Online Gambling, Esports Part Of Industry Panel’s Casinos Of The Future

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Long chided for lagging behind other industries in innovation, three heavyweights of the casino gaming space recently stook a proactive step forward.

GameCo, Interblock, and Konami Gaming formed the Innovation Adoption Advisory Panel (IAAP). As per its official mission statement, the IAAP aims to “compile insights from industry thought leaders that can help spur continued innovation in casino gaming product development and commercialization.”

The aging of the “casino demographic” remains a source of consternation for many in the gaming industry. These concerns are continually exacerbated by the accelerated rate of innovation seen in other entertainment products. In the battle against becoming obsolete, the trio of entities called on fellow industry leaders. The group hopes these leaders provide their views on challenges that could be near-existential threats if left unaddressed.

IAAP consists of seven distinguished gaming experts

IAAP’s primary work product to date is an analysis of nine specific topics pertinent to the space’s well-being. The group’s white paper is entitled “Innovation Adoption for the Casino Gaming Floor.” The IAAP’s panel, whose independent insights and consensus opinions comprise the bulk of the report, consists of:

  • Greg Carlin, CEO of Rush Street Gaming, LLC (22 years of gaming industry experience)
  • Brian Eby, Executive VP of Operations and Chief Innovation Officer for JACK Entertainment, LLC (22 years of gaming industry experience)
  • Todd Eilers, Principal, Eilers and Krejcik Gaming, LLC (15 years of gaming industry experience)
  • David Farahi, CEO, Monarch Casino and Resort, Inc. (12 years of gaming industry experience)
  • Felix Rappaport, President and CEO, Foxwoods Resort Casino (38 years of experience in the hospitality, resort, entertainment and gaming industry)
  • Scott Schweinfurth, former CFO of Scientific Games Corporation, WMS Industries, Inc., and Bally Gaming (22 years of gaming industry experience)
  • Joel Simkins, Managing Director, Head of Gaming & Leisure Investment Banking, SunTrust Robinson Humphrey (19 years of Gaming industry experience)

Panel defined seven core casino issues to focus on

The IAAP honed in on issues most likely to define the direction and success of the casino-based gaming industry for the next decade-plus. The seven-member panel provided their perspectives on the following:

  • Which major casino gaming innovations of the last 20 years have been most successful in driving higher or incremental revenues? Which have been the best at leading to cost reductions? Panelists also answered the question of which of the aforementioned benefits were the most important.
  • What is a fair timeframe for evaluating a new casino gaming product? What variables should the industry utilize to measure its success? Where should the industry seek guidance regarding these evaluation models for new products?
  • The challenge of defining a player’s worth to a casino. Additionally, how to use that data to help determine the placement of new gaming products.
  • Best practices for marketing a new casino product to players.
  • Ideas for solving the puzzle of attracting a younger demographic to casino properties. Moreover, solutions for driving their engagement with casino games once on site.
  • The specific challenges casino operators face in attracting a younger population. Can equipment suppliers work in conjunction with casino operators to address the issue?
  • How pricing models for gaming equipment should be structured when it comes to new games and innovations.
  • The importance of online/social/mobile gaming to the present and future success of the casino industry. Additionally, exploring what the potential impact of these new modes of gaming is on land-based gaming.
  • What a typical casino floor might look like at various points in the future. More specifically, how much space will be devoted to “non-traditional” games.

The importance of ‘win-win’ in new products

Panelists unanimously agreed that the best new casino products are those that create a win-win scenario. Innovations such as the Ticket-In/Ticket-Out (TITO) system and the bill validator enhance the guest experience in various forms.

This includes streamlining the gaming process and facilitating the proliferation of low-denomination wagering. In turn, these innovations lead to cost reductions and enhanced revenue for the casino operator.

However, these two products are now nearing the latter end of the 20-year cycle since their introduction and adoption. Compared to the pace of innovation and new product adoption in other industries, it’s an elongated time frame. Much more recently introduced products cited by the panel, such as electronic table games, are therefore critical to the industry keeping up with the tastes of a younger audience.

The casino floor: a toxic environment for innovation?

Does the casino industry provide an environment conducive to the survival of new products? IAAP members pondered this question. In particular they debated the merits of comparing a new game’s performance to the “house average” in order to determine its viability. As several members noted, the tendency to compare the new product’s performance to the house average can lead to its premature dismissal.

An insistence on comparing a new product to traditional offerings such as table games and slots can also lead to inaccurate conclusions. One of the potential solutions centers on product placement. Namely, deploying new products in underutilized areas of the facility away from the traditional gaming floor. Possible locations include sports books, lounges, and directly outside or inside a casino’s night club.

Panelists came to a consensus that a six-month period is a minimal but satisfactory amount of time to test market a new product within a land-based establishment. That window also includes an initial evaluation 90 days after introduction,

Prioritizing consumer feedback and marketing

Panelists also noted the relatively low priority that the industry seems to give to player feedback on its products. This places the casino industry behind the curve when compared to the video game space, to cite one example. That industry’s malleability with respect to the expressed critiques, wants and needs of its player population is considered a catalyst to its ongoing expansion and success.

Naturally, consumer awareness is essential to a new product’s success. As such, the IAAP panel deliberated the importance of marketing, and carrying it out in a manner consistent with today’s best practices.

Experts noted that outdated methods like direct mail and floor signage are still heavily deployed in the industry. They suggest this significantly undercuts a new product’s chances of catching on.

