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What's In Store For The Gaming World In 2017?

January 16, 2017
Throughout the last three decades, gambling has become, perhaps, the fastest-growing cultural and economic influence in America. In 1988, two states had casinos. Today, 40 states have land-based casinos, according to the American Gaming Association. .

State governments, Maryland included, count on gambling tax revenues to maintain essential government services, such as education and senior assistance. Nationally, gaming accounts for more than 1.7 million jobs and $73.5 billion in wages. Where point spreads were once taboo on sports broadcasts, now major sports news organizations offer advice on betting the games on their websites.

Gaming promises to continue to be one the fastest-evolving phenomena in America for the foreseeable future, and here's what to expect in 2017.

Sports Betting

The American Gaming Association, the main trade group that represents the casino industry, made the expansion of sports wagering one of its top priorities. The roadblock has been the Professional and Amateur Sports Protection Act, commonly referred to as PASPA, a 1992 federal law that prohibits states from licensing and regulating sports betting. A handful of states have grandfathered protections, most notably Nevada, which remains the only state that can offer broad gambling on sports events (Delaware, Montana and Oregon can offer limited sports betting).

With 40 states housing casinos ranging from tiny tribal establishments to immense destination gambling resorts, there's an itch among several states to open sports bookmaking operations. New Jersey has even tried to take its uphill legal battle for sports betting to the U.S. Supreme Court.

The surest path to broader sports betting is to repeal or amend PASPA. That's up to Congress, but resistance has come from the sports leagues and the NCAA, as well as anti-gambling opponents. However, there have been signs of cracks in the pro sports alliance. The NBA concedes the legalizing of sports betting is inevitable. Major League Baseball has been less emphatic but is bending on the issue.

In 2017, the AGA will continue to persuade opponents and legislators alike that it is in everyone's best interests to make sports betting a white market. Estimates of the illegal market in sports wagering (mostly online) are all over the place -- but $400 billion globally has been a popular number.

Clearly, there's a lot of money at stake for gambling companies and governments who would impose taxes.

Prediction: Broader sports gambling will not happen in 2017, but this is the year of a meaningful beginning of reaching that end. The key will be getting the most influential opponent, the NFL, to at least drop its objections to amending PASPA so individual states can make their own determinations.

Daily Fantasy Sports

A red-hot topic a year ago, daily fantasy sports has seen things cool off during the second half of 2016, which is a good thing. Most of the attention wasn't favorable, as the emerging industry was subject to intense scrutiny from mainstream media and state law enforcement officials.

Frankly, DFS did pretty well in 2016 considering it was in a fight for survival when the New York attorney general forced it to temporarily shut down in that state. Empire State lawmakers bailed out DFS by passing legislation making it legal. Several other states also passed laws explicitly green-lighting DFS.

From a revenue standpoint, the daily fantasy market has cooled mainly because the two chief operators, FanDuel and DraftKings, haven't had the money to do much advertising. What many people don't realize is despite all the marketing noise, these companies have always had trouble turning a profit, and after burning through piles of venture capital in 2015, they're treading water.

In November, the two main companies announced a merger would occur after the NFL season. Well, we're at that point and still waiting to see what the new, largely one-company DFS world (there are still some smaller operations) will look like.

Prediction: My guess is the resultant website (FanKings? DraftDuel?) will look more like the current DraftKings than FanDuel. For my money, DraftKings has always had the better aesthetics. Surely, there will be technological efforts to improve the mobile experience. A hope more than a prediction is the more efficient, consolidated company will trim its commission on the most popular contests, which has edged up from about 10 percent to about 15 percent. Once the merger is complete, financial backers will most likely infuse the new company with a fresh stash of cash to hit the reset button on marketing efforts next fall.

Bricks & Mortar Casinos

While casinos around the country continue to add components -- Maryland Live! in Hanover, Md., is building a hotel -- the casino industry is taking a breather domestically. The MGM National Harbor in Prince George's County should be one of the last new ones in the East for a while. There are plans for a second casino in Philadelphia, and Massachusetts is the next major emerging market, but the big casinos there won't open until 2018 and 2019.

Meanwhile, the challenge for traditional casinos is to attract an elusive demographic -- millennials.

Even when they do go to casinos, younger customers are more apt to spend money on food, beverage and entertainment experiences, such as nightclubs, than on slot machines or table games.

The new year will see casinos continue to chase the youth market with tactics such as skill-based slot machines; games that encourage an interactive, social experience, and forays into esports.

Skill-based slots -- machines that replicate video games -- seem to be the easiest way for casinos to make a pitch for younger customers, so expect to see a lot of that. Instead of pulling a slot handle or hitting a spin button, the gambler works a game controller and navigates a shoot-'em-up landscape. While skill is an asset, there is a significant element of randomness because of unpredictable battle scenarios. Some Atlantic City, N.J., casinos recently introduced such games.

In Las Vegas, one casino has installed an esports lounge, where fans of online battle gaming can gather and socialize, just to get younger people in the door. And Nevada is allowing sportsbooks to take bets on live esports contests in games such as League of Legends.

Prediction: Millennials are savvy. It doesn't matter how a casino disguises a slot game; if it intrinsically has a negative outcome for the player, young people will catch on and just not play, other than for casual amusement. Over time, casinos will learn they need to hire younger management who understands its own demographic, and perhaps the result will be more peer-to-peer gaming with the casino making its money by taking a cut of the handle, just like with live poker.

Las Vegas

If you cherished the Las Vegas of a decade or two ago, hang onto those memories. It ain't coming back.

Vegas continues to become more and more like other major American cities with the addition of chain stores (Vegas just got its first Ikea and Cracker Barrel restaurants in 2016) and the departure of old-time institutions (RIP the venerable Riviera, the tacky but beloved downtown Mermaids Casino with its deep-fried Twinkies and the Jubilee showgirl revue).

And horror of horrors, most casinos on the Strip will actually begin charging for parking in 2017, like it's New York or someplace!

In the fall, an NHL team, the Golden Knights, begins play in the T-Mobile Arena just off the Strip, and odds are still good the NFL's Raiders will be playing in Vegas by the end of the decade.

Prediction: Despite the changes, Vegas still offers a critical mass of excesses that allow the catchphrase "What happens in Vegas, stays in Vegas" to ring true. Visitation to Vegas continues to bounce back from the dark days of the Great Recession, as evidenced by escalating passenger counts at McCarran International Airport (43.7 million through November 2016). Vegas has roared back to approach its pre-recession visitation levels by reinventing itself as a more sophisticated, albeit definitely more expensive, getaway. The forecast is more and more people will continue to go -- and they'll need to bring more money.

Issue 229: January 2017