As the betting and gambling industry in the US continues to expand, much of the focus remains on betting verticials, but igaming continues to play a dominant role.
The COVID-19 pandemic has been identified as a core driver of the rapidly expanding North American gaming industry due to closure of retail venues, as well as an increased need for states to generate additional revenues – and the igaming sector has been no exception to this.
Commenting on changes in technological and innovative developments during coronavirus lockdowns, Ed Andrewes, CEO, Resorts Digital Gaming LLC, argued that these developments are here to stay.
“Technological implementation is all about prioritisation,” he said. “Maybe some of the third parties who already had revenue streams coming in with the bricks and mortar world will focus more on sports betting.
“What COVID has done, and with new states opening up, it has proven that igaming is a very important part of the overall business model, which is changing the focus to online.
“When the third party providers change either priority, that is what speeds the technology development. The case has been proven and there is good revenue generation, and third party providers will stay focused on that.”
Although finding common ground with Andrewes regarding the accelerating effect of the COVID-19 pandemic on the US igaming sector, Dermot Smurfit, CEO, GAN also highlighted the significant challenges posed by the market, in part due to the complicated nature of the interstate system.
“The original accelerant was sports betting,” he began. “The secondary accelerant was COVID, and now you have a third accelerant, which puts more pressure on technology providers to retail casinos, which is the Michigan pre-marketing playbook – the idea that regulators may well now permit B2C operators to pre-market several weeks or even months in advance of the first legal online wagers that’s been taken in a US state regime.”
Likening the current standing in the US market to a ‘car crash situation of multiple states regulating and permitting pre-marketing or actual operations in very similar timetables’, Smurfit went on to argue that it is ‘very hard’ to deliver what consumers want, such as easy access to a single app and a single account.
“All of the basic blocking and tackling of the industry here in the interstate markets in America are incredibly complicated relative to the 25-year-old industry machinations in Europe,” he continued. “I see nothing but continued increased pressure on technology, whether it’s in-house, or third party supplied. Do I see any let up or any change? Absolutely not.”
When quizzed on the notion that cannibalisation may occur in the US, online igaming operators drawing customers away from retail venues, William Hornbuckle, CEO and President, MGM Resorts, argued that he and his colleagues had been ‘fighting that idea for a decade’.
He instead put forward the view that the industry will adapt to changing times and changing consumer trends, and that land-based operators will increasingly embrace online verticals as a means of engaging their customers beyond the doors of their casinos.
He said: “I’ve been around a while. We’ve heard this with the Indian casinos, we’ve heard this with the riverboats. Every other market opened up in the country, in a macro rate operators continue to do well, and exceed, and expand the industry and expand the business, no different here. We have a living example in Michigan.
“Over time, we absolutely believe that the opportunity to create omnichannel and the opportunity to speak to customers 365, whether they choose to come into a casino or not, is to the net benefit of an organisation that’s doing it at scale.”
Agreeing with Hornbuckle’s viewpoint, Brooks Pierce, Chief Operating Officer and President, Inspired Entertainment, remarked: “Ultimately consumers are going to drive that, and you see it in every industry.
“There are times they are going to want to go to the MGM Grand, there are times they are not. They want to have availability for a product when it suits them and how it suits them.”
Pierce also exhibited similar sentiment to Andrewes and Smurfit with regards to the impact of COVID-19 on the industry, as he remarked: “We’re at an interesting place because we’re at a little bit of a crossroads of that because of the acceleration of technology and I think both from the operator side and from the supplier side, we had a unique opportunity with COVID to kind of really accentuate the development of some of the online products.”
However, Smurfit held a different view to the Inspired COO with regards to cross-industry cannibalisation, stating: “You are going to see cannibalisation online. There’s not terribly well understood cannibalisation between social casino and igaming.
“That’s a more interesting aspect of cannibalisation – as it rolls out across the US, if you’re a major B2C operator and social casino, it will become more difficult to convince people to spend as much as they’re currently spending on what I would call a ‘proxy-land product.’”
“In America, igaming has been prohibited for the vast majority of residents for such an extended period of time, so the demand has been served by a proxy experience of fake money for entertainment-only B2C social casino gaming.
“That cannibalisation is real, and will become more impactful on standalone operators over the next few years, whereas I think retail to online is purely incremental in nature.”
The speakers were appearing on a GAN Sports-sponsored panel titled ‘I-gaming on the rise – making waves in 2022’, and moderated by Katie Lever, Chief Legal Officer of Lottery.com, at the SBC Digital North America event on 9-10 June. To view this panel and others, register at https://sbcevents.com/sbc-digital-north-america/