Casino Entry Barriers
What are the entry barriers to the Las Vegas Casino Resort market?
When one thinks of casinos, one cannot escape from Las Vegas. Despite Nevada legalizing gambling in 1931, today, the notorious Las Vegas strip is dominated by several key players and the reason why this is so is due to the barriers to entry, defined as obstacles faced by potential new entrants, existent in the Las Vegas casino resort market. The entry barriers are explained below.
Government Policy
While the lucrative nature of casinos makes it an important source of government revenue, the social ills present as an inherent result force governments to balance the two contrasts with political delicacy and tact. The resultant governmental licensing of casinos thereby becomes a barrier to entry, allowing only a selected few to enter this highly-profitable market. The requirement of licensing for “all establishments where gaming is conducted” limits the ability of potential competitors to enter at their own free will since they would not only need to meet stringent criteria but be subject to the Nevada government’s willingness to license another casino resort. Such laws thus regulate entry into the market and pose as a high entry barrier.
Product Differentiation
As casino resorts …show more content…
For example, property prices in the Las Vegas strip have been steadily increasing at huge rates . Incumbents enjoy a first mover advantage, having invested when property prices were lower. Furthermore, more resources would also have to be spent to obtain relevantly-skilled staff, who are crucial to the success of the new entrants. New entrants would thus find their start-up costs to be much higher than incumbents and the additional resources needed to compete reduce the lucrativeness of the investment, forming a high entry barrier where entrance is driven by the desire to earn above-average
When one thinks of casinos, one cannot escape from Las Vegas. Despite Nevada legalizing gambling in 1931, today, the notorious Las Vegas strip is dominated by several key players and the reason why this is so is due to the barriers to entry, defined as obstacles faced by potential new entrants, existent in the Las Vegas casino resort market. The entry barriers are explained below.
Government Policy
While the lucrative nature of casinos makes it an important source of government revenue, the social ills present as an inherent result force governments to balance the two contrasts with political delicacy and tact. The resultant governmental licensing of casinos thereby becomes a barrier to entry, allowing only a selected few to enter this highly-profitable market. The requirement of licensing for “all establishments where gaming is conducted” limits the ability of potential competitors to enter at their own free will since they would not only need to meet stringent criteria but be subject to the Nevada government’s willingness to license another casino resort. Such laws thus regulate entry into the market and pose as a high entry barrier.
Product Differentiation
As casino resorts …show more content…
For example, property prices in the Las Vegas strip have been steadily increasing at huge rates . Incumbents enjoy a first mover advantage, having invested when property prices were lower. Furthermore, more resources would also have to be spent to obtain relevantly-skilled staff, who are crucial to the success of the new entrants. New entrants would thus find their start-up costs to be much higher than incumbents and the additional resources needed to compete reduce the lucrativeness of the investment, forming a high entry barrier where entrance is driven by the desire to earn above-average