Where Are We With Legalized Online Gambling In The United States?

In a recent previous blog I wrote about the explosive growth of social casino relative to the apparent slow growth of the legal US online gambling market. There are obvious reasons why social casino has been so popular relative to legal online gambling. 

The most obvious one is that social casino is not regulated  and available  to all. Legal online gambling is relatively restrictive when compared with the social casino. Currently,  only  New Jersey and Delaware have legal and regulated online gambling regimes. Online gambling is not legal on a federal level or across state lines. Regulated online gambling  also has age restrictions that  constrain  the total number of "legal" online gambling players.  

The Europeans have had  legal regulated online gaming for a decade and have demonstrated that a legal regulated online gambling can work. The United Kingdom, in particular,  has a  long history with legal online gambling and a well documented  legal framework that supports online gambling. Other countries such as France, Italy and Germany allow online gambling as well leveraging the British experience with legal online gambling.

Europe started its legal online gambling regime placing regulated gambling sites  on "offshore" hosted  gambling  regimes such as Gibraltar, Alderney, Isle Of Man, Malta, etc.  that  are British protectorates subject to British laws and regulation. This helped to avoid localized regulation and certain taxes that could impact the profitability of  online gambling business.

The US has taken a different approach setting up online gambling on a state by state basis. New Jersey and Delaware are currently hosting  legal online gambling. However, a number of other US states (Michigan, New York and Indiana) are floating legislation to also host legal online ambling for residents of their states.  This could lead to state compacts that combine players from several states to participate in multiplayer games such as poker.

So, if social casino is so much more popular then "real" online gambling why are many US states considering online gambling as a legal activity? The obvious reason is that online gambling generates much more revenue per player then social casino resulting in higher tax revenue from online casinos.

The Average Revenue Per Unit(ARPU) of a social game is  between .25 and 1.25 with no cash out. The ARPU for an online gambling player is $500!! and proceeds from "online gambling" can be redeemed and subject to taxation.  This means that gambling licensing fees can be levied by the individual states that are interested in setting up a licensing regime within there states. Also taxation can apply to gross revenue and profitability of online gaming. 

It has only been in the last year that we have seen meaningful legislative interest in legalizing online in states other then New Jersey and Delaware. The reason for this is that New Jersey and Delaware are demonstrating that legal online gambling can be successfully administrated. More importantly both New Jersey and Delaware have proven that  online gambling businesses  can be profitable resulting in the ability for states to garner licensing revenue and  taxes on profits of online gambling business operating in their states. Also online gambling businesses do employ residents resulting in wages for these residents and additional tax receipts for the states hosting online gaming businesses.

New Jersey - New Jersey has a population closing in on 9 million residents .  Revenue from online gambling operations came in at close to 18 million USD for 2016. 

Delaware - Delaware has a population of 900,000 closing in on 1 million residents. Gambling revenues for 2016 are still not available for Delaware. However in 2015 the state raked in 1.8 million in revenue from gambling operations.

UK Gambling Revenue - In 2015 the UK raked in 4.5 billion pounds (1 pound = 1.2 USD) in online gambling revenue!! Granted the UK has a robust online sports betting regime and has been hosting online gambling for a decade or more. However, these numbers do point out that if properly organized and regulated online gambling can become a very big money maker and source of licensing and tax revenue  in the US over the coming years.

More States Considering Legal Online Gambling - With the numbers coming in from Delaware and New Jersey we are seeing renewed interest in other US states such as Michigan, Rhode Island , Hawaii, etc. considering online gambling legislation. 

The US is in the infancy of regulated online gambling. However, as the UK and other European countries and protectorates  have proven  regulated online gambling can be a safe  lucrative business and a source of tax revenue for  US state governments interested in regulating online gambling. The popularity of social casino gaming has proven that the US population enjoys playing gambling style games online. It is only a matter of time before US state legislators recognize that online gambling is a safe and  great source of tax revenue. If you have legal land based casinos why not online casinos? In point of fact illegal online casinos are making a fortune on US players. It is time we give the US population a safe and secure place to wager and have fun!!

Kevin Flood is the CEO of Gameinlane, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems.    Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.

