5 Ways Las Vegas Is Facing Increased Competition for Casino Market Share

Up until 1978, Las Vegas enjoyed the greatest luxury capitalism can afford—an unbreakable monopoly. As the only locale in the United States able to offer legal casino games and sportsbooks, Las Vegas reigned supreme as the American gambler’s only viable destination.

But when New Jersey authorized legal casinos, the first non-Nevada gambling in the country arrived in Atlantic City in the summer of ’78.

Vegas kept on kicking, of course, growing and evolving while annual visitation rates soared above the 40-million-person plateau. But in 2021 and beyond, Sin City faces a growing array of competitive threats which make A.C.’s Boardwalk look like a bust.

Below, you’ll find five of the biggest reasons why Las Vegas faces competition the likes of which the world’s casino capital has never seen before.

1 – America Is Quickly Embracing Legal Sportsbooks State by State

Up until May of 2018, a federal law known as the Professional and Amateur Sports Protection Act (PASPA) of 1992 prohibited any state to legalize and regulate the sports betting industry.

Of course, given PASPA’s year of passage, Nevada was “grandfathered” in and permitted to continue offering legal sportsbooks. As such, PASPA essentially made Nevada and its crown jewel of Las Vegas the only location where punters could legally place wagers.

That all changed three years ago, however, when the U.S. Supreme Court issued a landmark 6-3 ruling to strike PASPA down altogether. The case reached the Court at the behest of New Jersey, which had spent the previous few years attempting to create a legal sports betting industry of its own.

Once PASPA was deemed unconstitutional by the Court, the proverbial floodgates opened as New Jersey led the way legalizing sportsbooks—both of the brick-and-mortar and online variety. Mississippi, West Virginia, and Pennsylvania soon followed suit, sparking a modern gold rush as states from coast to coast raced to get in on the ground floor of a rapidly emerging market.

Today, 26 states have either launched legal sportsbooks, or have laws passed and awaiting implementation. That means more than half of U.S. states are already onboard, while 45% of adult Americans now reside in a state where legal wagering is a reality.

Unsurprisingly, sports betting revenue nationwide has grown by leaps and bounds, jumping from $920 million in 2019 to over $1.5 billion last year. And by 2023, the American Gaming Association (AGA) predicts revenue growth to reach nearly $6 billion.

And sure enough, a new rival in New Jersey has already overtaken Nevada in terms of sportsbook “handle” (total money wagered). In 2020, despite setting a new state record with $5.4 billion in handle, the Silver State placed second to the Garden State ($6 billion).

Speaking with the Las Vegas Review-Journal, Chris Grove—who serves as managing director of sports and emerging verticals for industry analysts Eilers & Krejcik Gaming—pointed to non-gaming industry stakeholders fueling state-by-state expansion:

When you talk about sports betting getting done in Illinois, the (Chicago) Cubs showed up to support that bill. When else can you think of a time when a professional baseball team is lobbying in favor of gambling expansion? Pretty rare.

Grove explained that gambling expansion is rapidly increasing because of support from the leagues themselves. With high-population states like Pennsylvania and Illinois (5th and 6th in U.S., respectively) now supplied with an abundance of legal sportsbooks, Las Vegas simply doesn’t hold the same allure as it once did for action-starved bettors living elsewhere.

2 – Several Southwestern States Have Legalized Sports Betting

Among the states which have adopted legal sports betting, two share a direct border with Nevada—Arizona and Oregon.

Additionally, several states in the Southwest and West regions have all joined the party, such as Colorado, New Mexico, and Wyoming.

Sports Betting Stations and Screens

Given these developments in nearby states, it’s no surprise to see a slew of sports bettors simply stay home instead of making the multi-hour drive to Vegas. The impetus to travel has been further dampened by big-time Vegas sportsbook brands like Caesars, BetMGM, and SuperBook staking new claims within these regional neighbors.

Adding to Vegas’ diminished attraction is the ease of use other states have built into their online sportsbook products. In Nevada, bettors must visit a physical sportsbook to register an account with the bet shop’s online affiliate.

But in places like Arizona and Colorado, bettors can sign up straightaway via the app without ever leaving the couch.

In an interview with the Nevada Independent, Global Market Advisors partner Brendan Bussmann mentioned neighboring Arizona as a prime threat to Vegas given the online registration advantage. Brendan stated that while Nevada sports betting remains strong, there are still some areas in which it could improve to keep up with the competition. For example, the state of Arizona offers mobile registration as opposed to in-person registration.

3 – Legal Online Sportsbooks Come Equipped With Full-Scale Casino Components Too

Thus far, the focus has remained on sports betting. But the biggest and best online sportsbooks today also come complete with casino games of every caliber.

