In 2025, existing operators will plan expansion, plot acquisitions and prove there is plenty of potential growth in global gaming. Nearly 70 years ago, on June 20 1955, Life Magazine’s cover asked the question, “Las Vegas – Is the boom overextended?” The proposition, somewhat ridiculous in hindsight, was that Las Vegas, the largest gambling market, had peaked. In that year, The Riviera, The Royal Nevada, Showboat, Moulin Rouge and Dunes joined the El Rancho, Sahara, Last Frontier, Sands, Desert Inn and The Flamingo as part of the city’s casino landscape. Not all the new properties survived the decade, but over time the city prospered, despite the proliferation of Tribal, national, international and digital gaming in subsequent decades.
Today, the same question is being asked. There are two certainties in the coming years; there will be those businesses that adapt and thrive, and those that will not. In this article, I will review and summarize development strategies that have led to industry success, and what they mean for future growth and development as the industry enters a new era.
Personal Story
We all have stories and events that have shaped our thinking. These are important. In some aspects, my own route to working in casino development and strategy may be unique. In other ways, it is very common.
One night in the mid-1990s, the BBC aired a documentary on Las Vegas’ hotel architecture, showing pirates, tigers and memorably a black pyramid in the desert. For someone that planned a career in real estate development, the insights shared were fascinating ̶ and I was hooked.
A couple of years later, on a road trip with my parents, we spent three days in Las Vegas, staying at The Mirage. At night, I walked down the Strip, observing the megaresort construction in progress. Back in the 1990s, there was nowhere on earth that matched the scale, the energy and the tangible optimism of Las Vegas. It inspired a generation of those that are now leaders in this industry.
My professional career in real estate investment, development and capital markets followed. From basement casinos in England to salons in Monte Carlo, the silent gambling dens in Asia and the vast floors of Tribal properties, I visited casinos across the world. Playing online poker (when you needed a CD to upload the software), I had a ringside seat watching the online providers grow from scrappy start-ups to global behemoths.
As regular readers may note, I wrote my MBA thesis on Strategic Competitive Advantage in Las Vegas casino resorts; afterwards I started teaching, writing and consulting about the casino and hospitality industries, moving to the USA nearly a decade ago to work here. The story of Las Vegas holds many lessons for those of us working in the industry.
Yet many think casino development and management are easy; that if you build it, they will come. They are wrong. There are dozens of casino failures, underperforming properties and bad strategies implemented, repeatedly. There will be more.
As I have noted in the past, research points to just two drivers of sustainable competitive advantage. The first being location, the second customer loyalty. There are different types of customer and different drivers of loyalty, and those seeking to make investment decisions need to consider this carefully.
Location
Your location determines what type of business you wish to be. There are many things you can change within your four walls after construction; but once your property is built it cannot be moved. That is not to say that a remote location is terminal to your casino and, in certain cases, as Steve Wynn liked to say, “the destination makes the location.”
As we have seen in the successes of Tribal and regional casinos across the US, remoteness is not an impediment to visitation, indeed Las Vegas as a destination was originally hours from any major tourist destination by car. However, obviously developing in a remote location with a single feeder market, you are always subject to a rival moving closer to that population, therefore eroding the competitive advantage.
In global markets, current developments and recent openings in Japan and South Korea, alongside proposed developments in Brazil and Thailand, come with great development cost. In North America, Canadian side Niagara Falls may change its licensing restrictions to form a regional cluster, and increased US expansion in New York (and possibly Texas) will have significant consequences to existing and neighboring resorts, the majority of which are Tribal.Generally, the closer you are to a major population center, it is preferable in terms of longevity and casual play.
Casino expansion can either grow revenues holistically or cannibalize the existing geographic market; however the answers to long-term sustainability to geographic challenges are found in Nevada. Reno, Laughlin and Las Vegas have very different experiences and divergent outcomes. Indeed, Laughlin, once a prosperous destination, has fallen significantly below Washoe County in terms of gaming revenue, which in turn is being challenged by resurgent Downtown Las Vegas.
Therefore, the immediate decision facing new developers is whether to locate in a remote location with perhaps a monopoly or duopoly in a particular region, or be part of a cluster in an established or growth market?
History tells us that while there may be benefits to having few competitors, the major casino markets of Las Vegas, Atlantic City and Macau attract a different type of customer; and the clustering effect has the potential for revenue diversification and greater sustainability.
