Igaming Focus: Digital features to merge with live elements as smaller operators compete for U.S. share By Jake Pollard, CDC Gaming Reports June 9, 2022 at 10:00 am In this second article looking at the U.S. online casino market, we talk to eGaming Monitor and Playtech about how smaller casino operators can compete in a vertical that is dominated by the three major brands that are DraftKings, BetMGM and FanDuel. To those three brands can of course be added Caesars, which is about to move aggressively into the online casino space and start leveraging its brand name, casino expertise, and omni-channel platforms. For DraftKings, the addition and integration of Golden Nugget Online Gaming and the casino-specific demographics and revenues that is expected to contribute should boost its standing in the online casino charts. As the Eilers & Krejcik April 2022 Online Casino Monitor graphic below shows, DraftKings is roughly on a par with FanDuel when it comes to icasino share of market, but once GNOG’s activities are included, the combined entity should rank number two behind BetMGM for overall market share in the vertical. DraftKings completed the acquisition of GNOG in April, and one of Thomas Winter’s main tasks as general manager of the group’s North American online casino business will be “acquiring higher-value casino-first players, a player (demographic) DraftKings has long struggled to penetrate in a meaningful way”. As EKG points out: “The battle at the top of the U.S. online casino market share standings (DraftKings, FanDuel, and BetMGM have 70% GGR share on a combined basis) is about to get even more intense.” Casino royale Within this battle for icasino share, it is easy to forget that smaller and medium-sized operators such as Rush Street Interactive, Resorts, Harrah’s WSOP, 888 or FireKeepers are also forging a path for themselves in the vertical. They are able to make the most out of the vertical because it is more profitable than sports betting and produces higher margins, even if there are structural issues that also prevent them from growing and developing their businesses further. One of those is that many of them are pure play casino-only brands that might have considered launching a sports betting offering but, on balance, decided against making the investment. Another obvious issue for those smaller brands is the cost of marketing. Kevin Dale, founder and CEO of casino analytics firm eGaming Monitor, says they cannot compete on marketing spend, “however, there are non high-spend activities they can do to compete, such as brand image or values, customer service or price,” he adds. In sports betting, that would mean competing on odds, margins or the spread; while for online casino it means competing “on bonusing, cashbacks and social or multiplayer”. Dale adds that having “the broadest breadth and depth of products available is key, especially in a market like the U.S., which is significantly underserved currently”. ‘Product stickiness’, where Netflix-like recommendations come into play, can also play a role in increasing engagement and retention. Dale says his company has been developing such features, and the U.S. as a market is highly receptive to this. “In the land-based space, (operators have) been developing player and game data models, real-time reporting for CRM purposes for some time. They are currently behind Europe on the internet front but I expect it won’t be long before they actually go above and beyond some of the best in Europe.” The concept of data-based CRM or recommendation systems is well entrenched in other sectors. “In the U.S., they simply need to apply these concepts and tools to the gaming sector and that’s where good metadata comes in”, says Dale, because it helps operators identify “the next games that perform well regionally to them and are unique in that no other operator has them currently where they operate”. “In the push and pull of marketing, for example with players finding games on affiliates who then want to play them on operator sites, having broad content and even unique content can make a difference to customer acquisition.” Live and direct Live casino has made huge strides since its beginnings some 15 years ago. Its track record as a tool that attracts higher-spending players and produces strong profits has also been proven over numerous quarters by groups like Evolution and Playtech. Speaking to Edo Haitin, managing director of live gaming at Playtech, it is also clear that live casino can play a role in helping smaller operators attract a wider range of players than just VIPs and high rollers. “Live gaming is a place to bet, but also an experience and can be rolled out through different verticals such as bingo and sports betting,” he says. Dale echoes those comments: “Live gaming is not just live table games, it’s also live slots and gameshows. Live is proving extremely popular in the U.S., not least as Las Vegas leads the world in land-based gaming, which is its nearest equivalent.” Haitin adds that live casino started out as an additional product to RNG games and progressed thanks to improved tech stacks and strong consumer interest. He says the content has evolved to such that viewers are attracted to it “in the same way that they might watch video content on Youtube”; and as “new players come to live gaming”, the lines between the RNG and live casino worlds will continue to merge and further social and community features will be added to the products. Bespoke service Dale adds that smaller operators can get bespoke service from live studios and make specific moves for those high value players. “Generally only the largest operators manage to get the studios to do branded or completely new games, but there are studios that will look at this. It’s also worth noting that a smaller brand in the U.S. is still in global terms quite a large player, so in many respects it is worth the effort.” Haitin concurs: “We can help with temporary dedicated studios to ensure smaller operators get where they want to be as they succeed with network products and then move to dedicated products.” The online gambling market has always been hyper-competitive, but listening to Dale and Haitin, it seems clear that small and medium-sized operators will leverage and merge digital features such as streaming and social with live casino to enhance and broaden their appeal to new demographics. Expect more of that combination to come to the fore in the coming years.