Does the house always win? Successful ventures are designed to ensure profit to the casino. Despite eventual jackpots you may hit, the house should always keep its share in the long run. Yet, in places where so much cash flows, bankruptcies tend to be legendary. In this article, you’ll read about the most jaw-dropping failures in the history of casinos.
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Too Big to Fail?
Billionaire investments are immune to mismanagement or low cash flow. To quote a recent case, the Resorts World Catskills, a $1.2 billion investment, could be about to shut its doors. The leading causes include debt of $400 million and losses above $70 million in 2019.
There are a few reasons that unlucky casinos incur such spectacular losses. If a casino doesn’t get enough players, there’ll be little cash coming in the house. If one of those few players gets lucky, the house must cover the prize. For a casino with low cash flow, it means going into debt. That’s how most of them collapse.
The Oldest Casino in Europe and Other Misfortunes
Not even the Casino d’Campione, the oldest casino in Europe, managed to survive bad tides. In 2018, the traditional casino from the Italian enclave in Switzerland went bankrupt. In a town with a population of 2,000 people, it’s left 500 workers unemployed. It had devastating effects on the local economy and municipal services, now lacking the steady cash flow the casino used to bring.
In the United Kingdom, land-based casinos struggled for many years to establish a British version of Las Vegas in Manchester back in the early 2000s. After many legal disputes, it was finally possible to open Vegas-like resorts there. As it turns out, favourable legislation isn’t enough to make a casino thrive. Once again, a lack of players could be the cause. British players have been turning their attention to online casinos lately. The pandemic intensified this trend.
Land-based vs Online
Land-based casinos in big cities must deal with tough competition. Not being able to keep up with competitors is another common reason for bankruptcy. A land-based casino has expenses that an online casino doesn’t, like employees and building maintenance.
Since the beginning of the pandemic, casinos have become a safer investment. With more people staying at home (as they definitely should), casinos are surfing on an upward trend. There are countless lists with the best online casinos for 2021.
The Case of Atlantic City
Atlantic City was once one of the leading destinations for casino lovers. In 2006, during its golden days, the municipality made more than $5 billion in revenue. The city was booming with casinos. Now, the casino market is in rapid decline. The city has lost more than 50% of gaming revenue, while giant casinos, like Trump’s Taj Mahal, closed their doors.
It wasn’t an isolated case. Between 2014 and 2016, five major casinos collapsed in Atlantic City. Those were the Trump Plaza, the Revel, Showboat Casino, and the Atlantic Club Casino Hotel. The Revel was one the shortest casino experiences in Atlantic City. The casino that once hosted Maroon 5 and Beyoncé opened its doors in 2012, only to close them in 2014. In 2016, it was the Taj Mahal’s turn to close.
As mentioned before, competition was one of the main factors putting casinos out of the market. But in this case, competition didn’t just mean a struggle between local casinos. It also meant competition against casinos from newborn markets, like Philadelphia, Pennsylvania.
Land-based casinos need massive investment. The higher you are, the harder you’ll fall. When a casino fails to meet its projected profit, debt inevitably cripples it. Despite employing the same return to player technology that should ensure “the house always wins,” ill-planning and mismanagement can ruin it all. In the worst cases, not even traditional casinos, like the Casino di Campione, can survive.
Online gambling has been experiencing a sharp rise since the beginning of the pandemic. This modality has several advantages over land-based casinos. During these times, people can play from the safety of their homes. Online casinos can reach a much larger base of players without the constraints of social distancing. For those reasons, they’ve been proven to be more resistant to bankruptcy than land-based casinos.