After downloading a sportsbook app like DraftKings or FanDuel, a sports bettor in Arizona instantly gains access to those platforms’ respective casino components. You’ll find table games like blackjack and baccarat, machine games like the slots and video poker. In fact, every casino wager under the sun can be found on a sportsbook app.

For obvious reasons, the land-based casino companies operating in Vegas have long opposed online casinos in Nevada. That’s why, even with online sportsbooks humming along, Nevada still doesn’t allow casino gambling over the internet.

Regulators there have been exploring the idea of integrating all forms of iGaming, but in August of 2021, representatives for 26 casinos the state signed a letter sent to the Nevada Gaming Control Board (NGCB). In the letter, bigwigs like the Fertitta brothers of Red Rock Resorts and South Point Casino CEO Michael Gaughan urged the NGCB to keep online casinos boxed out.

Asked about the impetus behind the letter, Gaughan told the Review-Journal that increased competition is untenable for a Vegas already reeling from 2020’s mandatory closures:

I’m just trying to keep my people working. I got enough problems around here.

I don’t need to compete against internet gaming.

John Farahi, CEO of Monarch Casino Resort Inc., told the newspaper that he signed the letter because online casinos give players a reason to stay away from his properties. Bringing casino games to people’s homes didn’t give the Las Vegas experience.

If land-based casinos in Las Vegas are already feeling the heat from online gambling, what happens when most American states offer the service?

4 – Wary Would-Be Visitors Are Sticking to Their Local Casinos

Statistics compiled by the Las Vegas Convention and Visitors Authority (LVCVA) tell a brutal story. In July of 2021, a total of $3.3 million visitors represented a 10.4% decline when compared to the same period in 2019.

And in a tumultuous 2020, the city’s visitation rate plummeted by 55% to just 19 million—the lowest turnout since 1989. Accordingly, guest spending dropped from $37 billion to $17.5 billion, marking a precipitous 52% reduction.

River City Casino in St Louis

Of course, those numbers can be largely attributed to unexpected closures ordered in the name of public safety, combined with widespread hesitancy to travel via air.

With that said, gamblers didn’t simply stop betting in 2020. They found places to play closer to home. Even after reopening, Vegas experienced a dramatic drop in terms of out-of-state visitation. Forced to explore local alternatives rather than fly to Vegas, many regular gamblers wound up realizing that regional casinos and tribal venues offer passable imitations.

5 – In Many Places, Local Casinos Can Offer Traditional Vegas-Style Table Games

Even worse for Vegas, many states are using sports betting legalization to beef up their wider slate of casino games.

In Arizona, for example, the tribes which have been granted exclusive rights to run casino gambling were cagey in negotiations with state lawmakers. In exchange for allowing sportsbooks outside of reservation land, the tribes secured a massive overhaul which enables them to spread the full spectrum of Vegas-style games.

Before that development, Arizona tribal casinos could only offer blackjack and Three-Card Poker in true table game format, while other games were consigned to machines. Today though, all tribal casinos in the Copper State are allowed to spread baccarat, craps, roulette, Pai Gow Poker, and sic bo in all their glory.

In a July 2021 statement announcing the expanded table game menu, Gila River Hotels and Casinos CEO Kenneth Manuel explicitly mentioned the city which now finds itself under siege by regional rivals.

Gila River is proud to advance and elevate our entertainment offerings to our treasured guests who seek the excitement and variety of a full-fledged Las Vegas-style casino.

Gila River COO Richard Strafella told NBC12-News that Arizona-based gamblers now have no need to drive many hours westward to play. The property offers 15 Vegas-style table games.

And when asked about the new table games’ performance, Strafella let AZ-Central know that the locals are loving a little slice of Las Vegas in their own backyard:

All the games have been open all week and been performing unbelievably. The tables are doing unbelievably well.

Conclusion

As Bussman alluded to up above, pundits and prognosticators have predicted Las Vegas’ downfall ever since the first wagers were accepted in Atlantic City over 40 years ago. And indeed, while other American hubs of industry like Detroit and Pittsburgh have seen auto plants and steelworks go up in smoke, the Las Vegas Strip always seems to survive the downswings.

Nonetheless, one can argue that the city has never been forced to contend with such a crowded field of competitors as it faces going forward. Whether or not legal sports betting, online gambling, or regional venues offering “Vegas-lite” alternatives will win out over Vegas remains to be seen.

I, for one, wouldn’t bet against the old gal though. This town has beaten back recessions, pandemics, and the digital revolution… so don’t be surprised when Vegas outlasts these up and comers coming for the crown.