Poker Inc. is currently operating four casinos in Royal City. Competitors are right now planning to open up a rival casino in Kingsville.
Poker Inc. has hired our company in order to assess the consequences of the possible competitor opening and what strategies Poker Inc. should follow.
This case is made to be interviewer-led. Therefore the interviewer should guide the interviewee through the interview. The questions should be read out and shared with the candidate.
The case is split into two parts:
The first part describes more qualitative problems and has more open questions that should make the interviewee think about the problem and its solution.
The second part is more about quantitative problems and calculations. Here the interviewee should try to make his own calculations and solve the questions.
The following structure/framework provides an overview of the case:
This is a rather simple question, which should lead the interview to the conclusion that he/she has to evaluate the impact of an own casino on the company’s revenues compared to a competitor’s one.
Lost revenue = Revenue * % of rev from Kingsville
Lost revenue per type:
Gamblers = $400 m * 25% * 100% = $100 m
Vacationers = $500 m * 25% * 0% = $0 m
Experiencers = $100 m * 25% * 50% = $12.5 m
Total revenue lost = $112.5 m
As the $112.5m lost due to the new casino will in that case benefit Poker Inc., this will not result in a revenue loss. However, the tax rate in Kingsville is higher, and therefore the additional taxes that have to be paid will result in losses for Kingsville.
Revenue lost = Revenue lost to taxes = Revenue of new casino * ∆tax =
Revenue of new casino * (new tax-old tax) = $112.5 m * (50% - 25%) = $28.125 m
Possible solutions:
More questions to be added by you, interviewer!
At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the next interviewees solve the case very fast).
Hello Radhia, your point is fair and it would be fine to discuss it with the interviewer. The main hypothesis should be that you can gain some gamblers that are usually going in other casinos in Ro... (read entire answer)
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