Are land casinos still a good investment?

There’s no denying that the rise and rise of the online casino has been one of the biggest success stories of the last decade. As more and more have appeared even greater numbers of players have joined the throng playing everything from roulette to poker and from blackjack to slots online. This, in turn, has had an inevitable effect on the more traditional land based casinos and in recent years even that mega metropolis of gaming, Las Vegas, has seen its revenues gradually declining. Plus, to make matters worse, many of the leading online casinos such as the uniquely designed retro Vegas of the fifties style 777 online casino website have now introduced “live” versions in which you can play in real time with real dealers recreating the authentic experience of actually being there yourself. In the UK this has also been taking place in an environment where extra pressures are being imposed on the industry by the government in the form of increased taxes and the prospect of tighter regulation. Against this backdrop many of the major players in the market have decided to follow the principle that biggest is best so over recent years there have been a number of mergers, not to mention some fairly aggressive takeover attempts. For example, in 2015 Betfair and Paddy Power came together to form one of the biggest gaming companies in the UK with a value of £7,200 million and last year Ladbrokes and Coral merged to create a new business worth £2,500 million. Another online gaming expert that has seen both sides of the acquisition craze has been 888 Holdings. As one of the earliest entrants to the market, having been founded in 1997, the company has shown a commitment to growth and innovation over the intervening years. So it’s no surprise that in 2015 they were targeted in a takeover by William Hill who planned to make a £720 million bid for the company. But one major William Hill shareholder dug their heels in on the grounds that the offer was far too low and the deal was abandoned. Last year the situation was reversed when William Hill turned down an offer made by 888 Holdings and Rank. Their objection was that the £3.1 billion offer still meant that the company was being under-valued. They may have failed in the bid but it certainly doesn’t seem to have undermined the market’s confidence in 888 Holdings though. From 2015 to 2016 their turnover increased from $230.6 million to $279.3 with pre-tax profits rising from $32.5 million to $59.2 million. The share price has reflected this too, having steadily risen over the last few months. The situation for land-based casinos seems a little less certain though. For example, despite there having been suggestions as long ago as 2006 that a new casino could be built in Swindon, attracting visitors and creating jobs, we still seem to be no nearer a decision being made. So all the signs are that online casinos may be a wiser investment than their land-based versions, in the current climate at least. But if we’ve learned anything about the casino industry in the past it’s that it’s very inventive and adaptable – so writing off land-based casinos as an investment opportunity for the future would be a very foolish move indeed.