Background and challenge
As legislation eased on non-Nevada casinos and online gambling grew, competition heated up significantly for long-standing existing regional casinos. Our client, a regional casino brand, was facing increasing competition from new casinos in the region. In the near term, the client was at risk of losing 25-30% of its revenues.
A key challenge was in identifying which casino market segments were expected to grow while staying protected from competitors. L.E.K. Consulting evaluated the current property ownership of the client to identify which regions may have growth opportunities and how they may be protected.
Approach and recommendations
L.E.K. took a two-pronged approach for improving the client’s business: optimizing existing and potential assets.
In order to identify challenges with existing assets, L.E.K. conducted in-depth discussions with management. Leveraging L.E.K. intellectual property, we were able to identify three key tools that would help the client optimize its existing business:
- Formalize the training and development of management
- Streamline the return-on-investment tracking of marketing efforts
Additionally, L.E.K. identified and evaluated five vectors for growth:
- Transform the adjacent tourist area with existing land ownership
- Expand its customer base through effective markets
- Build casinos in new markets without existing land ownership
- Develop a presence in the online gaming market
- Acquire other high-growth properties
We rigorously evaluated each vector by risk level, expected return on investment and necessary upfront investments required. Then, we developed a detailed playbook of best practices across each of the tools for optimization.
Armed with plans to optimize the business, the local casino successfully transformed existing operations and improved cash flow. After L.E.K. completed the project, the client successfully renovated its properties to support continuing growth in the business.