The End Of The Land Based Casino As We Know It And The Rise Of the New Co Casino

It is no secret that traditional  US land based casinos have been in decline for some time with fewer players at the tables or the slots. The Caesars Bankruptcy, blamed on high debt loads , and the exit of  CEO Gary Loveman  to greener pastures in the insurance industry point to a troubled land based casino business environment that cannot magically be rectified by a change in management.

The issues impacting land based casino  participation and revenue in  Atlantic City and Vegas  are numerous; including the rise of regional native American casinos, other non native American  regional casinos, online social casino, legal and illegal online gambling.  

 The existence of alternative gaming venues can be partially blamed for a percentage  of  the decline in visits and gambling revenue in Vegas and Atlantic City. However, the nature of "gaming" engagement  itself has changed with less interest on the part of existing gamers to engage in  "Vegas" style games and land based gaming in general. The online world, and to some extent, the console gaming world in the form of eSports and other popular connected console games have taken precedence over the physical gaming experience.

 The passing of the baby boomers and the rise of the millennials has resulted in a change in gaming behavior, preference, and venues. Ironically, visits to Vegas are increasing. However, the visitors are not gambling when they arrive in Vegas.   The problem with this trend is that gamblers spend more money then tourists and party goers. This trend has created a challenge for Vegas, and to a certain extent, Atlantic City  when it comes to offering a casino style experience without the casino revenue.

The recent eSports competition  held at a Vegas casino  points to a ray of hope for casinos. This event was well covered by the media and strongly endorsed in the G2E gaming conference in Vegas.  G2E is a conference that has a long history and is predominately sponsored by land based casinos and suppliers to the land based casino industry.  The enthusiasm and curiosity of the attendees about the eSports phenomena was obvious. 

The real question going forward, is what do the land based casinos do to further encourage gaming that involve millennials?  eSports is just one flavor of "connected gaming that is popular amongst this demographic. What other connected games can the casinos leverage?

The Connected Casino Floor -  When you watch a traditional slot player sitting at a slot playing for hours you wonder how that experience could  be extended by having head to head play or at least some form of competition amongst other players on the floor.  There is no reason why you can not connect theses players in tournament style gaming. Each of this players could create a made-up/fictional name and select an avatar.  Play could start with all players participating and ending after an elimination of all players except two. This final showdown could  and would attract spectators if the floor was properly configured to broadcast the players  final competing. This could also lead to a "big money" final tournament which is televised. There would be   time limits on each competition and a jackpot achievement that would complete the competition. The start of each competition would be announced, players could decide if they want to participate and add their names to the list of participants. The connected floor players could also play against online players that have access to the same game in a virtual context.

Console Games On The Casino Floor - The connected casino floor concept  could be extended by adding console gaming in the casino itself. Instead of a slot machine a console with joy sticks, etc. would replace the slot. The console would give the player a number of game options to play individually or against other players.  Play would require coin in by the player and perhaps additional wagers as the game progresses. Players ready to play against each other would be listed and a time for a game to commence would be displayed on the machine/device and  on notifications screens through-out the casino. Big winners  engaged in console game play would be given special attention throughout the casino and on social media to keep everyone updated and engaged in the competition.

Connecting Land Based Casino  And Social Media - When a players engages in an activity on the casino floor there activity should be  broadcast  on social media. Player wins in particular or large payouts should be the focus of the communication. This will engage the social media audience within and outside   casino  in a games progression and how certain players are doing. The goal of social media communication is to increase "engagement" and "awareness" inside and outside of the casino. 

Connected Blackjack And Poker In And Out Of The Casino -  Blackjack and poker are traditional multi player gambling games that are  popular gambling games that millennials play in and out of the casino. To extend the popularity of these games amongst millennials online poker and blackjack matches should be sponsored by land based casinos leading to finals in the casino. The qualifying games should also be played with a mix of players outside the casino and within the casino. Within the casino itself the "connected" casino could have  computer terminals  placed in sections of the casino where people could also play online. These terminals would allow players in the casino to join poker and blackjack games being played worldwide on the net. The results of their play and the play of the online players would be displayed in strategic places in the casino. The final tournaments would be played in the casino either at a traditional table or in the connected casino environment.

There are certainly many options that the land based casinos have to grow and attract the "connected" generation of players.  Poker and Blackjack are  popular gambling games that conveniently  bridge the gap between offline and online game play. 

