Success in the online gaming sector faces a number of obstacles.

Success in the online gaming sector faces a number of obstacles.

Since the explosion of casino gambling outside of Nevada and New Jersey in the late 1980s and 1990s, the gaming industry is now experiencing its most dynamic period. Today’s gaming industry is undergoing more subtle changes. They include developments like the quick uptake of iGaming, or internet/online gaming, the use of online sportsbooks, and the ensuing shift away from brick-and-mortar casinos, positioning sportsbooks for even faster expansion than retail locations. Given that the demographic trend for this type of gaming is toward an older population, it is anticipated that slot machines and gaming tables will lose popularity over time. Shawn Stewart, the gaming sector leader at Grant Thornton, claims that the problem is that sportsbooks and online gaming, which are much more well-liked among younger gamers, have not fully filled the void. To make up for revenue losses, obstacles to the widespread use of online gaming have not been sufficiently removed. The recent 2022 Global Gaming Expo (G2E), where speakers cited numerous explanations for this gap, had increased the acceptance of online gaming as one of its main topics. Industry experts concurred that in order to expand online gaming, success requires addressing three key issues: adapting to new customer trends, dominating growing competition, and navigating constantly shifting state and local laws.

Regulation of online gambling trends

According to Stewart, the decision by American states to legalize sports betting was understandably motivated by the promise of increased tax revenue. Due to the legalization of sports betting in about 30 states, residents of the remaining states are using online gaming apps, which causes gambling revenues to leave the state. Where sports gambling was legalized, the fact that actual tax revenue fell far short of expectations surprised many legislators. Sports betting profits are frequently taxed in states where it is legal to partake in sports betting. However, because there is still fierce competition in the market, most company profits are being reinvested in player promotions, which reduces taxable income. The number of income deductions that are permitted is currently being restricted by states in an effort to increase tax revenue. Where iGaming for real money is permitted, taxable profits appear to be more promising. Only a few states currently permit this, but in those that do, it has proven to be a more reliable source of tax revenue. Legislators who are hesitant to support it may find it difficult to convince them due to the stigma associated with states that “encourage” gambling outside of sports. According to Bushard, sportsbooks and casinos alike are well-positioned to compete with the dominance of Native American-owned casinos on the federal level. Beginning with bingo halls in the 1970s, some Native American tribes were able to successfully exploit their special sovereign status within the U.S. to run casinos and win a landmark decision that exempted them from federal gambling laws. The special status of Native American casinos has, however, been contested by gaming compacts in Washington State on the grounds that it amounts to racial preferencing. Two initiatives that would have either allowed commercial operators to offer sports betting online or in-person at Native American casinos were on the fall 2022 ballot in California. Despite the failure of both initiatives, the campaign to pass them received more than $200 million in funding. According to Stewart, there is a clear trend that challenges the Native American casinos’ current status, which has an impact on both traditional and online gaming. All experts in the gaming industry concur that the anticipated growth of real money iGaming will likely coincide with the current growth of sportsbook gaming. Who will profit, however, is a very hazy issue. The campaign to make iGaming more available and better integrated with already-existing casinos still has room for outsiders to have an impact.

Providing for new game preferences

Unsurprisingly, the gaming industry has already been significantly impacted by the development of a more cashless society, which was accelerated by a rise in online sales during the pandemic. Joshua Bushard, a partner in Audit Services and a leader in Grant Thornton’s Gaming Practice, claimed that this has prompted more casinos to develop app-driven omnichannel experiences, citing MGM Resorts as an illustration. The BetMGM gaming app offers a wide variety of betting options, but the key to its success is giving app users extra rewards and benefits that are only available when they physically visit a property. In line with that capability, MGM Resorts locations encourage visitors to use the BetMGM app to get the most out of their accommodations, a feature that is widely regarded as “essential.” Customization, which makes each customer’s gaming experience unique while using personal preferences to introduce players to other gaming genres, is a concept connected to omnichanneling. For instance, a sportsbook bettor may be very comfortable with the nuances of various sports bets, but may feel awkward placing an online bet and instead prefer to visit retail sportsbooks, according to J.J. Bennett, a senior manager in Grant Thornton’s Audit Services. While serving that player at the casino, a gaming company can take advantage of that familiarity to gradually introduce the app at the player’s pace and comfort level – and build brand loyalty in their retail environment where gaming options are becoming more diverse.

Expanding market volume and share

Many in the sports betting sector compare the current state of gaming businesses to Uber’s early business model, which was successful despite taking losses on purpose for years. According to Bushard, “Uber was willing to be a loss-leader in the personal transportation business for a while, anchoring people in and grabbing a high market share.” Since then, Uber has increased prices and altered driver compensation in an effort to finally turn a profit. Major sportsbook companies like DraftKings and FanDuel are using the same “playbook” in that they are currently forgoing profits to gain a dominant market share, both to secure their own position relative to one another and to stifle competitors. Major sportsbook companies are aware that differentiating their product from those of their rivals is the key to accomplishing that successfully. The main rival sportsbooks also want to expand the market for sportsbook apps, which currently has around five million users. To accommodate a majority of gaming customers who still favor visiting a physical location, gaming apps must be made more user-friendly in order to gain market share. A component of this solution combines developing an omnichannel customer experience with establishing reliable partnerships to expand the market. There has been talk of gaming companies joining forces with other sports-related businesses, like sports apparel businesses, to gain access to those customers.


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