Predictions for 2008
by Andy Holtmann
January 30, 2008
A look ahead to what I think this year has in store for the gaming industry
I’ve had a couple of people suggest to me that I should write some sort of predictions for the year ahead. At first, I wasn’t keen on the idea. But then I thought about the concept a little more. Predictions…we all have them, or at least we all have an idea of where we see things headed. As a sports fan, I’m constantly making predictions as to how well an athlete or team will fare. As a consumer, I make predictions about whether a product will be worth the cost (and when it will come down in price). As a traveler, I make predictions on how long it will take me to drive some place, or what the weather will be like when I get there. As an editor who has been covering so many facets of the gaming industry for the past eight-plus years, why shouldn’t I be able to make a few predictions based on what I’ve seen, heard and been told of over the past 12 months.
So here are six predictions for a new year in the gaming industry. Let’s see which ones I’m right about—and which ones I completely miss the mark on—by the end of 2008.
Prediction One: The private equity surge that we saw in 2007 among gaming companies will slow a bit in 2008. You might see a few more companies accept private equity dollars, but I think big moves like Harrah’s, Station Casinos and other large companies going private will not be a factor this year. In fact, I think Wall Street may get more active, and we may see a few private companies go public.
Prediction Two: The election cycle is going to have a slight splintering effect on the gaming industry. We saw a little of this in 2004, as there was a lot of politically-charged rhetoric spun by key gaming industry figures and anti-gaming forces alike. Issues like taxation, labor and immigration could have some companies disagreeing with each other, while gaming-related ballot issues in several states will bring gambling opponents out en masse, leading to the industry as a whole having to be on the defensive again in terms of public perception.
Prediction Three: Server-based gaming technologies are finally going to show real movement, and will be commercially deployed on a small scale. We’re already seeing signs of this with unique partnerships between manufacturers, as well as successful beta-testing (thus far) and scores of new games, add-ons and other products being developed to fit into a server-based gaming world. Look for at least one manufacturer to raise the bar significantly with a new server-based development that will make others smack their heads with the “why didn’t I think of that?” look on their face.
Prediction Four: Partnership rather than acquisition will become a preferred method of adding to companies’ portfolios and offerings. We saw one good example of this in 2007 when MGM Mirage and the Mashantucket Pequot Tribe combined forces and marketing efforts with plans to build an MGM Grand property on the grounds of Foxwoods in Connecticut. It’s also worked for MGM and Boyd Gaming with The Borgata in Atlantic City, and it seems to be working so far for manufacturers with server-based gaming. I see more of this coming, as the field of play for strategic acquisitions that bring real synergies seems to be thinning.
Prediction Five: That said, I see at least one mid-level casino operator being acquired in 2008. But also look for one fairly notable company to get out of the gaming business in 2008. I don’t have any solid information on this one…just my gut instinct telling me that one firm out there may decide to concentrate its business interests in other areas.
Prediction Six: Tribal sovereignty will be significantly weakened this year, as the efforts by labor unions to organize tribal casinos will prove largely fruitful. I see tribal operations and practices that will soon be scrutinized by the National Labor Relations Board as just the start of much more intervention and “oversight” by state and federal agencies alike. And that means that tribes that for hundreds years have served as their own governments will no longer find themselves truly sovereign—in any business or action.
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