As a strategic adviser to a number of clients considering online gaming options throughout the past few years, The Innovation Group and its Innovation Interactive practice have witnessed the many challenges existing casino operators have faced in the i-gaming research and decision-making process.
Some operators have jumped into the space and opted for a technology solution before investing the time and effort to develop their strategy and understand their market and client base, only to find it did not yield the marketing and visitation impact they were seeking. Others have delayed moving forward because of uncertainty of legislation, or the ambiguity as to how to leverage online offerings to support the land-based facilities.
The unknowns regarding staffing needs are also commonly raised concerns, particularly for smaller operators and those considering a free-play or social solution that will take added marketing and IT man hours for existing land-based facilities to realize revenue from the online participation. Player protection, ownership of player data, and the B2C and cost issues regarding social platforms like Facebook have been prevalent for some time, and now the issues surrounding potential regulation of social gaming have many operators on their heels, particularly tribes with compact concerns.
There are other reasons, of course, but these are among the most frequent we hear and have worked with our clients to address.
Hurry Up and Wait
The cumulative result of these concerns? For all the investment, research and technological advances to date, the industry has witnessed very few operator-based free-play and social gaming sites go live. Even with examples like the Maryland Live! website, which is arguably one of the most successful demonstrations to date of how a free-play site can help reinforce the land-based brand, grow the player database and drive traffic to the casino, cost-prohibitive offerings and overall uncertainty seem to have yielded significant caution throughout the industry. The Innovation Group conducted a survey of operators in February 2013, and while only 2 percent of respondents said they were not at least evaluating online gaming, fewer than 10 percent had gone so far as to select their partner and launch a free-play or social site.
This trend appears to be shifting as of late, as we have seen more provider engagement activity from operators. This is likely due in large part to the considerable reallocation in offerings from the providers, particularly throughout the past few months. They have listened to their client base, adjusted and responded with improved solutions for free play, social gaming and real money, and recaptured the interest of many operators who thought the original proposals were far too cost-prohibitive for products not directly monetized. In addition, the technical solutions have become more flexible and diverse in content, more sophisticated from a marketing and consumer protection standpoint, mobile-centric, and in general, now more in line with player demand and operator needs.
Ironically, this has all come to pass because, with the exception of New Jersey, Nevada and Delaware, online gaming technology has evolved more quickly than the corresponding legislation needed to allow for it. So for those in yet-to-be regulated jurisdictions, the providers had no choice but to develop free play and social gaming options that would better appeal to clients where legalization had yet to occur.
So, now that this is becoming reality, is the time right for more operators to consider free play or social gaming as additional marketing and delivery channels for their existing casinos? And will the advancements and trends being seen among the providers in the regulated states bring added value even to those who can’t engage in real money?
Can’t We All Just Get Along?
By now, everyone is aware that New Jersey, Nevada and Delaware are in the midst of implementing real-money online gaming, and at least in the case of New Jersey, the models we are seeing seem to be more in line with what we have seen in the European online gaming jurisdictions. Integrating with proven platform providers, the traditional slot manufacturers that have always been known for exceptional content are all vying to get the online versions of their games on as many operator sites/skins as they can.
The good news is, even for those in unregulated states, that this may be the encouragement that was lacking for the manufacturers and game content providers to work together to more effectively integrate into one another’s platforms, and advancing relationships that in theory could benefit even free play and social gaming offerings through diversity of content.
A few manufacturers had strategic agreements in place up until now, but not at a volume that could be considered industry-changing. Operators are overwhelmingly telling us they want to replicate the diversity of their floor in the online space, and of course choice and quantity are always good for the player. In other words, if this all turns out as it could, this change could be an important advancement for the industry.
Next month, we’ll highlight real-life situations in which companies involved in free play and social gaming explain how they are implemented, what they have meant for land-based casinos, and strategies for moving into real-money online gambling.