Academics
Brad Stone: The Future of the Industry
Brad Stone ’77 of The Sands discussed the current state and future prospects of the gaming industry. Of course, any discussion of the current state of gaming must have the economy as a primary focus. Stone noted that, while casinos continue to generate significant cash flows, they are certainly not recession proof, and have felt the impact of decreased property values, increased unemployment, and weakened consumer confidence. Stone noted that regional casino operators will be less impacted by the economy than “destination” casinos, such as those in Las Vegas and Atlantic City—2008 marked the first decline in U.S. gaming revenues since 1990, and Las Vegas and Atlantic City were the hardest hit. Macau, however, experienced a record year in gaming revenues in 2008.
While Stone is as uncertain as anyone regarding the future of the industry, he did make some valuable predictions. He suggested that gaming companies will adapt to this crisis by becoming leaner and meaner, and focused on controlling costs, obtaining healthy margins, and managing expenditures. The economic situation will result in a “survival of the fittest” in which only the best companies, who have strong assets and financial flexibility, will survive.
The short-term outlook for the casino industry includes a high level of competition, major supply increases, and asset sales. In the mid-term, we can expect some stabilization—Stone assures the audience that Vegas always bounces back from tough economic times, though Atlantic City may take longer. As for the long term, Stone is confident that the gaming industry, especially in Las Vegas, will survive: Vegas has been doubted many times before, yet has constantly reinvented itself and emerged intact. After all, people will always want to gamble. Stone anticipates revitalization throughout the industry and high investment projects in strategic locations; particular areas to watch in the future include Thailand, India, and Brazil.