When one thinks of casinos, one cannot escape from Las Vegas. Despite Nevada legalizing gambling in 1931, today, the notorious Las Vegas strip is dominated by several key players and the reason why this is so is due to the barriers to entry, defined as obstacles faced by potential new entrants, existent in the Las Vegas casino resort market. The entry barriers are explained below. Government Policy
While the lucrative nature of casinos makes it an important source of government revenue, the social ills present as an inherent result force governments to balance the two contrasts with political delicacy and tact. The resultant governmental licensing of casinos thereby becomes a barrier to entry, allowing only a selected few to enter this highly-profitable market. The requirement of licensing for “all establishments where gaming is conducted” limits the ability of potential competitors to enter at their own free will since they would not only need to meet stringent criteria but be subject to the Nevada government’s willingness to license another casino resort. Such laws thus regulate entry into the market and pose as a high entry barrier.
As casino resorts scramble to differentiate themselves “based on a special theme” and “incorporating the look and feel of specific foreign destinations”, potential entrants are hard-pressed to produce a casino resort that would surpass others to overcome customer loyalty and attract customers. The average customer, who is more affluent and more educated , is likely to be more willing to pay for new experiences but with 197 casinos already present in Las Vegas, attempting to outdo highly-differentiated incumbents or carving a separate niche market might prove difficult and costly. The necessary allocation of many resources to do so might have adverse financial consequences, forming a high entry barrier for potential entrants...