Tuesday, July 15, 2014

How Do You Lose Money Running A Casino?

Build one too many.  Trump Atlantic City is shutting down.  Since gambling makes so much money, everyone is in it, especially the states.  In an example of diminishing returns, gaining customers required outbidding other casinos on winnings, narrowing margins into nothing.

All major religions and ethical systems outlaw gambling because it produces nothing. The fatal flaw in the business model is whereas in a business that offers a good or service, say a restaurant, the customer is satisfied by the meal at the price offered.  A second meal at that price immediately following is of no interest.  At a casino, a players winnings never satisfy.  They want more at the same price, a price at which the casino necessarily loses.

Another reason casinos are failing is there seems to be a better one at play, the stock markets.  Stockman strikes again:
At the end of the day, the Fed and its fellow traveling central banks have systematically dismantled the natural stability mechanisms of financial markets. Accordingly, financial markets have now become dangerous casinos in which speculative bubbles are guaranteed to build to dangerous extremes as the central bank driven financial inflation gathers force.  That’s where we are now. Again.
It seems there is now a "win only" casino out there, the stock market.  Good luck with that.

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