Casino Reinvestment and Expansion

Under the new paradigm of the economic downturn in a broad spectrum of conditions of consumer spending, casinos face a unique challenge in addressing how they both maintain profitability while remaining competitive. These factors are used in the commercial gaming industry with high tax rates and industry of Indian gaming complicated by self-imposed contributions to tribal general funds and/or per capita distribution, but rather a tendency to increase the fees charged by the state.

Determine how to “render unto Caesar” to reserve, while the funds necessary to maintain market share, improve profitability and increase market penetration, is a daunting task that it must be well planned and executed.

It is in this context and the author’s perspective, including the time and quality of practical experience in the development and management of this type of investment that the items referred to itinerary planning and prioritizing a strategy Casino Reinvestment.

Baked goose.

Although you obviously do not cook the goose that lays golden eggs, is often surprising how little attention is paid to his thought perhaps continuous and food. With the arrival of a new casino, board, investors, and financiers are developers / tribal rightly concerned to reap the benefits and there is a tendency not to allocate a sufficient amount of income in the maintenance and improvement of the property. And it raises the question of how the benefits should be allocated to reinvestment, and to what end.

So each project has its own set of circumstances, there are no absolute rules. In most cases, most of the major commercial casino operators do not distribute net profits as dividends to its shareholders, but the improvement of existing sites also reinvested in search of new places. Some of these programs are funded with additional debt and/or equity issues. Cuts in tax rates on corporate dividends tend to focus on these methods of financing, while business reinvestment heart ongoing care.

As a group, and in the current economic conditions, the listed companies had a net margin (profit before tax, depreciation, and amortization) is an average of 25% of profits after tax gross income and interest payments. On average, nearly two-thirds of the remaining profits for reinvestment and asset replacement used.

Play casino operations under the gross tax rate jurisdictions are more capable of their properties, which further enhances revenue Finally, the benefit of the tax base to reinvest. New Jersey is a good example because there are certain reinvestment allocations mandates of the United Nations, income as a stimulant. Other states, such as Illinois and Indiana effective with higher rates, to reduce the risk, which can eventually undermine reinvestment school cafeterias to increase the penetration of the market demand, to be like the neighboring States, in particular competition. Moreover, an efficient management to generate higher profits for reinvestment, which is both effective and fundraising, and the issuance of shares.

How can a company decide its attributable profit casino is essential to determine the long-term viability and should be a part of the original strategy of global development. While payment programs short-term loans repayment/debt may seem at first convenient to quickly reach the compromise, but can also greatly reduce the high school to reinvest/expand over time. This also applies to any distribution of profits, or for investors or, in the case of Indian gaming projects, distributions to the general fund of the infrastructure of a tribe payments per/by.

In addition, many lenders debt service reserve and restrictions on reinvestment or other severely restrict use it since the project met the ability to maintain the competitiveness of the invoice and/or possibilities make the mistake of asking.

While the defense is not that we do not plow-back profits into the business, we recommend consideration of a program that reflects the cost allocation “real” to maintain the asset and maximize its impact.

Maintenance and replacement.

Maintenance and replacement provisions should be set through an annual budget based casino, Quebec, distributors based on the replacement cost of stocks intended furniture, lighting, equipment, construction, systems, and landscaping. But too often we see annual wish lists, which have no relation to the current use of these products. Therefore, it is important to really predict the replacement cycle, the allocation of funds does not necessarily have to be included in the fiscal year. In the first phase, it seems unnecessary to replace spending money on new equipment, but by the accumulation is possible recycling is used to avoid falling into the Fund when they are most needed.

One area of ??focus is the slot machines, the replacement cycle has been a reduction in the end, as new games and technologies can be developed to a much higher rate, and competition develops given.

The cost savings.

Investments in programs and cost-saving systems are, by their nature, and if there are enough studies that use a less risky fund allocation of income, then almost any other investment. Often, this may interest savings and reductions in the form of new energy systems for business, labor and insurance products more efficiently shopping.

These elements have reservations, one of which is to analyze in depth will tout their savings against their own special application, and often advertising claims are exaggerated. Refunds income and long-term debt can sometimes be advantageous advance resulted especially if the links between the investment fund during the development phase can be limited completed. In these cases, it is important to consider the net effect of this strategy on the bottom line, compared to any other use of the funds for the improvement of investment to improve revenue growth /.