A Tough Business

Looks easy, doesn’t it? Rent a building, throw in some slots, turn on the juice and start counting your money. You’re now a casino owner.

Think again. This is a TOUGH business.

First of all, your business has a big government agency with a long list of (NOT optional) rules watching your every move. In fact, you can’t make most “moves” without their approval up front. Oh, and you have to pay the government a fixed “Fee” per month for every machine you have. It’s just a tax that you pay whether the machine makes money or not.

Next, you have security. Your business is handling a lot of cash. Cash can make even the most honest employee tempted. Plus, your customers like cash. Some of them spend endless hours dreaming of ways to cheat you. You need security. Lots of expensive security and it needs to work perfectly all the time.

Think technology is simple and cheap? It’s NOT. It breaks. It changes. You business is very dependent on technology. Slot machines are big computers. They are all networked together. You just bought yourself a complicated computer network. Ever hear of hackers?

Bills. Man, you got bills. Electric, water, telephone, maintenance, advertising, janitorial, supplies, licenses, postage – the list never ends. But that’s not the biggie.

The biggie? Debt. As one casino general manager told me, “it’s all about the debt.”

As an owner, you can buy or lease your slot machines. Unless you have a BIG chunk of capital you’re willing to risk, you have to lease the machines. And you’re immediately in trouble. The basic math of it is that most machines “net” only barely enough to cover all the expenses if you have a lease payment. Low-utilized machines actually cost you money.

Did you hire your staff yet? Who’s working this Christmas Day? You are.

So, Mr. casino owner. What do you think now?

Yeah, me too. I think I’ll buy a McDonald’s instead.