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Casino Gambling Industry Case Study

Essay by   •  April 15, 2018  •  Case Study  •  874 Words (4 Pages)  •  810 Views

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1. Rivalry among Existing Firms

a. Casino gambling industry is the highly taxed and most regulated industry of United States. They are regulated by the state governments and the taxes varies from state to state. The money collected from these casinos is used to fund various programs like education, youth and senior services, public safety and infrastructural projects. It is mandatory for all the casinos to meet the federal regulations that involve money and financial institutions because a large volume of money is involved in this industry.

b. The level of concentration or the rivalry among the competition is high. With casino, there are various services that are added in these casinos that make them better as compared to their competitors. These include spas, shopping centres, theater style shows, and restaurants which help them to attract more customers.

2. Threat of New Entry

a. According to the Indian Gaming Regulatory Act Native Americans are given rights to negotiate for the development of the gambling industry in United States. According to the data more than 200 out of 550 Native tribes operates Casinos. On the other hand, other outsider companies are not allowed to own a Casino. They can only operate or manage these properties on contractual basis. This means that there is a high threat to new entry because if you are not a Native American you are not allowed to own a Casino in United States.

3. Bargaining Power of Suppliers

a. There are a few suppliers in this Industry. The suppliers include International Game Technology which is the largest supplier of the casino products to all the casinos in the world. There are four other suppliers Novomatic AG in Austria; Intralot S.A. in Athens, Greece; Universal Entertainment Corporation in Tokyo and Scientific Game Corporation in New York.

b. International Game Technology (IGT) is the leading company that make slot machines and provide table games, key components and other support products and services. According to that even there are a few suppliers, but IGT is the leading supplier for the casino industry. This means that the bargaining power of the supplier is high because they provide all the key products, there are less suppliers and they provide unique quality products which gives them more power.

4. Bargaining Power of Buyers

a. The buyer is a person who purchase products and services. The buyers of the casino industry will be the people all around the world who like to play casino games and they travel from different countries to play these games.

b. In our opinion, the buyers have limited bargaining power in this case because there are large number of buyers available and when the number of buyer is large, they don’t tend to have any bargaining leverage. The large number of buyer will lead to a positive impact to the casino industry but will leave consumers with no power.

5. Threats of Substitutes

a. Internet gambling is the substitute to the casino industry which has witnessed an increased growth since 2011. Internet Gambling means playing all the games of casino online. Delaware was the first state to legalise online gambling, poker, blackjack, and other slot games. Globally it gained up to $33.6 billion. Europe and Asian Pacific Markets contributed $16 billion and $8.9 billion. This increasing popularity of the online gambling substitutes the casino industry and affects their profits margins.



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