Casinos Finally Realizing Online Gambling Is A Friend With Benefits

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In a recently released white paper on the potential synergies between online gambling and land-based casinos, Spectrum Gaming Group concluded most US casinos are now accepting of online gambling. The report goes on to say that the industry is moving toward embracing its one-time adversary.

The report marks the 15th anniversary of Spectrum Internet Gaming Heuristic Theorem (SIGHT). SIGHT is a project that examines online gambling from the land-based perspective.

Spectrum’s perspective is that physical US casinos should look at online gambling as incremental revenue. With that in mind, they should also develop online presences.

A summary of the report notes casinos should look past the fixed revenue generated by online gambling. Instead, they should see online gambling as an “important marketing tool to reach new demographics in new way that would increase both online and land-based revenue.”

Spectrum’s findings line up with another recently released research paper by the trade group iDEA, which concludes online gambling has been extremely beneficial to the state of New Jersey, its casino operators, and online customers.

Online casinos don’t replace the physical experience

Spectrum’s white paper touches on one of the core talking points that spews from online detractors: the potential for cannibalization.

Opponents like to draw parallels to the demise of video stores, but this analogy misses a key point: Blockbuster didn’t put movie theaters out of business any more than cassette tapes, CDs, and digital music put radio out of business.

“Technology did not alter social aspects of spectator sports or movie theaters,” the report states. “Technology will not alter social aspects of visiting brick-and-mortar casinos.”

Blockbuster was replaced by a new Blockbuster called Netflix, just like cassette tapes were replaced by CDs and CDs by digital music.

New Jersey’s iGaming success leaves little doubt

To make this point, the report draws attention to the experiences of land-based casino operators in New Jersey.

Similar to Online Poker Report’s research, the Spectrum report shows New Jersey casinos benefit from the addition of online gambling.

Online gambling has grown the marketing databases of Atlantic City casinos. The vast majority of online customers were either new or lapsed customers.

Point of disagreement

There is one part of the Spectrum report with which I unequivocally disagree.

At one point, the report states:

“New Jersey has online tax rate of 15 percent, roughly double land-based rate. This creates clear incentive for land-based operators to encourage online players to visit properties. Other states have significantly higher land-based rates, thus precluding that option.”

For this to be true, the reverse would also have to hold true. If casinos were marketing the lower-taxed vertical to customers to convert them from one channel to another, why do New Jersey casinos advertise their online games to brick and mortar patrons?

The answer is simple: Gambling online or at a land-based casino isn’t an either/or proposition. New Jersey casinos have found online and brick-and-mortar customers are different animals. No amount of marketing is going to radically alter the way they gamble.

Thomas Winter, the vice president of online gaming at Golden Nugget, explains why:

“Patrons will play wherever they want, no matter how hard a brick and mortar casino would entice them to play online. At Golden Nugget for instance, we encourage our B&M players to play online (and vice versa), even if our online tax rate is double what it is land-based.

We do that through targeted emails, mails, on-property signage… Still, only 11 percent of our online signups have come from GNAC rated patrons, out of which only 8 percent were active at GNVCA in the 12 months prior to online signups.”

Furthermore, the small percentage of people who become multi-channel players increase their land-based spend. Golden Nugget’s multi-channel customers — eight percent of its online customers — increased their spend at Golden Nugget by 15 percent once they became online customers.

Every casino seeking out multi-channel customers

This is an industry-wide pattern in New Jersey.

Tropicana’s Luisa Woods told Spectrum’s Michael Pollock: “Not only was [brick-and-mortar customers’] online spend completely incremental, but they also grew their land-based spend.”

It also holds true beyond New Jersey.

“Multi-channel customers are always more valuable and more loyal than single channel customers,” said Captain Up Vice President of Sales Yariv Sarig at a panel discussion at GiGse 2017.

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Steve Ruddock

About

Steve Ruddock is an avid poker player and a veteran member of the gaming media. His primary focus is on the regulated US online casino and poker markets. He writes for numerous online and print publications, including OnlinePokerReport.com, USPoker.com, and USA Today.

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