The Casinos Business In Uruguay And Its Future

The casinos business in Uruguay and its future

Introduction

In this essay we will analyze in the long term the business of casinos and gambling in Uruguay and then being able to determine and conclude whether the insertion of this nature in the country would be a success, or on the contrary a failure.

General and specific environment:

The analysis of the environment, both general and specific is of great importance to identify both the factors external to the company, as well as those that are closest to it.

General environment

To identify the general environment of the casinos, we will use the Pestel analysis tool.

Political/legal factors:

These factors can influence profitability or the possibilities of survival of the sector, so they should be considered before deciding to invest in the field.

The level of political stability that the country has and that in turn reflects the rest of the world is of great importance in order to progress economically and also attract investors from other parts of the world. In the case of Uruguay, this would not be a problem since it is recognized for being one of the countries with the best political stability in Latin America, and it is the second Latin American country with less corruption in the public sector according to the index of the perception of the perception of theCorruption (CPI) prepared by ‘Transparency International’.

The regulatory framework is also extremely important when installing a casino in the country, since for this possible, certain legal requirements must be met before.

In Uruguay, to install an entirely private casino, it is necessary to obtain a license through a public tender, this is established by Decree No. 588 of 1975. It is also necessary to build hotel establishments or other public attraction centers together with the casino in question. Once the license is obtained, the casino must pay the State a fee calculated based on the projection of its estimated gross income, together with the corresponding taxes.

Economic factors:

They are belonging to the economy of the country in question, in this case, Uruguay. These factors are of great impact and directly influence the profitability of the casino.

First, the type of market that is currently operational in the casinos sector is important, be it a monopoly, an oligopoly or something similar to an economic system of perfect competition, we consider that in Uruguay the type of market of the market of theCasinos is currently an oligopoly due to there are few physical casinos in the country, which provide a very similar service.

Second, the country’s economic cycle stage, together with the GDP growth rate will affect the speed with which the casino is expected to grow and prosper in the future. Currently, according to the data provided by the BCU (Central Bank of Uruguay), the country is in a stage of economic stagnation, which is not favorable for their growth.

Third, the exchange rate of the country in which Casino would affect Casino’s profitability. This is because machines cannot be obtained directly in Uruguay, but should be imported.

Fourth, a high level of unemployment in the country would mean that people would be willing to work for a lower salary, which would reduce Casino’s costs. However, it can also mean that people are not well economically as to bet big in the casino, which means less profits.

Finally, the specific economic situation of the place where the casino will be installed must be taken into account. You must sign up for an area where there is a better economic situation and the population has more money to bet.

Social factors:

Social aspects reflect the society where the casino will operate. These cover from culture, to the beliefs, attitudes and values of the country’s population. Therefore, a correct understanding of these would be very beneficial when installing a casino.

Within these, the social class of the country’s population to focus is of the utmost importance: the casino could not encourage its clients to bet large if the majority of the population outside of lower class. According to the report prepared by the Ministry of Economy and Finance, in 2018 the distribution of the population in socioeconomic classes determined that: 75% belong to the middle class, 18% to the lower class and 6% to the classhigh. Therefore, at the time of installing the casino, the lowest class neighborhoods must be avoided, in order to maximize the profits.

Technological factors

If the casino seeks to prosper, the constant technological innovation is essential to be able to differentiate itself from the competition and in this way, attract more customers. Here it is of great importance to correctly implement the recent advances and technological developments, so that in this way it is possible to improve the product that is being offered.

Environmental factors

Meteorological conditions can influence the efficacy and efficiency with which the casino operates, a pleasant climate is better for the casino and to attract its customers. In addition, there is the possibility that the casino can benefit from subsidies, or that some clients are willing to pay a premium if they use renewable energy or have better sustainable development policies. On the other hand, care must be taken with excess production of polluting waste, since in addition to generating fines, it will generate a negative reaction from the general public towards the casino.

Specific environment

To identify the specific environment of the casinos, we will use the tool of the five Porter forces:

• Customer negotiation power: it is quite low because they cannot negotiate prices because there are many customers, if the casino loses some customers, it is not very serious, also customers do not have many casinos options nearby.
• Power of negotiation of suppliers: in the area of the machines the negotiation power is quite high because there are not many suppliers, so they can set the prices they want and the casinos will have to buy them in the same way.
• Threat of new competitors: it is low because it requires a very high investment and the political-legal issue is very complex.
• Threat of substitute products: Online casinos could act as a threat, supplanting physical casinos in the not too distant future, or taking away customers, as they do today.
• Rivalry between competitors: it is usually low because there are not usually many casinos in the same area, especially in Uruguay (except the case of Punta del Este).

Key Factors of Success

Market study:

Before opening and undertaking in a casino, a market study must.Once this study was carried out, the casino could build a good business plan, in which he placed his strategies raised to achieve success.

Within these strategies, and in the field of casinos, some basics can be identified that all casinos should implement to be more successful:

Advertising and marketing:

The investment in this branch is indispensable if what is sought is to have a successful casino. Some of the ideas to be implemented can be to show photos of the great winners of the Casino awards in order to generate in their visitors the feeling that they can also have that luck, in this way they are encouraged to play and bet big.

Likewise, the use of social networks allows interaction with customers. Through these, the casino can inform people about the novelties of the casino, (whether new slots, promotions, etc.). In this way, contact with the client is not lost, which is essential so that he does not lose his interest in the casino.

Benefits, bonds and memberships:

Another fundamental strategy is to provide free discounts and services such as food and drinks. These benefits cause the client to feel comfortable and familiarize himself with the casino.

