The online casino market no longer operates in the Wild West of old. Instead, it is a more business-focused and mature sector providing increased levels of value to its customers.
In the early days of online casinos in the United States, the approach was one of growth at all costs. Yet this has changed dramatically, shifting from reckless market share acquisition to a more nuanced, strategic approach. Moving to bottom-line profitability has involved managing a market entry slowdown with increased user acquisition costs. As a result, casino operators now need to be efficient and diligent in all aspects.
The Value of Promotions
Across the globe, introductory offers and bonuses remain a key method of attracting and onboarding new customers. Log on to an online casino in South Africa, such as Betway, and you will find offers that let new players experience the platform without dipping into their bankroll. This is the same in other regulated jurisdictions. The difference between this market and the US is that this is a new, growth area, where the US is reaching a slight slowdown.
Because of this, the era of $1,000 risk-free bets and huge deposit matches is over. As gambling companies have floated on stock markets, raw user numbers are no longer the defining metrics of success. Instead, earnings before interest, taxes, and depreciation have become key. Operators have moved to a model of Customer Lifetime Value (LTV), in which keeping existing customers engaged and spending, instead of using huge bonuses to onboard new ones, is vital.
More studies have also become available on the impact of offering these bonuses. A study in the United Kingdom by its Gambling Commission found that 61% of respondents felt indifferent to incentives given by gambling companies. A further 48% then opted against receiving them in future.
The Structural Revenue Model of Online Casinos
If the gambling industry is considered as a whole, including sports betting and online casinos, then this sector plays a key role in revenue. Sports betting is seasonal. It relies on the calendar to plot its highs and lows, when sports seasons start and end, or when events like the Super Bowl take place. If a soccer World Cup happen over summer, then boosts can be found, but in years that don’t have them, then revenue can be down.
It is also volatile: A few favourite wins can diminish operator hold. Sports betting also relies on the Vig: A margin placed into bets that gives the bookmakers a cut. Sports bet operators are constantly changing this to be competitive, yet still give them a profit. This means margins can be low.
In contrast are the revenue models of online casinos. They operate around the clock, 365 days a year. Added to that are their high margins. An average slot game provides a house edge of between 4% and 9%, depending on the title. With no seasons, they are a steady income driver for the sector, making them the backbone of digital gaming organizations.
The Switch to Social Interaction
Casino companies have also been way ahead of cultural shifts. While many entertainment providers were espousing the virtues of Augmented reality and AI, the iGaming sector was already pivoting to a much more human attraction: Social interaction.
The boom in live casino gaming has been proof of this. Bridging the gap between the interactions found in a physical casino and still providing the convenience of playing from home, streaming technology allows users to view a dealer in a studio. By using the integrated interface to place wagers, many even have chat functions for two-way conversations and discussions.
Social features and elements of gamification have also begun to arrive. This has been evident in another genre: Crash gaming. Characterized by titles that are easy to pick up and play with little prior knowledge, involving quick wagering and fast turnaround games, they are also loved for their social elements. This includes lobbies, high scoreboards, chat functions, and in some instances, the chance to pool bets together with friends and other players.
A Blueprint for Maturity
All of this signals that the online casino market in the United States has graduated. It has gone from a stage of immaturity to one that is more responsible and provides more services to its customers.
Part of this has also come from increased regulatory compliance. The need to comply with responsible gambling commitments, along with AML and security, has also forced it to change. It has displayed a willingness to adapt. In the US, where many states have been weighing up the pros of gambling and the taxable benefits it can bring against the harms, the industry has needed to mature to prove its worth.
Thus, the next phase of growth is unlikely to come from new states opening their doors. Instead, it will come from improving in those where online casinos already operate.