Social media can also play a big role in creating an online  audience for gambling game tournaments  keeping the  online audience aware of what is happening, when it is happening  and where gaming events are occurring. 

It is clear that  the land based casino business must change and change quickly if they want to remain "relevant" in a connected world. The recent eSports event in Vegas demonstrates that Vegas can pull this off. The question is: Do the traditional gambling business owners  have the energy, expertise, will and courage to reinvent the casino as we know it by combining the offline and online gaming audience?

Kevin Flood is the CEO of Gameinlane and FitCentrix, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems.    Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.

Gaming Blog "Kevin's Corner" Achieves Milestone of 130, 000 Visitors!!

Kevin's Corner traffic exceeded 130,000 visits last week marking a significant milestone in the Gaming blog!  Kevin's Corner   started 5 years ago as a "professional" blog targeting individuals and businesses engaged in the "gaming" industry. With over 200 individual  blogs  it provides a wealth of knowledge on a variety of different gaming subjects. It has covered, "real" money iGaming, social casino, freemium gaming, virtual currency transaction and the relationship between land based casino and online gaming operators. The blog continues to attract a global  audience  as  different gaming business models merge and converge creating  acquisition and business partnership  opportunities.

Kevin Flood started the blog  to encourage  an open dialogue on a subject that was becoming increasingly complicated as new forms of online gaming began to emerge and merge into a complex interwoven environment of land based gaming, online gambling, social casino, virtual currency transactions and real money transactions. The international nature of gaming and the various laws  and preferences impacting gaming made for an interesting and, perhaps, confusing mix of laws, player populations and revenue models. Kevin's own experience as a game developer, game publisher  and executive for  US  based land based casinos exposed him to many of the influences that guided gaming behavior and business models. His experience launching  online gaming operations in different countries and in different environments made him realize that there are also similarities across borders that could be shared and discussed in a public forum.

The following  blogs are the top 5 blogs in terms of volume. Although volume is a good indicator of popularity it is not necessarily  an indicator of  "value". Kevin's Corner has attempted to address many aspects of gaming for  a variety of different business  sectors. In some cases a blog that has not hit the top five in terms of volume has been very useful for its  targeted audience and the information it provided.

Number 1 -Game Analytics - Big  Data and Business Intelligence  -  With over 2500 views this blog has received the  most attention and still continues to get   high traffic views based on how important making sense out of all of the data that games and game businesses produce.  Games are unique based on the amount of data that games can produce. It is a lot harder to understand the significance of, and patterns within data, then to collect it. Planning ahead for what you really need to know and being flexible in how to add new data and new data types into the mix is the key to good gaming business intelligence. Understanding player behavior and player (state) is challenging.  Where a player is(state) in terms of the lifetime value of the player is critical for the success of a gaming business. Having comprehensive analytical systems that  individuals or even a staff of analysts pealing through the data is not uncommon as a slight difference in game content and marketing strategy can make a meaningful difference in revenue, player retention  and player acquisition.

Number 2 -What Is the Better Gaming Business Model? - With the advent of social networks, social casino, freemium play, virtual currency and various new notions of what constitutes a game of chance , skill or for fun it is easy to become confused as to what is the right gaming model for a business. The source of revenue for the models, consumers of the content , marketing approach and revenue per player differ widely across gaming business models.   This makes the choice of a gaming model difficult. In the end, the gaming business model of chose has to fit the knowledge, skills, investment capital and legal framework that fits the organization.

Number 3 - Will Social Casino Games Be Subject To Regulated Gambling Laws?  - In the early days of social casino there was much speculation that social casino would be categorized as "real" gambling. Facebook credits(virtual currency) where at the heart of the controversy. Gambling is traditionally characterized as an activity that includes chance, consideration and "prize".   Government entities and traditional online gambling regulators where skeptical about the use of virtual currency in social casino games as a prize.  After a lengthy debate on the subject of virtual currency, regulators concluded that virtual currency that could not be converted or "cashed out" into a traditional currency obviated the "prize" definition of gambling. Therefore, avoiding the need to "regulate" social casino.