Also, when touring some casinos in the country, we were able to visualize that the implementation of membership cards is common. Through these, several benefits and bonds can be provided, and also allow casinos to study the game and bets of their customers, which is very useful to know who the great trainers are.

Neuromarketing:

Within the casinos neuromarketing is a fundamental practice. This is based on the sending of stimuli, which act on the client’s brain. According to studies of the "University of British Columbia", bright and colored lights, as well as sounds with the characteristic tone of slots, induce risky behaviors, causing customers to make decisions without stopping to think clearly about their probabilitiesof win.

Another study by “Smell & Taste Treatment and Research Foundation Ltda”, from Chicago, USA, showed that the citrus and fruit aroma, which thanks to aromatizing devices manages to reach all customers, generates a feeling of pleasure and comfort, making themstay there.

Games positioning:

The positioning of the machines and game tables cannot be left to chance. In our visits to casinos in the country we have realized that the position of the games is thought carefully so that the client is encouraged to bet more. This is because small betting machines and slots are mostly positioned in the corners of the casinos, which can intuit that it is given greater importance to the highest betting machines, placing them in view of people for peoplethat they stop before playing in these.

Growth trend in the sector:

Currently in the country, we consider that the casinos sector is stagnant. We intuit this because the IMM (Municipal Intendance of Montevideo) admitted that all the Casinos de Montevideo have lowered their profits considerably compared to previous years.

Given this situation, some of the casinos have opted for savings policies, where their investment is almost nil. This is carried out by minimizing costs such as real estate, advertising and marketing;and reducing staff to less than 100 workers.

This trend means a fairly serious problem if what is sought is to undertake in a casino, unless in the near future this stagnation manages to solve.

Threats and technological opportunities:

• Virtual reality: It allows users to live a much more immersive and realistic experience than traditional casinos offers. In addition, it can be implemented both in physical casinos and online.
• Artificial intelligence: today artificial intelligence begins to gain popularity. This technology allows to collect data and analyze information to perform certain operations. In the casinos could improve the customer experience through the analysis of their game, and the selection of machines that coincide with the interests of the same. In addition, you can detect signs of ludopathy in problemal traigators. Not only this, but it would also be helping the casino operator, recognizing suspicious winning patterns and warning errors, improving the general management of Casino.
• Robotics: The robotic industry is in constant development. Currently in Japan, China and Canada, work is being done on a Crupier robot that distributes letters in poker tables, responds doubts about the traigators and at the same time enforces the rules of the place, avoiding possible fraud.
• Costs: While it is true that technology is in constant progress and development, and that implementing some of these advances in casinos could be of great benefit, the costs that implement these technological improvements would not lead to implementation should not be forgotten.
• Online security: Although the popularity of online casinos is increasing, the aspect of security is a determining factor for players at the time of betting. Therefore, we must bear in mind that there are many dangers in the digital world and that no one is exempt from suffering some cyber attacks.
• Jobs: these technological improvements in casinos, such as the implementation of the digital casino, or the development of cross robots directly threaten the jobs, which can bring legal problems.
• Casinos Online: We decided to leave this point for the latter, because it can be seen in both ways. It is a fact that many online casinos threaten the business of physical casinos, because many times people decide not to go to a physical casino since they do not live near one, nor do they like the atmosphere of it, and opt for the online gameas an alternative. Despite this, digital casinos do not have to be seen as a substitute good to physical casinos, but can also be seen as a complementary good. Our argument to this exclamation is based on the fact that if a physical casino will launch its own betting website, it would not act as its competition, but could complement the casino in question.

Sociocultural variables:

Within the sociocultural variables we want to focus on the collective consciousness generated about the problems that casinos and bets generate in people. Socially casinos allow people to relax, distend and forget for a time of their concerns. However, the image that casinos give to the public is not very rewarding. This may be due for several reasons. First, casinos are associated with alcoholism, drug addiction and prostitution.

Alcohol consumption is very common within them due to the large number of free drinks offered. Drugs On the other hand, constitute an indirect practice but also affects the image of the casino. As for prostitution, it should be noted that it is also indirect, but that it is camouflaged inside the casinos. Another extremely important aspect is the problem of ludopathy generated by casinos. This disorder is increasingly common, especially in young people who begin to bet at an early age.

These factors affect the general image of the casino, and if they continue to get worse, they can cause the loss of many clients, or the denial of new customers to visit them.

Regulatory variables:

As for the possible regulatory variables, several bills linked to casinos are being presented in Uruguay. Within these, there is a bill, which promotes casinos. This same dictates that the casinos aboard the cruises that sail in national waters or carry in the local ports can remain open. With this, what is sought is for vessels to remain in Uruguay more time, so that tourists can learn more about the country.

Another important project to analyze, is one that seeks to combat ludopathy. Through this, it seeks to create a free telephone line of advice against this disorder, prohibits the installation of ATMs in games rooms, and forces the placement of the message: “playing compulsively is harmful to health” in visible placesof the establishments.

Conclusions

In conclusion, our group considers that currently in Uruguay, the casinos are not at their best, therefore we believe that the insertion of this nature in the country would not be very beneficial. This is because current casinos installed in the Uruguayan territory are not having the success they should, and their profits are well below compared to previous years. In addition, casinos are currently badly seen by the population, which is increasingly aware of the risks that convellan betting games. However, we do not rule out the possibility that in the future the country decides to invest in this item, and thanks to the new inventions and technological development, gambling are revolutionized, and that in this way, the situation changes and the casinos achieveagain increase its popularity in the country.