Casinos Should Spend, Invest, Grow But Not Forget About Their People

As 2012 rolls along, I keep hearing casino executives use the words “investment” and “expense” synonymously.  I think this deserves close examination and I’ve included a couple of definitions to see if it helps.

Investment [in-vest-muhnt] n. 
          1. Property or another possession acquired for future financial return or benefit.
          2. A commitment, as of time or support.

Expense [ik-spens] n.
          1. Something spent to attain a goal or accomplish a purpose.
          2. A loss for the sake of something gained; a sacrifice.
          3. An expenditure of money; a cost.

Casinos constantly face  a very expensive reality – if they don’t grow, their competition will.  It’s a basic rule of nature that plants and animals with protection survive while those without it are lunch.  The same is true in gaming where protection is often viewed as growth.  Growing a casino and adding amenities makes things difficult for the competition.

For example, if a casino has machines and bingo, a competitor might see that as a soft target because the barrier for entry is relatively low.  But if the casino adds table games, it’s not only providing more entertainment opportunities, it’s creating obstacles for the competition.

These are the familiar progressions that many casinos follow as they expand.  They know expansion has a high cost.  For some casinos, expansion can be extremely expensive to the tune of hundreds of millions of dollars.  But they need to either stay in front of the competition or at least keep up.

So is expansion an expense or an investment?  If it’s done properly, it probably is both.  It’s money spent to accomplish a goal.  It’s also something acquired for financial benefit.

And just like an expansion, the cost of improving your people is both an expense and an investment.  You need to do it to compete.

One of the first casinos we did guest service consulting for quickly understood that the money they spent on training – an expense –  was also an investment in their people and property.  Most of this casino’s staff were tribal members with little guest service experience.  As a matter of fact, some of the guest service expectations were the opposite of some of the tribe’s cultural beliefs.

Many casinos’ training departments are viewed as a money pit.  Training is a necessary expense that they pay for because they “have to.”  If you see training only as an expense, then either you don’t understand the potential return on investment or you’re doing the wrong training.  Improving your people is one of the best investments you will ever make.  It can pay a huge dividend and you now have an appreciating asset.

A good investment is like having a money tree.  You know that once it’s planted and nurtured, it will consistently produce a good return.

People tend to make serious financial mistakes when they focus on the expense and don’t see the return.  There are entire industries that have focused on expense only to be  crushed by the competition.  The first one that comes to mind for me is the United States automobile industry.  It was so focused on costs, it ended up building cheap cars.  Fortunately, auto manufacturers learned their lesson and turned their focus back to investing in order to produce very competitive vehicles.  I think they are producing some of the best, highest quality designs in my lifetime.

Spending and investing are critical to a casino’s success.  And investing in your people is the best way to ensure a bright future.  Grand buildings and breathtaking golf courses are great but it’s people that make the difference. 

I was recently at a casino that was spectacularly beautiful inside and out.  But it was almost empty.  I was shocked at how few guests were at the property.  I visited their competitor later that day.  The competing casino was nice but not nearly as large and expensive.  Nevertheless, it was packed!  When I asked people why they were there, they said it was because of the people.

Spend.  Invest.  Expand. Grow.  They’re all critical to success.  But along the way, don’t forget that your people must be an equally important part of that formula.                   

To read other articles by Martin Baird, go to

Martin R. Baird
Robinson & Associates, Inc.

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