The regulator's decision not to regulate social casino may also have been influenced by the  realization that the social casino and "real" money gambling populations had different characteristics. Traditional gambling attracted a smaller audience relative to social casino.  Also, social casino was heavily influenced by the social network that hosted the games with the network itself being as important, if not more important then the game play itself.  The  poor "conversion" of social casino players to "real" money gambling players also had an influence on the regulators decision.  Some players prefer social casino  over real money gambling and others prefer freemium or virtual currency games. The social casino businesses have also been careful to make a clear differentiation between their models and online gambling business models. 

Number 4 - The Merger Of Social Casino, Online Gambling And Land Based Casino Models. - Similar to number 3 in terms of content and interest blog number 4 also received a lot of attention as a number of businesses began to develop, acquire and launch a number of  gaming models. However, merging of these models has been difficult as the audience, risk and governance of these models is  very different.  Operating the  gaming models as separate and distinct businesses has proven to be the most rational and successful way to operate  these discrete models.

Number 5 - Zynga Under Investigation  By The US Justice Department -   The popularity of Zynga poker in the Facebook  social network did catch the attention of the US Justice Department as it was one of the first really large social casino businesses using Facebook virtual currency credits as a way to monetize players. The sheer size of the Zynga poker community averaging thousands of players interacting at  peak time did draw the attention of US authorities.  However, with no cash out possible the JD had little to stand on without changing the "definition" of what "prize" meant in a gambling  context. Prize is something of "tangible value" that can be exchanged and used to purchase other items of tangible value outside the origin of the currency generated. Facebook made sure that this could not happen, therefore, obviating the need to either shutdown Zynga or forces the company to change its revenue model.

Kevin's Corner continues to cover global gambling topics of all, types and  varieties. Reflecting on what has been the most sought after gaming content subject  over the past 5 years certainly reinforces what is "popular". However, the popularity of a blog does not necessarily indicate its "value" to all audiences. Thus, making it an important goal of Kevin's Corner to continue to cover many different topics.  Kevin's Corner subjects are often recommended by members of the gaming community as the community seeks to decipher what is really going on in the space and to engage others in a open dialogue about the future of gaming. If you would like a subject covered lets us know. Please send your suggestions to kflood@gameinlane.com.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.

 

Is It Gambling, Skill Or Play For Fun? "The Confusing Intersection Of Fantasy Sports, Social Casino, Skill Gaming And Traditional Gambling"

I have to believe that at this juncture a person, business or regulator entering the US online gaming space must be totally confused as to what is "real" gambling and what is not and what is regulated and what is not. Even for a veteran of the online gaming space the world has become confusing, if not downright contradictory and perhaps even a bit strange.  The traditional definition of "gambling" has been "an activity that involves three elements; "chance", "consideration" and "prize". In a a game of "chance" a players' knowledge and acumen are not factors in the outcome of a game. However, this definition has been stretched by the advent of virtual currency, skill gaming and fantasy sports creating a bit of confusion over what is or is not gambling.

Even before the advent of the "skill" game category people have argued that poker and blackjack are skill games and not games a chance. The dictionary definition of skill actually identifies poker as a skill game. "poker is a game of luck and skill"!!  Despite this definition  poker and blackjack retain their "gambling" status. Fantasy Sports has further complicated the  gaming universe making for an even more confusing world of conflicting and perhaps misleading notion of what is or is not fun, gambling, skill or "other". Fantasy sports is "categorized" as a skill gaming yet "unregulated".

  Facebook And Social Casino - Confusion over what is or is not gambling intensified with the launch of gambling game content in social networks. The first real challenge to the notion and definition of online gambling started in 2009  when "social" casino entered the scene in the form of Facebook games  leveraging Facebook "credits"  as a wagering currency. These games allowed  game/gambling publishers to launch gambling style games in the Facebook environment without being subject to a "regulatory" process or regime.  Facebook "virtual" currency credits could be purchased but not redeemed allowing game developers. operators  and Facebook to  circumvent the traditional  "prize" element of online gambling law.    The term "social" became attached to any gambling style games that used virtual currency as a transaction currency. The term "social casino" has now extended beyond Facebook  gambling style games and includes all "gambling" style games played on mobile and web that are either freemium(no virtual currency) or virtual currency based. Essentially, no "cash" payout and no social network required.

