Perception is reality By Paul Sculpher, Special to CDC Gaming Reports January 15, 2020 at 2:45 am How important is it to know exactly how your target market perceives your industry? We can all name any number of new casino projects in our respective jurisdictions which have failed miserably, and there are plenty of reasons why this can happen. Some of the more spectacular failures in the UK have involved companies from overseas investing gigantic amounts of money in larger sites — possibly anticipating regulatory change in slot numbers and prizes — only to end up producing a cavernous echo chamber with a cost profile that sinks the business. These aren’t restricted to companies coming to the UK. Anyone who remembers the Aladdin debacle in Las Vegas will know it can work the other way too. But why are these hugely expensive mistakes so common? The party line can often be, “They didn’t understand the culture in country X”. But I think in many cases it’s more precise than that. All the demographic studies in the world can’t help you understand the public’s perception of casino gambling in another country, and perception and expectation are the drivers of behavior. Perceptions of casinos in the UK are very different to perceptions in many other countries. As someone who’s been in the casino business for 25 years or so, I get a front-row seat to how the “person in the street” views the casino industry. That’s not by talking to customers, but by virtue of every non-industry person I meet being keen on talking about casinos when they hear that’s my trade. As you all know, it’s one of those industries that people find interesting and generally have an opinion upon. There’s an oft-quoted statistic in the UK business that only 3% (or 4% or 5%, depending who you’re speaking to) of the UK population have been to a casino in the previous 12 months. It’s a statistic that has fueled a number of entrants into the market, who see far higher participation rates overseas and believe the market is ripe for exploitation. However, it comes back to that perception question. My take (cliché alert) is that casinos in the UK are still viewed as something for rich, cigar-smoking James Bond types and very much not for the regular person. Operators have been trying to combat this point of view for 25 years or more now, by building more welcoming, mainstream casinos — nothing like the low ceilinged, smoky, cramped sites from the ’90s and earlier, but you’d have to say with limited success. Casinos are still perceived as places for people who have money to burn. The level of astonishment expressed by anyone who hears that the average spend in a casino outside London is somewhere around £30 is immense; the message that a casino trip can cost the same as a cinema and a burger just hasn’t got through. Contrast that with the prevailing view in somewhere like Melbourne, where Crown bus in hundreds, if not thousands, of older people a day. There, the casino is perceived as a just another leisure activity. The Vegas experience has conditioned many of our American friends to consider a casino trip as something completely normal, that spending time on the slots is in the same category as going to a sports bar, and that feeling has percolated across to the rest of the country, with casinos in most states by now. But what does the UK’s perception of casinos mean and how does it affect decisions? Well, one positive, it seems to me, is that offline casinos haven’t been mentally thrown into the “bad-guy” bucket to which online casino seem to have been consigned. A number of high-profile TV documentaries have slated online casinos for the stakes they will allow, and with a furor bubbling over TV advertising and sports sponsorship and a number of other live issues, their future is looking challenging. When compared with the offline casino world, they’re in a much better position. Public perception hasn’t worsened, because for the last 50 years, it has been trending between ambivalence (“They’re not for me, so I don’t care”) and suspicion (“Of course people lose more than they can afford; that’s what casinos are all about”). The regulator rightly has a duty to make sure all forms of gambling comply with the primary objectives, but while the perception landscape has become much tougher for some sectors, for casinos, it’s just stayed below the public’s radar. The wise operator coming into the UK market might reflect on the above and wonder if it’s a good one to be in. The upside is that the AML situation has crushed the top line and tighter responsible-gambling approaches might double the dose, both of which can only lead to depressed valuations and possible bargains. But that’s not the whole story. The canny incoming operator might recognize that the perception battle is one that’s been fought by UK casinos for decades, and about now you’d probably say it’s been lost, at least to the vast majority of the population. With that in mind, maybe it’s finally time to make a move I’ve been advocating for a decade now: smaller sites. If building 30,000-square-foot sites just means you get a middling number of bar patrons who steadfastly refuse to morph into significant players, perhaps the answer is to build your casino big enough just to cater to the existing players, while being upscale and centrally located enough to give you the chance to pick up some tire kickers along the way. Offline casinos have been the poor relation of retail betting venues and online gambling for many years and perhaps now is the time to accept their status and cut their cloth to suit their situation. Understanding exactly how your customer sees you — and sometimes accepting that a couple of decades of trying to change that and failing means it’s a battle you can’t win — is a huge part of that.