Bridging The Gap
BITAC Panel Details Online Gaming Movement And Its Impact On Traditional Casinos
Fueled in part by the pandemic, as well as ongoing technological innovation, online gaming continues to gain momentum and change the paradigm for traditional casinos. A pair of veteran casino executives weighed in on some of the latest and more impactful online gaming trends during a panel discussion at the recent BITAC Casino Resorts in Las Vegas.
The panel discussion—which was entitled “Bridging The Gap: Connecting Online Gaming Activities To Traditional Casinos For Broader Appeal”—was moderated by Larry Birnbaum, principal, XENIOS Group.
Adam Rosenberg, senior advisor to Blackstone and gaming and leisure industry expert, pointed out that COVID “accelerated a move online for lots of businesses that were in the process of doing it, but needed to do it much more quickly.”
He added, “we saw an explosion of growth in online gambling and people starting to bet on things that they hadn’t bet on before because there weren’t live sports events.”
Rosenberg also acknowledged a shift in the traditional casino customer base, in part because they reopened more quickly than some other entertainment options.
“To find something to do a lot of people came to their local casinos to explore what they had to offer and are now ‘in the system.’ How we keep them and monetize them is something that I’ve been very focused on,” he said.
John Lukasik, consumer research and marketing, Penn National Gaming, Inc., also acknowledged a new demographic and emphasized that traditional brick and mortar casino companies that aren’t digitally based have been forced to adapt to the online movement.
“These companies are saying ‘oh no, we’re losing our base to these other customers so how do we keep them engaged within our ecosystem’? That’s essentially what they have to look at. They have to look at what it is that’s driving them to bet at home? How you can take that enjoyment that they’re getting on the couch and bring it within the physical space as well?” he said.
Lukasik further added that when it comes to sports betting switching costs are very low and as a result keeping customers can be a challenge. “Most people are playing on a lot of apps so you’re seeing less brand loyalty among this consumer,” he said.
Meanwhile, the emergence of eSports and other ‘fringe’ sports continues to reshape the online gaming experience.
“I would just say for the consumer it’s great, the more options the better. From a pure operations standpoint it’s very smart to understand you’re not going to necessarily have a ton of data on some of these more fringe sports, so it’s very important to limit the amount that you’re letting people wager so you don’t take a big loss on something. I would definitely say there’s a red flag if somebody wants to bet $50,000 on a cornhole match. I’m probably not going to take that. I just think as an operator you have to be very smart in how you manage your liability in the sports book,” said Lukasik.
Rosenberg, for his part, was more focused on the regulatory aspects of it.
“There’s a fair amount of wagering happening on eSports events now. There’s a big push now to get regulators comfortable with this, like they are getting comfortable with traditional sports betting, which implies integrity and proprietary data and official league data. As long as the regulators can be comfortable that the data that they’re enabling people to wager on is legit and there is some level of integrity to smoke out and eliminate throwing games, cheating, match fixing, things you see in traditional sports too. That all needs to be addressed, but it will because I do believe it’s a big opportunity. Wagering on eSports, in particular, is going to be one of the early ways that that gets monetized,” he said.
Meanwhile, a lot of the sports betting sites, such as DraftKings and FanDuel, have been highly promotional in trying to gain casual customers, which both executives pointed out could be cause for concern.
“A lot of the loyalty you’re seeing is in the promotion and the bonuses. How sustainable are these numbers that we’re seeing? We’re seeing companies throw out a billion dollars annually in marketing in order for capturing,” said Lukasik.
“I would analogize to when the land-based casino industry was proliferating around the country and operators would come in and compete for customers, there was always this fear of an overly promotional environment. Atlantic City is a great example that really fell victim to it at certain times in the past and I think you’re seeing that now play out online. The customers are fickle and they’ll go to where the best offer is. There’s a huge mismatch at the moment between the cost of acquiring customers and the lifetime value of those customers. Businesses like FanDuel and DraftKings are not profitable in their core online businesses, in sports betting, in particular, but they are able to drive some of that play to traditional online gambling, which is very profitable,” said Rosenberg.
Finally, the executives detailed where they’ve identified growth opportunity for the segment going forward.
“One opportunity I see is better utilization of physical space. There’s a lot of empty big-box retail and dark spaces in and around malls. There’s also a push for location-based entertainment and how we can entertain the next generation of people, outside of gambling, with rock climbing facilities or self-contained indoor amusement parks, for example. I think there’s an opportunity to better utilize all this empty real estate in a way that gets people coming out again. I see that as a great opportunity going forward,” said Rosenberg.
Lukasik maintained that he sees sports books within stadiums becoming more prevalent. He also noted lots of casinos are trying to think “outside the box” when it comes to attracting guests.
“How we can combine that sports book with a sports bar type atmosphere? You’re seeing that really pop up in a lot of casinos. I think that trend is going to continue, because it enables you to not have that lack of monetized square footage throughout the day and it helps you engage with the sports fan in general. So I really see that leading the way for the physical sports books in the future for casinos,” he said.
