Intensity of Competition in the Casino Gambling Industry
Casino Gambling is one of the most developing industries in the United States of America. A considerable number of people have endorsed the act of gambling in their life. More companies have taken entry into the business though they are faced with many challenges such as competition from existing firms.
1: Who are the buyers in the Casino Gambling Industry?
The gambling industry has an enormous number of buyers since people in the U.S value the activity. The customers in the Casino industry include the gamblers, retailers, and wholesalers who bring gambling products to the target market. A person who moves into a casino has the intention to gamble and make winnings, so the product they are buying in the setup is the leisure of playing and the expected financial returns. In any industry, the buyers have a bargaining power; may it be minimal or exaggerated. For the case of a casino, the bargaining power of buyers is moderate because most of them will love to move to places where the services are affordable, and they expect better returns compared to low-quality sites. When a casino has high prices for their services, some of the customers may have to move away, and the best way to a casino to maintain its customers is to have moderate prices. The prices cannot go very low, which signifies that the consumers have medium bargaining power since the prices have a level they cannot go below. Thus, the bargaining power of buyers determines the way casino and gambling service providers tend to regulate their individual game entry/chance prices. The range of services provided at Casinos and gambling services have set standards for catering to high end, middle end or low end customers (on the basis of bet size for a particular chance). Hence, the moderate buying power of buyers keeps a little impact on overall pricing as the gambling services already have their pricing defined per game and per bet within a game.
Every industry requires the set suppliers to avail the needed products. Similarly, in the case of a Gambling Casino, the suppliers are extremely necessary to ensure thorough supplies of gambling equipment, betting tables, etc. Some of the crucial vendors in the industry include soft and hard drink distributors, sellers of computerized gaming tools, and attendants in the joints (Thompson, 2008). For any industry, the possibility of having a supplier bargaining power is very high. The bargaining power of a supplier can be varied only on the basis of corresponding rise or fall in the number of suppliers in that particular industry. In case of the Gambling industry, the reason for supplier bargaining power varying is because of the availability of multiple sellers for selling the gambling equipment; betting services enabled games, etc. This inference is also established from the fact that with rising number of gamblers and rise in legalized gambling industry in developed countries like USA and developing countries like China and India has given immense scope of emergence of various suppliers in the industry. This has caused multiple payers acting as suppliers for providing high end gambling equipment and accessories in the global gambling industry. Hence, the casino owners may choose to buy from companies selling at the lowest price and have value for their products. The more the sellers, the higher the bargaining power they have because the customer will choose from which seller to buy. In the current economy, the bargaining power of casino suppliers is medium because many people in the U.S have started appreciating gambling.
3: Which are the firms that may want to enter the Casino Gambling Industry?
In any industry, competition is normal if growth is to be experienced. The casino industry is not an exceptional when growth is considered. In the 19th century, gambling was not very widespread, but as the world has been evolving, growth is inevitable. New firms enter the gambling industry each day, and some of the firms are those dealing with drinks, companies with improved gambling tools, and availing of highly trained attendants. New entrants in the casino gaming world are very hard to succeed. Hence, it can be obviously concluded that barriers to entry are very high for newer players as there are a number of external and internal factors which tend to block them from entering the gambling industry. First of all, government regulation and interventions are very high for any firm that wants to enter the gambling industry. A newcomer in gaming world faces significant challenges due to the multiple agreements and licenses needed from the state. Another challenge for a new person doing well in the casino gaming is the large amount of capital required to purchase the necessary tools like computerized gaming machines and computers. Further, it is also true that the new entrants have very high chances of facing threats when they try to venture in the gambling industry because of the competition they are to face from the already established firms (Eadington, 2009). For a young company, it is necessary to have high prices for products to ensure there is a return on investment, but this is not possible since the already established companies lower their prices while providing quality services to ensure they have a competitive advantage. Finally, the resistances from social components like activists, anti-gambling agencies, religious groups and churches, etc. is very serious barrier to the entire industry as such. The prime reason for this resistance is due to the underlying menace of addiction associated with the gambling profession and the assumed negative economic impact of money getting drained into the casinos which could have been used for some other fruitful purposes. Thus, the cumulative impact of all the above mentioned factors determines the higher barrier to the entry of new players and to even the existing players.
4: Identify some Substitutes for the Casino Gambling Industry?
No business can lack the presence of another business to act as a substitute for its operations in the case when it is not operational. The Casino gaming industry faces competition, stiff resistance from activist, severe regulations by the governments, and there is the likelihood of the Casino gambling getting replaced by the online gaming consoles. So, the threat of substitutes for the Casino industry comes majorly from the practical segmentation of this industry into a type of gaming industry. All the alternative forms of gaming entertainment which can involve the customers via some form of gaming thrill and their subsequent involvement into winning or losing aspects can pose as a substitute to Casino gaming. It is also possible that all other forms of sports and general gaming service providers can pose a threat of substitution over Gambling industry. For example, some people are likely to be so inclined towards having their personal gaming tools (such as PlayStation in their houses) that they might ultimately avoid visiting casinos and spend the same time for entertaining themselves via their video games. Further, it is also true that a substitution for casino gaming by any other forms of gaming poses a relatively low level of threat to casinos because of the fact that Casino Gambling has more direct association with addiction and higher sense of satisfaction in attaining monetized victories over the opponents. Hence, we can conclude that threat of substitutes for the casino gambling industry is low because once the person gets addicted to a gambling habit, there is very low possibility that he/she might switch to some other form of gaming entertainment for himself. Substituting casino gaming will take time unless the government regulations are implemented to control the number of casinos in U.S. In spite of the various activist movements and subsequent impact of social remonstrance against bad economic impact of Casino gambling, it is still true that the substituting the casino and gambling services with other forms of gaming and entertainment services still stands a tough challenge for all of the involved stakeholders.
5: Casino Gambling Industry and the Level of Intensity of Competition.
Casino gambling industry deals with gaming activities that people intend to have a financial gain and at the same time enjoy their leisure (Thompson, 2008). The Casino Gambling industry involves the dual effect of combining chances of winning with consequent monetized rewards which get amplified along with the rising risks involved in the gambling bets. Thus, the players who seek Casino Gambling as their mode of entertainment often get passionate and addicted to estimate their chance of winning higher monetary rewards (lotteries) when they take higher risk base on their luck and probability of winning. The casino industry is supported by a group of other facilities such as retail shops, restaurants, cruise ships, and tourists’ attractions sites that act as the primary motivators for the visitors to come to the locations. The level of intensity of competition in the Casino industry is very high because for any business to have room for operation in these areas, it must have excellent services to compete with the exiting players, because most of the existing casinos are associated with playing habits of wealthy people who seek and need very fancy Gambling Casino facilities and places. Therefore, for any firm trying to have a competitive advantage within this industry, it must have high quality services like those of gambling facility, better equipment, hospitality features, security arrangement, legal permissions, unbiased gaming environment, etc. Thus, the overall quotient of higher industry competitiveness is defined by the quality standards of facilities provided, without getting subdued by any concerns that the prices will increase because most of the people visiting the casinos care less about prices and are more cautious of overall service quality.
Work Cited
Eadington, W. (2009). Capital, rent-seeking, and risk taking in the casino industry and the economy at large1. International Gambling Studies, 9(3), 181-187. http://dx.doi.org/10.1080/14459790903348210
Thompson, W. (2008). Governing Fortune: Casino Gambling in America. Journal of Gambling Issues, 21, 120-124. http://dx.doi.org/10.4309/jgi.2008.21.15
