Space Use and Needs As already discussed, social distancing and capacity restrictions required under current mitigation efforts have been addressed on an ad hoc basis that will not be suitable to long-term use. Simply turning off machines, removing seats from table games, closing entrances and erecting plastic barriers as quickly and cheaply as possible to get the doors open, will all need to be adjusted and replaced over time by solutions that are more attractive to the customer, more durable in everyday use and more efficient for staff to clean and work around. Gaming has a unique advantage over most businesses in being able to capture large percentages of its total revenue base from relatively small percentages of their customers. However, even casinos are limited in their ability to meet demand and maximize profits in a space restricted environment. Also, even with adequate spacing between machines and table seats, customer circulation, lines for cashiers and rewards and higher demand for favored games and denominations inevitably lead to customer and employee proximity that defeats the social distancing goals of the spacing efforts. For facilities that have the land base to physically expand their gaming floor, adding space to reach prior gaming position levels under new distancing rules is an option worthy of consideration. The old rule was to fill every space with as many machines as possible because machines could achieve rapid payback with only limited occupancy and leaving space empty that could generate profits made little sense. Since the greater space will likely remain mandated to some degree, adding space rather than removing gaming positions is expected to be warranted for most facilities that physically can. The reason is similar to the reason for maximizing machine counts historically, the payback is rapid at achievable revenue volume. The graph on the following page shows the average win per gaming position necessary to achieve a two-year payback for added space given various levels of cost per square foot to add the space. The base assumptions are an average space per gaming position of 65 square-feet and an average marginal return on gaming win of 50 percent. While you can argue with any of the assumptions or adjust the preferable return window, the basic concept and pattern will remain the same. As the graph shows, the average daily win per position required to pay for even very expensive space needed to add a machine is well within the range of many Indian casinos. At lower space cost figures, say below $500 per square foot, the vast majority of Indian casinos could support adding space, provided, of course, that there is demand for the added gaming. Expanding the gaming floor need not necessarily require constructing entirely new space. As capacity constraints and other post-pandemic shifts in operating environment affect space usage for ancillary facilities such as dining areas, function space and event centers, conversion of portions of those areas may also be warranted to meet the need for added gaming space. In fact, greater flexibility in design, to allow for faster adjustments in times of crisis or just to reflect changing demand patterns, should be a guidepost for any renovation or future expansion to casinos resorts.
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