Customer loyalty
Reverting to the Las Vegas crisis in the mid-1950s, the casino product was generic with the experience formulaic, product nearly identical and the main differentiator, entertainment, routinely moving between the established properties. Even today, there is no significant differentiation in the gaming product, but in the last decade there has been a notable strategic imperative to increase customer loyalty. Unlike location, which is a singular decision, ongoing decision-making in positioning, investment and offer, to capture customer loyalty is consistently under review, with many successful strategies found in Las Vegas history and applied contemporaneously globally.
Segmentation
The first question asked is, who is your customer? If you can’t offer a detailed response, then your casino has a fundamental problem. (Gaming America sidenote: This is exactly what Derek Stevens said when we asked him what one's first consideration should be when building a new casino. It's exactly what he thought of first when introducing Circa to Downtown Las Vegas).
I recently took a group around Downtown Las Vegas, perhaps the most competitive market on earth. Back in the 1970s, Glitter Gulch was the home of gambling. Not the resort experience of the Strip, but a more concentrated market with properties packed into a narrow corridor with few discernable differences or impediments to customer migration.
Sam Boyd, who had managed The Mint, Sahara and Plaza, built The California to attract tourists coming from the neighboring state. The name didn’t attract them; the offer was undifferentiated to all others in the market, and the property (and company) were facing oblivion. Boyd had also lived and worked in Hawaii. In a final throw, he marketed his property in that state, changed the offering to appeal to Hawaiian customers and they started coming. Boyd’s subsequent strategies focused on local customers around Las Vegas and, with a customer intimacy strategy in place, expanded across the USA into regional markets. Of course, by demographics is one way to segment customers, but today there are dozens of factors properties should consider.
Alternatively, by looking outside the existing customer segments for unmet demand potential, opportunities remain. Identifying your customer is the first ̶ and crucial ̶ part of the equation, but it is not the full answer. The next layer is understanding your customer’s needs in order to determine their loyalty drivers. And, again, the case studies for success are found in Las Vegas’ evolution.
Storytelling
Based on the Las Vegas experience, the spectacle was far more sophisticated than many customers can appreciate, and casino design operates on multiple levels. Not only are modern casino resorts shopping malls for experiences, but they have to connect with and communicate with their chosen customer.
Just as I initially engaged with Las Vegas through a documentary, there were always movie and TV show appearances with casinos featuring alongside the stars of the day. From Ocean’s 11, Diamonds Are Forever, Charlie’s Angels, and celebrities aligning with resorts, notably Orson Welles’ informercials on gambling. Some, like Caesars Palace had a much-reported party on opening night, implosions became national events, and openings featured advertisements – even TV specials – to showcase the narrative of the property. The use of media to sell Las Vegas’ casinos has been something that has been part of developing the brand – and story – into modern Americana.
The primary aspect of casino design and architecture is communicating a marketing message. Not just what is inside the building, but to entice the customer that the property is seeking to attract. From the post-modern Mediterranean cypress trees and Greco-Roman fountains of Caesars Palace, faux-Circus tents, or contemporary urban atheistic of the present generation, the best casino architecture is that which identifies and resonates with the target customer.
From the initial encounter, a well-designed property tells a story. Initially in Las Vegas casinos, that story was about luxury and aspiration. This evolved to escapism and elegance. As the market became increasingly competitive, some resorts communicated value, amenity and action. Family, fun and fantasy followed. As casino architecture matured, aspects of storytelling were weaved into all elements from top to bottom. The period of 1990s theming was the most obvious, but even the more contemporary designs, notably Wynn, Cosmopolitan and Fontainebleau, contain more subtle elements of theming that appeal to their target customer’s psychology. It isn’t just what you want your customer to do, it is how you want them to feel. Keeping this promise throughout the resort is the secret of modern casino design and hospitality management.
Property storytelling, inspired by the cinematic architecture and growth of modern media, has evolved with Las Vegas’ growth. There are lessons to be taken.
Relationship building
The theory of loyalty is rooted in customer lifetime value, which we explored in a previous issue. The drivers of loyalty are of course customer dependent, but all assume the properties of cultivating a relationship between customer and property/operator. Over decades, significant investment has been made in this area. Once a driver of competitive advantage, there is near ubiquity in players cards featuring tiers, free play and benefits, including comps. This aspect, plus price, can be defined as transactional loyalty.
Amenities, facilities and range of offering that is required for a particular customer, whether as a business traveler or as leisure tourist, we define as functional loyalty. The use of brands, entertainers, affiliations that are aligned with a particular customer demographic that will make that customer choose that property or retain their loyalty, is expressed as Tribal loyalty. All of these are part of the relationship building exercise and the most common applications in general casino management.