Fantasy Sports - Coincidentally, and perhaps serendipitously "fantasy sports" entered the scene in 2009 as well with the launch of FanDual and eventually the launch of DraftKings fantasy sport businesses. One of the factors leading to the creation of fantasy sports is the fact that "traditional" online sports wagering is considered illegal in the US.    In  Europe online sportsbook is legal and a very successful business model.    Interesting to note is that wagering in fantasy sports is with "real" money and not with virtual currency. Thus, North American fantasy sports operators are not much different then their European "real" sportsbook cousins.

Legal US Online Gambling - Further complicating the online gaming/gambling world is that  states such as New Jersey, Delaware, Nevada, etc. are offering  regulated  gambling content online. This market is estimated to grow to 5.2 million in 2020!!

Land Based Casino's  - US land based should also get a mention here as it is apparent that the online online gambling has not impinged on their revenue and growth. In 2014 the land based casinos  raked in 34 billion dollars in revenue!!   Players are engaged in both venues.  There are US land based casino operators that still fear the impact of legal online gambling even if there is no proof that online gambling has any negative impact on land based casino businesses. It could be argued that operating a land based and online gaming/gambling business may actually improve revenue and traffic for both forms of gaming/gambling. 

The complex and evolutionary nature of US online gaming  and online gambling regulation has created a confusing, and  complicated collection of laws, regulations, definitions and business models. The most recent ascent  of "fantasy" sports has made the environment even more confusing.

 Despite, the confusing and contradictory nature  of regulations and the lack of regulation gaming and gambling sectors of all kinds continue to grow and thrive.  Consumers continue to seek out   gambling style content no mater what the wager is the payout is. However,  The desire to "gamble accompanied by confusion over what is legal and what is not  has  given rise to very robust and successful "illegal" online gambling business sector  targeting US players. To date these offshore sites have peddled their businesses in a clandestine fashion. Despite this marketing approach they have grown successful offshore businesses targeting US players.

 The complexity of  the  online gambling/gaming  space combined with the continued demand by consumers for gaming/gambling begs the question; Should "gambling/gaming" of any format that involves "wagering" be folded into a singular regulated regime or should all regimes be deregulated with the exception of "problem gambling" legislation?  This is certainly a question that is worth answering yet very challenging from a practical perspective. Certainly the ultimate goal for regulation is the protection of citizens. However, if the laws are contradictory and confusing then the laws themselves lose their value and the respect of the citizens they protect.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.

Methods And Challenges Increasing Social Casino RPU(Revenue Per Game)

Understanding the characteristics of a game that contribute to revenue opportunities for a social casino game are always challenging. Many factors influence a game's ability to generate revenue.  In the highly competitive, and in many cases  "me too" world of social casino game content, where much of the content is very similar, game publishers are challenged with ways to differentiate and  increase revenue from a game that result in comparatively higher revenue. The following are general categories to consider with the objective of increasing revenue for an existing or new social casino game.

 Game marketing and game content are the two general areas that game developers and publishers focus on to increase revenue from an existing game.  These general  categories are subjects on their own that require different  skills, expertise and execution strategies to properly move revenue higher. Bringing together teams with both skill sets and objectives, that share  the common goal of increasing revenue, and at the same time manage the cost of acquiring players and controlling development expenditures is challenging yet necessary to blend the two initiatives in a common strategy.

Despite the cultural and operational differences that exist between development and marketing, both organizations should collaborate to agree on product/game changes that impact the game "experience" for the purpose of increasing RPU.

Delivery Platforms - Game delivery platforms can and do influence game design and RPU. A web, Facebook, mobile phone, tablet, Google, Apple, Amazon, etc. implementation  impact how and why a game should be constructed and marketed. It is very unlikely that one shoe fits all and wise game developers and publishers will take platforms into consideration when crafting a game for higher RPU.  Preferably ,a game should be specifically  developed for its environment, audience and format as opposed to being "ported"  to different environments.

Game Differentiation - Social casino audiences are an interesting group of  game content consumers. The demographic is skewed to a relatively older segment of online players when compared to other game audiences and their prejudice for game content can be influenced by "traditional" notions  of land based casino  and online gambling content.  These peculiarities  inevitably narrow the range of what is considered a social "casino" game for many players.  This tendency  has resulted in a crowded "me too" marketplace that requires either some differentiation(not too much) to get noticed or a high marketing spend to attract players.

