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What's happening in your backyard?

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You have no doubt seen DWS’ monthly gaming Whats-happening-in-your-backyardsnapshots where we compare a region’s growth over a one and two year period, but how often have you stopped and thought why? Why should one region grow faster than another? Most importantly though, will it continue to grow faster than average or eventually slow back down?

Having a crystal ball would certainly be helpful for determining potential new and second sites as well as helping to formulate your long term capital expenditure plans. Whilst we weren’t able to obtain this crystal ball (it was well guarded by a powerful warlock), we did manage to use statistical analysis to a find common threads and identify trends to provide meaningful insight.

DWS conducted a review of regions on the east coast (Queensland, New South Wales, Victoria and the Australian Capital Territory) examining a range of factors over five years including population growth, socio-economic status, tourism, employment, household income, family composition, proportion of retirees, average daily revenue of machines, gaming machine density, proximity to casinos, and the list goes on…

Before we get to the nitty-gritty, it’s important to note the changing economic landscape over this time: the slow-down of the mining boom, the slow-down of China and Chinese tourism, the falling Australian dollar, changes to smoking regulations and the emergence of online/social gaming,  just to name a few.

With that in mind, let’s take a look at the similarities between regions:Table4

These drivers of growth are only half the story, just as much focus needs to be given to the risks (detractors of growth). Here’s a few trends and pitfalls to consider:Table7

The general rule of thumb is that 80% of your revenue comes from people living within 5km of your venue. Therefore it makes sense to know who is living on your doorstep and who is likely to move in. Market surveys, trend research and demographic analysis should be topics at your next planning meeting. ‘Build it and they will come’ no longer applies. Listening to, and knowing who’s in your backyard is the best way to safeguard profitability into the future.

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