However, the two most important drivers of loyalty – and indeed relationship building – are much harder to actively manage and require a more strategic approach, something that historically in Las Vegas, we have perfected. It wasn’t an accident that at The Mirage, Bellagio or Wynn, the lighting was an attractive tone, that the scent evoked a particular sense, or that the sound of water reminded you of tropical shores. Neither was it an accident that you were greeted by a smile, the dealers were able to converse in a friendly and open manner or that customers felt elevated – even special – when coming to Las Vegas casinos. To some this is the “hospitality” experience, but to those that work in this sector, it is an elevated craft in terms of creating both emotional and aspiration loyalty. Las Vegas casinos have taken conscious steps to create positive experiences and interactions, that by design, elicit an emotional response and embed as memories.
Whether it is a past experience, that when recalled offers the customer pleasure, or an active response to a physical environment, which makes the customer feel elevated, creates emotional or aspirational loyalty from the customer… and that relationship between the place and the customer is deeper than price, points, comps or any other structured relationship. And when that loyalty connection is made, it is very hard to break.
That’s what makes the casino and hospitality experience forged in Las Vegas different from any other. It is about storytelling, design, operations, but also the requirement to understand the psychology of the customer and engage on an emotional basis.
The new dimension
In the 1990s and 2000s, casino operators began to expand their regional footprint in newly deregulated US markets. The case study is Harrah’s. By using their national infrastructure and the technological advantage of creating and managing a distributed players database (where players' cards could be used in any Harrah’s property and points accrued) Harrah’s could have more regular contact with customers than the traditional annual visit to Las Vegas provided.
Three decades later, online casino and sports wagering is permissible in 36+ and online casino in seven – and more will follow. Whether offensive or defensive plays, understanding the challenges and opportunities of online and mobile wagering will define the future of the US gaming; however, the opportunities for gaming operators to have a relationship with their customer – and literally be in their pocket – is one that would be fantasy to past generations of Las Vegas casino operators. Moreover, it fundamentally changes the industry.
In a 2021 column in this magazine, looking at a post-Covid Las Vegas, I asked the question about what business we are in. My conclusion was that this was still the hospitality business. Having given this some further thought, I wish to review my conclusions: looking at 2025, the landscape has changed. Although there is much we can learn from our past and that nothing is new, this fails to acknowledge that, in terms of technology, in fact, everything is new.
Indeed, in my Generation Next column earlier this year, I explored the development of space and time in relation to managing land-based casinos. With online gaming, there is no space required and the product can be accessed anytime, anywhere.
Generational shift: Farewell Tropicana, Mirage, and introducing the next iconic casino
The Tropicana was formative when it opened in 1957. Inspired by Miami’s Fontainebleau (and built by part-owner of that property), it was arguably the first resort in Las Vegas developed for leisure, with a casino as an amenity, ushering in a new type of property. It understood who its customer was – the post-war generation – and met their needs, both physical and emotional. At time of writing, it is closed and will be imploded before this column is printed (it duly has been).
The Mirage reinvented the casino in 1989. Inspired by Steve Wynn’s genius, it was the first fully conceived megaresort, built for entertainment and fantasy, ushering in modern Las Vegas. It knew who its customer was – the baby boomer generation – and met their needs, both physical and emotional. At time of writing, it is closed and is slowly being removed of every legacy characteristic to make way for the new Hard Rock.
Their exit only reminds us that these properties – with all their collective memory – were built for their generations. What we also know is that existing customers are more loyal than ever before but are a declining demographic. The future growth is in younger customers and there is space – either in Las Vegas or elsewhere – for the new icon that defines the next generation.
We know there needs to be storytelling, a brand and design created. The next generation of customer seeks exploration and discovery, adventure and surprises, and message attuned to that demographic, globally.
Whereas past casino resorts developed relationships with their customers using media, mail and experiences, it is conceivable that the next generational icon will begin its storytelling and have personal connections in place before their doors open, thanks to the prevenance of digital communication and personalized engagement. In this new age of immediate global content distribution, the opportunities are endless.
And with the benefit of understanding the drivers of strategic competitive advantage, we can apply all the loyalty lessons from the outset, with the opportunity to build close intimate relationships that will last decades. There are very few groups that have the skills and vision to successfully strategize, plan, build, open and operate a new casino resort from scratch. Many outsiders have come to Las Vegas, showing the Nevadans how to do it, thinking that they know better. As we saw in the 1990s era, the most successful openings came from those that were already in and understood the market. Mistakes are often made by those that fail to appreciate or understand the lessons of the past.
Looking forward, whether in Las Vegas or in another market, the opportunity exists to reshape the industry. Using storytelling and strategy to synchronize online, land-based, digital and physical that has the potential to redefine possibilities.
It has been done before. It will be done again.
Nothing is new.
Everything is new.
