Regulatory, societal pressures force online gambling companies to adapt

Level Up: Why Online Gambling Companies Should Learn From Video Games

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The gambling industry in recent years has often been accused of a lack of innovation — from mobile sportsbooks that look the same as the 1980s betting coupons to slot mechanics that have barely changed since their inception.

This relative inertia, though, is not without cause.

An explosion in mobile gaming shows that customers value speed and simplicity above all else. The increasing burden of regulation likewise means product teams are more focused on compliance than inventing the next clever feature.

It’s a similar story in the US. Preparing a tech stack for launch in a new state is often lower-hanging fruit than optimizing a product in an existing market. 

As you may have heard, however, the land grab is on something of a temporary pause. And that could give online gambling executives a chance to think about the future with a fresh perspective.

Baby steps toward video game content

Video games might be an interesting place from which to glean some lessons. Player hours for the most popular titles have risen by up to 70% during the coronavirus-related lockdown, according to Forbes.

Even before the surge, though, Fox Bet president Matt Primeaux suggested the gambling industry needed to do more to tap into video games.

For Primeaux, more gaming-branded casino content is the obvious next step.

The likes of NetEnt have done very well branding slots with TV series (Narcos) and rock bands (Guns N’ Roses). Why not extend that to something like League of Legends?

“Take the branding, the characters and look and feel of a video game, maybe throw in some loot boxes that the video gaming public is used to, and I think that’s an interesting jump,” Primeaux said.

“Is that something that could engage and entertain as well as a video game? Probably not, but it’s a good first step.”

Time for a paradigm shift?

Kim Lund, a poker exec during the original US online poker boom and founder of cross-over games studio Aftermath Interactive, wants to go further and truly combine the two industries.

“The gambling industry is fantastic at running games as a service (GaaS),” Lund said. In other words, it’s good at keeping players engaged for years through a well-oiled CRM and marketing machine.

The problem is that the machinery is currently dedicated to obtaining deposits. And the underlying methodology faces growing scrutiny from society, from the media and gambling regulators. Direct advertising is increasingly unwelcome, bonuses are becoming more restricted (see: Sweden), and even qualified workers are shying away from the gaming industry and its worsening reputation.

Lund argues that the GaaS framework is so strong that providers don’t need to push for deposits. So how can online gambling use some elements of video games to soften its business model?

Plenty of room for innovation

One option could be subscriptions.

DFS company FantasyDraft took a step down this road last year, offering rake-free contests. Users instead pay subscription fees split into seven tiers based on their usage. The company said the model would provide it with more stable revenue, as well as benefiting players.

A similar model could be applied to poker or even slot tournaments.

Sweepstakes products could be another option, with or without entry fees. Swedish company Wooza, for instance, lets people enter into a prize drawing in exchange for watching an advertisement. The law says this type of sweepstakes doesn’t need a license, so companies are free to test and iterate around these ideas.

Video games have stolen a march

So far, Lund says gaming companies are embracing gambling concepts rather than vice-versa.

Coinmaster, for example, is a free mobile adventure game with a reward mechanism built on the simple three-reel slot mechanic. The game has been downloaded more than 80 million times.

“Gambling is a small pond in a massive ocean,” Lund said. “There’s so much innovation happening outside, but it feels like gambling companies are content to stay in their small, heavily regulated pond.”

It’s worth pointing out that the gambling industry has been tinkering around the edges of video games for years in the form of so-called gamification. However, Lund claims this is usually “surface-level fluff,” like playing a slot enough times to complete a mission rather than actual innovation.

“People are always telling me gamification doesn’t work,” Lund said. “Yeah, it doesn’t work because you’re not doing it right. What engages is storytelling, progression, things that change the experience or the way you play the game.”

Even before COVID-19 wiped out sports betting, the online gambling industry was starting to see the walls close in a little. Perhaps it’s time for operators to adapt to a new normal and innovate their way into a bigger pool.

- Brad has been covering the online gambling industry in Europe and the US for more than four years, most recently as the news editor at EGR Global.
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