Traditional Slot Content -  Traditional land based slot game developers have taken advantage of demand for traditional slot content online and have successfully moved   land based content verbatim to the online domain. This in itself confirms consumer preferences and the challenge for studios without an inventory of copyright protected slot content. Assuming traditional gambling content is the preferred game content for social casino players the real objective is differentiation within this constrained universe. This either limits or encourages creative license in the development process. However, extreme divergence from the norm is seldom popular.   

Non-Traditional Slot Content - Many social casino companies produce games that have non-traditional themes. These themes have to be clever, not alienate the core audience and target a very specific demographic that may or may not be the core group of traditional online slot social casino players. For example, we have seen "virtual world" implementations that immerse a player into a simulated casino floor. However, these implementation have struggled because it appears that consumers want quick  access to  game play and many are not familiar the land based casino experience. This indicates that  game model experimentation should be part of the development process suggesting that committing to a particular social casino genre without  some player feedback before committing to a new genre is advised.  This also implies that  iteration on themes may result in finding a niche market that does not require an excessive marketing spend to acquire. If successful the mining of a relatively untapped gaming market segment could be lucrative.

Non- Slot Content - Despite the fact that slots are the most popular online social casino game content other forms of casino game content such as craps, roulette, blackjack, poker, pai gow, etc. are also popular forms of social casino. There are significant differences in how best to monetize this array of games because there is such diversity in the  game mechanics for no-slot games. For example, is there a dealer involved, how many people play at a time, how are games and events started, how do players communicate in a multi player environment?   These factors all require unique and special attention to adequately address optimizing a game for revenue generation. Essentially, each  game category requires  special consideration and a careful examination of the market for the game  to determine the potential audience size and propensity  for revenue.

Cultural and Demographic Sensitivity - Be aware of your target audience and or the audience that is most likely to be attracted to your form of social casino content. This may seem obvious but many social casino publishers do not differentiate content, offers or promotions  based on the sex,  location, religion, culture or language. What encourages players in your target audience to transact and when are they most likely to play?  What game content could be offensive to your audience and what content will encourage them to play? Careful and limited use of text is advised to decrease the possible friction points across language and cultural boundaries.

 Buying And Promoting Chip Purchases - Promoting chip buying is a science  based on an understanding of your player.  Players will be motivated to purchase more chips in a number of ways. A player may be enticed by  a beginner player  offer, an in-game play offer, an exit offer or cascading offers. A player may also be distracted by offers,  and  may not understand why they need more chips at certain points of the game.  One of the common faults of many  social casino games is that they do consider a players "state" and when a player will most likely transaction.  What is the players chip inventory and is the amount used to determine where and how chip offers are generated?  Some  games will constantly encourage a player to buy more chips when in fact they already have a large amount resulting a player ignoring chip offers. Essentially, the game is not player aware ignoring the "state" of the player or the historical chip buying propensities of the player. Investment in programming and analytics to fully understand your "players" and where they are in terms of their wallet will result in a better placement of chip offers during game play.

Coordinating  Marketing Programs And Content Modifications - Frequently game marketing programs to drive traffic and  increase RPU  are not complimented with content and game changes to specifically address a campaign.   In some cases the operation and development staff are not aware of a marketing program, its intended audience or the expected RPU.  Running generic marketing campaigns are OK. However, crafting "informed" campaigns will result in higher yielding efforts. Making a development and operations  staff aware of special marketing campaign goals may generate some creative ideas that could quickly be implemented by the development staff.

Analytics - Initiating   marketing programs or  game content/mechanic changes without a way of measuring there impact on player behavior, game response or RPU is obviously not a wise decision. An analytics system that specifically addresses the game domain and audience that a company is targeting is an investment that any serious game publisher will have to make to determine the efficacy of new product development  and changes to games that are intended to influence RPU. Both marketing and development should have access to the analytics for evaluation. The analytics should be customizable to address the specifics of your game and the way your organization tracks RPU.

Game Development - To be effective at increasing RPU a development organization must be prepared for frequent, short  and rapid development cycles. They must also be prepared for roll backs, quick changes and code redeployment to address market pressures and the achievement of RPU goals.  Game platforms need to support A/B testing  experiments where some traffic is driven to one instance of a game and some traffic to another instance allowing for comparison of different versions of a game. The goal is to allow and encourage experimentation where the staff is comfortable knowing that they have explored a number of options. 

