Is Younger Better?

The internet and the quest for millennial gamers

The casino industry is currently facing a dilemma. Older gamers are literally dying off while fewer younger people express interest in casino gaming. Effective marketing to millennials and their subsequent conversion to gamblers has become the holy grail in providing a replenished customer base for casinos.

Many operators are banking on the “in-development” games of skill to attract millennials, but other avenues have also arisen. These generally include games delivered over the internet to a person’s preferred device. These include social gaming, daily fantasy sports and the more recent advent of eSports.

The role of the casino is to be the provider and facilitator of these games, thereby laying claim to this market segment that will be won over as casino patrons by the “skill games” soon to come to casino floors.

Daily fantasy sports (DFS) is seen as one area which a casino could leverage to bring younger (though primarily male) players into the casino world via a DFS competition run by the casino. Sports bars and lounges would be remodeled to accommodate the players. However, over the last year, the DFS industry has been in turmoil as regulators and law enforcement have focused on these operations in numerous states. While this may have taken the “shine” off DFS and the big multi-state providers such as FanDuel and Draft Kings, it may also open up the market to local casinos with their local affinities to compete in this space.

The biggest questions for DFS and its delivery via a local casino are: Can it be profitable or at least break even with a smaller local market versus a national one, and, can the players be converted to gamers once in the casino? The answers to these questions are as yet unknown, but at minimum DFS provides one internet-based avenue for casino operators to explore its potential to drive millennial visitors.

Social gaming has become the focus of the iGaming community in the U.S., given the lackluster performance of real-money iGaming in states that have legalized it, and the subsequent decline in the number of states considering real-money iGaming. Social gaming has great potential for casinos in terms of reaching a new audience that had not previously considered casino gaming as desirable.

The casino games are offered on a variety of devices that are never far from a millennial’s hand. Initial reports from operators on the East Coast support the contention that yes, social gaming does attract a wider audience, a sizeable proportion of whom have not visited a brick-and-mortar casino.

When they do visit the casino in person, it has been noted that they are younger and tend to spend more on their casino visit than the average player. However, not all operators have seen positive results. This appears to be the result of a disconnect which is in part attributable to the software providers’ failure to offer features that would facilitate the delivery of marketing programs and promotional events designed specifically to drive traffic from online to land-based casinos.

Contributing to this has been a failure of casino marketing departments to rapidly evolve and execute marketing and promotional programs targeted to convert online players to land-based casino visitors, and to demand from software providers that they have the tools to do so.

The advent of eSports provides yet another avenue for the casino to reach the millennial generation in one of its core defining activities. Anyone of my generation with a teenage son knows just how avid game players can be, and the number of hours per week spent on this activity. eSports are played online in a multi-player universe where individuals or teams compete.

Game developers are now sponsoring worldwide competitions where the prize money is in the millions of dollars. Leagues have been developed and a “season” (usually three to four months) has been inaugurated with playoffs to crown the champions.

Facilities can be custom-built such as is proposed for Las Vegas, where Ourgame International Holdings of Beijing has proposed a facility of approximately 14,000 square feet capable of seating 200. Dedicated facilities are not a necessity, and fortunately, casinos generally have a wealth of available space—whether in a showroom, ballroom or multi-purpose space that with minor alterations can accommodate eSports events.

For example, the Downtown Grand in Las Vegas recently ran a competition to crown the champion of Wargaming Net League North America, or WGLNA. The winner claimed a $75,000 prize in addition to a slot representing North America in the Wargaming Global Grand Finals in Warsaw in April. All this was done in a space that would be converted later that week to accommodate a wedding.

From a physical perspective, hosting one of these events is no more onerous than hosting a musical act. Other games such as League of Legends and Mortal Kombat are also popular. The former had major events at the Key Arena in Seattle, the Staples Center in Los Angeles and at Madison Square Garden in New York.

From the casino perspective, this is a great marketing tool. First, it creates awareness among the millennial generation; it brings them to your facility (although in relatively small numbers). The casino can sponsor its own team (or teams) within the leagues, and games can be televised, garnering even more visibility for the casino among this demographic. For the three to four months of the season, the casino can schedule weeknight events in its existing facility.

The ability of social gaming to create new land-based gamers is reflected in the data. Both DFS and eSports certainly achieve the goal of reaching and catering to the recreational demands of millennials, but it has not yet been shown that this results in concrete improvement of gaming revenues.

Some might say that in this new paradigm, the impact on gaming revenues is not as significant as offering a wide range of leisure activities beyond gaming that appeal to the broadest spectrum of potential guests, with the thought that once in the building they will spend money. That, some say, is the future of the casino industry. While this argument has some merit, the reality of the decision-making process will, for the foreseeable future, be slanted towards the generation of gaming revenues.

While social gaming, DFS and eSports can deliver millennials to the casino, to have an impact on gaming revenues they must be attracted to the gaming product. Given this, the casino industry has put a lot of faith in game developers that are currently working on “games of skill.” It is these games that will engender play from millennials on the casino floor, regardless of whether they are attracted to the casino by online social gaming, eSports events or DFS.

As yet, it is unclear as to how effective these “games of skill” will be. Given the high level of graphics and production found in the eSports environment, one must hope that the machine developers have looked closely at the products associated with eSports, and that they replicate some of that quality in these new games.

I don’t expect that the first generation of these games will entirely solve the issue of attracting millennials as gamers. I do, however, hope that the subsequent evolution of skill-based games will become ever more appealing to this key generation.

With an attractive and appealing set of skill-based games in place, then internet-based activities such as social gaming, DFS and eSports can drive customers to the casinos with a much greater likelihood of these new millennial guests becoming casino gamers.

Paul Girvan is a partner and managing director of the Innovation Group, in charge of its New Orleans office. Girvan has been providing feasibility analyses to the gaming industry since the early 1990s and in the last five years has increasingly focused on iGaming. The Innovation Group is co-producer of the iGaming North America Conference held in Las Vegas each March.

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