The Most Valuable iGaming Customers Are Doing All Forms Of Gambling

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The term “omnichannel strategy” came up so often in a panel discussion of top iGaming industry leaders Thursday that they acknowledged that, as a buzzword, it’s become overdone.

At the same time, online casino operators are clearly consumed by that omnichannel philosophy, wrapped around stirring crossover among land-based casino customers, sports bettors, and online slots and table games players in those states that have legalized iCasinos.

“I think everybody’s using that phrase, so it’s lost its sex appeal,” said Jon Kaplowitz, head of Penn Interactive. But its meaning, he noted, remains “deadly serious. It means giving our consumers great choices and great games to play, whether they’re playing at a casino, whether they’re at home, or whether they’re on the road.”

He and Adam Greenblatt, CEO of BetMGM, and Richard Schwartz, president of Rush Street Gaming, shared an SBC Digital North America web conference panel about the trends and future of iGaming. Their three companies are key early leaders in an industry that is still small by comparison to legal sports betting, with New Jersey, Pennsylvania, Michigan, Delaware, and West Virginia having legalized and implemented online casino play.

As was noted by an industry representative on another iGaming panel earlier in the day, while state legislators have not embraced this newer form of gambling with the same enthusiasm as sports wagering, the early-adopting states are finding it provides far more revenue for both operators and governments’ budgets than does sports.

“The real kind of ugly truth in the industry is iGaming will continue to sit at the core of the profitability model” by comparison to sportsbooks, said Dermot Smurfit, CEO of GAN. “It’s very difficult to make a profit when making 15 to 20 bucks a day from an online sports gambler vs. 70 to 90 bucks from sports gamblers who cross over into online casino, or from individual players who only want to play or engage in iGaming and ignore sports betting.”

Everyone wants that multiple-field gambler

While the executives representing Penn Interactive (part of Penn National Gaming), BetMGM (part of MGM Resorts), and Rush Street Gaming (operator of the BetRivers and PlaySugarHouse brands) noted some differences among them, they all pointed to the valuable synergy — rather than cannibalization — from online casinos being able to attract the gamblers who may already be engaged in other parts of the brand.

They made multiple references to how moviegoers at some times feel like going to a theater, while on other days prefer staying home to watch on Netflix, but it all benefits the film industry. They see it the same way when it comes to offering customers multiple gaming options, as the most attractive ones are those who do them all.

“We’ve seen the typical casino patron who visits multiple casinos, who plays online games as well as sport betting, is eight times more valuable to us than the typical casino patron,” Kaplowitz said.

That kind of value is important because of the costs inherent in acquiring new customers. Penn National is able to reduce some of that expense compared to competitors by relying on the social media influence of its partners at Barstool Sports. It and BetMGM and BetRivers promote their online options heavily through the brick-and-mortar casinos to which they’re connected, while the latter two also invest heavily in broadcast advertising.

“Having MGM in the name is an incredible strength,” Greenblatt asserted, while noted there is a “critical balancing act” between what is spent on customer acquisition and for other purposes. That means investing in the right technology and data to gain good understanding of the best customers to pursue and the right incentives to offer them to play.

“Within 10 days [of their gambling on the site], we can tell you with a high degree of confidence how much that player is worth,” Greenblatt said.

Schwartz said that as Rush Street/BetRivers has entered new iGaming markets, it has been able to meet its goal of recovering within six months the average cost it takes to acquire a new player. The profitability is greatly enhanced when it finds, and develops, gamblers who enjoy playing both online and within one of its properties.

“You have to find ways to drive players back and forth,” Schwartz suggested. “They’re vastly more valuable for us … and the retention’s even stronger because you can engage them in both channels.”

Could more iGaming become available? Please?

Even with the modest pace of iGaming legalization, the executives all noted the vast expansion that has already taken place within their own digital-based companies, with staffs growing exponentially over the past couple years.

“For all the human tragedy, COVID has been amazing for this business,” Greenblatt said, in terms of having increased online activity and revenue. “People have more time, people have fewer alternatives and leisure activities … and those fortunate enough to keep their jobs had more disposable income. We were beneficiaries of that. It will be interesting to see what happens as we come out of this COVID period.”

Future expansion is likely not to come from a pandemic but from further state legalization, although the prospects for that are uncertain. The best accelerant may be the competition among states that eye successful launches by their neighbors, such as this year’s entry into the iGaming market by Michigan. BetMGM has quickly become the iGaming revenue leader in that new state.

“Igaming is on the map in the U.S.,” Greenblatt noted. “If players aren’t able to find it in their states and they know it’s there in neighboring states, and there are more and more of those, where do they go? They go to the gray markets.”

Concerns about brick-and-mortar cannibalization are still sometimes expressed as one thing that impedes legalization, even though MGM Resorts President and CEO William Hornbuckle said emphatically on the earlier panel that such worries have never proven founded.

“It doesn’t mean it won’t ever happen, but over time we resolutely believe the opportunity to create omnichannel, the opportunity to speak to customers 365 — whether they choose to come in [to casinos] or not — is to the net benefit of organizations doing it at scale,” Hornbuckle said.

His online executive, Greenblatt, echoed that on the later panel with this soft plea to the online audience: “For anyone who is listening who has any influence over anything related: Please, could we have more iGaming states?”

Image by Shutterstock

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