”
He along with MGM Resorts International are soon to open “experimental spaces for young people.” These will feature new types of slot machines that test the skills of the players-in the manner of the games they now play on their mobile devices.
In addition the physical layout of these new rooms called will feature LED screens that continuously change the backgrounds-something like the overhead screens with projections that have been in place on Fremont St in Old Las Vegas.
Other approaches involve virtual reality shooting games which allow you and others to bet on how well you do. There is talk of games involving groups of players with wireless consoles with a variety of games you can bet on as well as ‘electronic sports tournaments” and more contemporary music acts.
But as the man from Hertz says, “the industry is not filled with creative geniuses.” Ironically while selling the gambling experience- the executives themselves are reluctant to take a risk on something new. Cash flow believe it or not is also a problem. While Vegas isn’t going broke, all the major casinos seem to be carrying tons of debit which is tempering their desire to tweak the traditional models. And there’s slot machine providers themselves who aren’t crazy about the R & D and more expensive costs associated with change. The casinos are already in debt to them.
While Las Vegas is doing okay with the non-gaming strategy casinos elsewhere-casinos who are primarily dependent on slot machines-are not.
The “traditionalists” still feel that as millennials age and have more money they will become the same kind of gambling consumers as their parents.
As the parent of a millennial myself I’m not sure that this will come about if the casino’s keep the same old same old in place.
One of my colleagues at the magazine distributor I worked with who was fond of creating spreadsheets bringing together demographic information and “numbers” about income distribution by geographic location and groups once did one with millennials as the focus. His conclusion was that millennials basically didn’t have enough money for much in the way of entertainment or fine foods and so on.
And while it’s true when looked at on paper millennials are no- where near as wealthy as other groups in our society I told him his ‘story,” the conclusions he was drawing from his data collection- didn’t offer a true vision of what millennials do with their money.
Since I’ve had the opportunity to see firsthand how millennials approach things- from what I see they’re always willing and able to find the money and spend on things they really value, like an experience whether it be a new tattoo, a trip to some far off destination, or a music venue. They’ll also spring for great produce, wine and all the rest. When they feel the need –they’ll find the money.
They don’t appear to be particularly hamstrung by a lack of funds because they do spend their money differently. They don’t feel the need to accumulate in the same way as previous generations. While they certainly enjoy nice things and experiences they don’t acquire things with a goal towards increasing their status in quite the same way. Basically the rise of so many of the apps we see today reflect their mindset a lot better than “numbers” and statistics in general.
But if I had a hand in creating these new spaces for Las Vegas there are some things I would recommend.
For instance as someone whose gone to Vegas for numerous conventions in the grocery business I always found walking very far along the strip to be a pain after a while. It’s simply not laid out to do this.
What if a Vegas version of the High Line was created for biking and walking-giving another look at the Strip? I’m sure the Vegas people could figure out ways to get gambling and drinking on this as well as satisfy those who wish to exercise something other than their elbow.
And what about the trays of drinks they bring to you at the tables-why not have great craft beers-at 7, 8, 9%-the kind millennials enjoy drinking. And artisan spirits like gin and others that are being produced around the country.
And there’s the drones. Couldn’t some sort of area where drones can be flown in tests of skill with of course betting and drinking accompanying the action be created?
Ideas are cheap of course. Everyone has those. What remains to be seen is whether the traditionalists are right about patterns that have evolved over time or whether Vegas is going to miss the boat-fail to accommodate the differences in a new generation.