Consequently, the panel emphasized the importance of using marketing techniques that appeal to “millenials that are tech-savvy and used to new forms of marketing.” So too were collaborative efforts between operators and gaming equipment suppliers through methods such as co-sponsoring events centered around a new product on the casino floor.

Building towards a bright future

The remaining questions contemplated by the IAAP centered on one overriding theme — how to attract the next generation of patrons and how they’ll help shape the casino space in the future.

Panelists seemed to agree that non-gaming entities within a casino property are critical to luring a younger crowd through the door. Two notable examples are night clubs and e-sports arenas.

How to get those customers to migrate to the gaming area was naturally also a subject of discussion. The group pointed to the importance of developing hybrid table games and skill-based games that mirror those already enjoyed by many on their mobile devices.

Changing up the supplier/casino business model

The panel recognized that consumers have an increasingly vast and inexpensive selection of entertainment options available. This drove a discussion of how new innovations should be subject to new pricing models that would help their adoption. The experts generated a number of specific ideas on how existing pricing paradigms could be modified to achieve this goal.

  • Start with an 80/20 participation model with the option to buy using the previous 365 days of participation payments. The operator and supplier should also consider the option to replace the unit with another innovative unit by applying previous payments towards the purchase.
  • Similar to the big box retail and department store industry, suppliers can rent space on the floor. Resultingly, they are responsible for the product and the revenues of that space. Then the supplier pays rent to the casino along with a share of the revenue.
  • Suppliers can pay slotting allowances similar to the grocery store business for shelf space and specific location on the floor.
  • Suppliers of new products can flex pricing terms on base hardware along with recurring revenue/ revenue share levels.
  • Longer exclusivity options and/or favorable long-term pricing for casino operators willing to take on the risk of testing and trying new innovation and game concepts.

Customer input = better products?

The panel also addressed the important role of the casino operator when it comes to research and development. This is a topic that does not get discussed very often. One suggestion was greater transparency from an operator to a supplier with respect to a product’s performance data. Additionally, casinos could give suppliers access to some of the game’s players.

This type of open communication would yield important feedback. It would be similar to how customers constantly provide feedback to app developers along with impressions of their product.

In the gaming space, the value attached to such data for both the supplier and casino could be significant. The continual tailoring of a product to the expressed suggestions of its player base would undoubtedly lead to greater success for all parties.

The many benefits of iGaming

The panel delved into the timely topic of iGaming and its effect on land-based establishments. New Jersey’s gaming landscape was repeatedly held up as corroboration that online gaming benefits casino operators on a number of levels.

Beyond the fact that it possesses many of the traits that a younger demographic has come to demand from its mobile entertainment — instant, user-friendly and engaging — iGaming also helps bring in new customers. Moreover, it reengages inactive ones and boosts the amount that a casino’s average customer spends.

The panel discussed the encouraging reports out of Atlantic City. For example, reports some operators see as much as 75 percent of their land-based customers partake in their online product. Panelists agreed that when done correctly, online gambling can be responsible for up to 10-20 percent of the gaming revenue in a given market.

Moreover, the IAAC supports the idea that an online gaming platform is a natural breeding ground for innovation. Suppliers and operators can give new products a test run in the digital world , then utilize customer feedback to refine it accordingly. This notably reduces financial risk for suppliers and ups the odds of success for a new product once it is introduced into the land-based space.

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Looking into the industry’s crystal ball

To wrap up the discussion, the IAAP pondered what the casino of tomorrow might resemble. While panelists espoused various visions, the one point of universal agreement was that the guest experience must be a perpetual point of emphasis for operators.

The panel also envisions a multitude of other potential developments in the areas of product offerings and casino structure:

  • Further development of hybrid table games.
  • Possible partitioning of the casino floor into themed areas that appeal to different customer groups.
  • An increase in games that contain social components.
  • The ongoing development and refinement of the complete entertainment experience for the casino patron, beyond just the gaming selections.
  • An increase in live dealer electronic table games, touch-screen tables with multiple game options, and skill-based gaming products.
  • Innovations in the traditional slot machine.
  • The expansion of arena-style gaming, virtual reality, e-sports, and video games within the casino.
  • New play mechanisms, such as joysticks and other video game-related accessories.
  • A “ticketless and cashless” casino floor where a customers’ wins can be automatically posted to their social media accounts or where an intuitive system readily identifies a player’s preferences for game interfaces, speed of play, and risk profile based on previously provided information.

A starting point

Given the wide reach of their discussions, the IAAP undeniably laid out a road map for a number of different initiatives that can ensure the casino gaming industry’s survival, relevance, and success in the coming decade and beyond. Naturally, the onus falls on suppliers and operators alike to collaborate in multiple ways, particularly as it pertains to fostering innovation.

Exhaustive as they were, the IAAP’s initial findings are just intended as a starting point. The white paper emphasizes that substantial follow-up work is left to be undertaken as part of the panel’s ongoing efforts.

Photo by  OHishiapply / Shutterstock.com

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Juan Carlos Blanco

About

Juan Carlos Blanco has served as a freelance writer for a wide variety of online publications and websites, with an intensive focus on fantasy sports. An avid daily fantasy sports player himself, he’s provided analysis and comprehensive coverage of the MLB, NBA, NFL and CFL, while also reporting on news and developments in the daily fantasy sports and online gaming industries.

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