Jim Allen Says Inflation Is Crimping Demand for Casinos

Jim Allen Says Inflation Is Crimping Demand for Casinos

Jim Allen, the Chief Executive Officer of Hard Rock International, noted that inflation was putting a lot of pressure on the casino industry, requiring people to visit and engage with their favorite games. Jim Allen added that there were many more ways in which inflation affected the casino industry.

Consumer Price Index was registered at 8.3%, down from an 8.5% increase in March. The price of gasoline was one of the major factors affecting the industry. The prices are somewhere in the range of $5 to $6 a gallon. A rise of 305 to 40% is problematic because regional casinos survive based on how many visitors can access their locations.

Regional casinos have been the backbone of the economy, ensuring that the country bounces back to the pre-Covid era. Based on the current conditions, these could be the testing times for operators.

There is no sign of relief in the short term as gas prices remain high. Tribal operators in Oklahoma have been affected by this factor the most, and their casinos depend heavily on visitors from the neighboring region of Texas.

A similar case applies to regional casinos that are situated in Louisiana. Now that gas prices are up, players cannot take a trip to the brick and mortar premises.

Frank Fertitta, the Chief Executive Officer of Red Rock Resorts, supports the argument. Frank Fertitta reflected on the first quarter’s earnings to state that there was no doubt about inflation in food and groceries affecting the lower segments.

Caesars Entertainment and MGM Resorts have put forward another argument saying that the soaring consumer prices were not snapping their demand.

While Las Vegas is proving to be resilient, Florida casinos are sturdy for now, Jim Allen noted. Casinos in the Reno/Lake Tahoe area are expected to feel the impact of California gas prices. Those visiting the casino sites are reporting to have reduced their expenditure.

A factor that specifically affects Hard Rock is the rise in the price of building materials. Saying that the price of building materials has just exploded, Jim Allen said that the cost of the supply chain, labor shortages, and Mirage enhancements could cost him more amid the rise in inflation.

Casinos that operate over the internet have nothing to worry about in this sector. They can be accessed through an internet connection, and there is no geo-restriction for operators to target. Players can be at their homes engaging with the content at their convenience.

It shows that rising fuel prices do not affect online casinos at all. People continue to participate, and operators rarely experience a downturn unless caused by a poor technical fault.

Current inflation data could signal all the operators to consider going beyond the traditional approach as an added option for those who don’t want to drive from another region.

Author: Connie Boyd