[toc]The gaming industry has never experienced a shortage of next-big-things.
But the next big thing since its somewhat accidental debut is virtual sports. Virtual races started as a gambling alternative after a 2002 racing industry shutdown during a Hoof and Mouth Disease outbreak. And 15 years later, these games have progressed well beyond their original purpose as “filler” content.
Neale Deeley, the managing director of gaming for SportRadar, is one person who takes umbrage with the “filler” designation. He provided the data to back up his point during a panel discussion at GiGse 2017. The panel also included Warren Steven, the product director for GoldenNuggetCasino.com, and Ali Hajjafar, the director of casino operations/product at Rush Street Interactive.
In addition to providing the backstory on how virtual sports got their start in the UK, Deeley offered some data on how large the industry has become in the ensuing years. According to Deeley, virtual sports account for 12 percent of over-the-counter betting in the UK, and 20 percent of sports book profits in Italy. In locales where access to sports betting is limited, they fare even better, such as in Nigeria, where virtual sports brings in more than 50 percent of all betting revenue.
Suffice it to say, virtual sports is a thriving industry in Europe, Asia, and even Africa … and now they’re coming to the US.
Virtual sports in the US
Virtual sports already dipped its toe in the US market.
William Hill offers virtual sports at several of its Nevada sportsbooks. Additionally, Pala Interactive launched versions of virtual sports on its social casinos. But the true test for virtual sports in the US will come when it launches for real money in New Jersey.
Multiple New Jersey online gaming operators are prepping to launch virtual sports on their online platforms. Depending on the reception, the could also roll them out at their land-based properties down the road.
Golden Nugget and Resorts both confirmed they will launch virtual sports powered by Inspired Gaming, and it would be surprising if Rush Street, which operates a New Jersey online casino under the Golden Nugget’s license, didn’t follow suit.
What’s holding up New Jersey?
Because they use a random number generator to determine results, regulators view virtual sports as a type of slot machine. For example, the New Jersey Division of Gaming Enforcement approved the game.
However, technical issues delayed the launch. Integrating the games with the clients is more difficult than anticipated, and until these technical issues are resolved, the debut of virtual sports are on hold.
Does virtual sports need sports betting?
The US will be the ultimate testing ground for virtual sports. In New Jersey, virtual sports won’t have to compete with traditional sports betting, but they also won’t be able to draw from an existing pool of sports bettors.
This raises the obvious question about their viability as standalone products.
When New Jersey launches virtual sports, we may finally learn if virtual is:
- A lucrative filler product that largely relies on existing sports bettors;
- An alternative to sports betting, capable of thriving on its own; or
Predictions for the New Jersey market
According to Deeley, the typical virtual sports player looks an awful lot like the typical sports bettor. The only exception is that sports bettors do substantial research. Because of the overlap, the transition from sports betting to virtual sports betting has been relatively seamless in Europe.
This suggests a thriving sports betting marketplace that adds virtual sports is the ideal condition for the industry to thrive, as is the case in Europe.
But then there is Nigeria, where a lack of primetime sporting events and sportsbooks drives potential sports bettors to virtual sports. But even in Nigeria, there is a core customer base of sports bettors.
In the US, the virtual sports industry will have to prove itself without a built-in customer, as outside of Nevada, virtual sports will not draw from an established base of sports bettors.
Instead of players becoming aware of virtual sports in a sportsbook, New Jersey operators will have to figure out how to market the product to their casino and online casino customers.