Oil prices to
boost online gambling, casinos in trouble
Well, folks, the oil hit yet another record today,
climbing over $133 per barrel and according to many analysts
there is no relief in sight. Naturally the high oil prices will
affect not only the gasoline price at the pump, but the price of
almost all goods in the country. But experts point out the fact
that there is a short list of companies who stand to benefit
from the rising oil prices, namely internet-based services, such
as NetFlix, videoconferencing providers and in general any
company which allows people to relax closer to home. Of course
the financial experts in the U.S. would not discuss online
gambling, unless stocks of Internet gambling firms are traded on
the local markets, but it's a fact that online gambling is right
there along the companies expecting to benefit from the soaring
oil and gas prices. Respectively, the land-based casinos stand
in front of a brick wall. Thanks to the gambling laws in the
U.S. which mandate that gambling should be turned into a
vacation or at least a road trip, many players would skip the
long drive to the nearest casino (or Las Vegas) and turn to
their computers to play slot machines or blackjack.
Online casinos such as
Golden Casino and
River Belle are turning up the
heat on their offline competitors with attractive money bonuses
and free play. Yes, the gas savings are there, but would you
prefer a discounted hotel room (likely facing the hotel's garage
and still at $50 a night) or would you go with $555 bonus on
your first deposit (Golden Casino)? Most of the land-based
casinos are yet to find an adequate response to a marketing
campaign of this magnitude. When driving/flying to Las Vegas was
cheap, the free food and shows were good enough for the
consumers to combine the entertainment of gambling with the
entertainment of vacationing, but now, not so much. The rising
prices reflect the cost of operation for the casinos, as well,
which would drive profits down and even facing gambling
companies with red balance sheets. Meanwhile the online casinos
don't have to deal with increasing prices of anything. Most of
their employees and offices are based in small and poor
countries, where highly educated people will work hard for
pennies on the dollar, compared with the U.S. labor market. The
online gambling companies don't have to pay more for basic
casino hotel operations such as cleaning services, food, wear
and tear, etc. as their main operation is located on inexpensive
computer servers.
So on one side we have the online
gambling company, which requires no more than 100 employees and
10 servers. Located in countries where $100 will get you a long
way, the expense of salaries and energy are minimal. But on the
other side you have the land-based casinos, requiring thousands
of employees and hundreds of different services and products -
from the little soap in your hotel room bathroom to the chef
preparing the Crème brûlée downstairs, all this while necessary
for their customers to travel, often long distances, and to pay
the tourist-town prices outside of the casinos...There is no
doubt who the winner in this situation is. Don't be surprised if
the U.S. gambling companies turn around and start lobbying for
regulated online gambling in the United States.
Published on
05/21/2008
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