Conclusion - Increasing game RPU is a mix of creative marketing programs, flexible game platforms, detailed understanding of the target audience and development organizations that can respond to frequent changes in game content.   The days when a game could be developed and launched without the ability to frequently change the game, where the game developers or marketing staff exclusively drive game design and changes is long gone. The social casino space is an especially intriguing and competitive  space because it is unregulated and familiar to "high" transacting social gamers.   However, consumers of social casino content have been heavily influenced by what they consider to be "traditional" gambling content constraining the creativity of game developers and increasing the competition to acquire, monetize and retain players. This odd mix of freedom and constraints challenges organizations to think in different ways about game content, marketing and methods for growing RPU.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

Understanding The Relation Between Land Based Casinos And Online Gaming

The upcoming online gambling debate between Caesars and the Sands CEO's is a bell weather for the historical, cultural and operational divide that has existed between operators of online casino game content such as social casino and online gambling operators and the operators of land based casinos. The upcoming debate addressing the legalization of online gambling in the US and its impact on land based casinos has been going on for years with casinos changing their minds on supporting online gaming or ignoring it maintaining a singular focus on land based operations.

Many people are unaware of how long land based casinos have actually been confronted with this questions and how they have vacillated between supporting, not supporting and supporting again, etc. operating, running or engaging in joint ventures related to online game content.

Between 2001 and 2004 many of the UK casinos and land based brands such as Hard Rock successfully launched online gambling operations and still do today. US casinos also entered the UK online gambling and pseudo social/gambling market around the same time and eventually closed their operations for a number of reasons.

Of particular interest was the social casino  site launched by MGM for the America audience in 2001. The service was a resounding and surprising success but was closed because the service was not tied into the MGM loyalty  systems and MGM was more interested in "real" online gambling in the UK.

The emergence of Zynga poker between 2007 and 2009 attracted the interest of land based operators again and they turned their attention to "social/freemium" gaming.  Fast forward to 2013/14 with MGM/MyVegas  jumping back into the social/freemium arena  with the added benefit of integrating the property into their loyalty systems. IGT buys DoubleDown and the other Slot providers such as Bally's and Williams all start to convert their traditional offline slot content to online versions. Caesar's buys Playtika, etc.

Despite all of this activity there still remains a divide and a degree of skepticism on the part of traditional casino operators, small regional casinos and even operations managers within the larger land based casinos that have launched online businesses. If online is real and if they should get involved?  The Sands is upfront about this, however, others have the same feeling. Social and real money online gaming operators still sense an aloof  and sometimes disconnected relationship with land based casino staff.

So what is at the basis of this confused and for many, a rather frustrating state of affairs between offline and online gaming operations?

The fact of the matter is that both of these businesses models could not be more different. There are more reasons for  each group not to engage then their are to engage. Everything from day to day operations, marketing, staffing, content selections, priorities, regulations, history, skill sets, etc.  are different.

The one binding factor between the two business sectors is that in the US and Canada the gambling regulation and license are being  controlled by land based operators. This does force the two sectors to collaborate in some way and ironically forces land based operators to become online gambling experts.

The Sheldon Adelson Gary Loveman debate is going to  engage the question "will online gaming positively or negatively impact land based operations" and does online gambling make any sense from a purely financial sense based on a land based casino's operating model, cash flow and profitability. we will see how the debate goes.

Social and freemium gaming is a wild card in the overall debate because it is not subject to the same regulatory rigor and has a very different operating model for "real" money online gambling. Pace of Innovation,  extreme competition, size of the market, etc . are examples of why this sector has a different spin to it.

In the end, despite the outcome of the debate social and online gambling are here to stay. Even if legislation to legalize online gambling roles out at a glacial pace in the US there are plenty of "illegal" sites that are and will fill the demand for this content.

There is certainly a place in the business world for land based casinos that take no interest in online social/freemium or real gaming and a place for pure online models. Offline and online are fundamentally different experiences and people will have their preferences. The questions is where will the growth in total players and revenue per player  come from?Currently, Vegas is beginning to generate more revenue from non-gaming activities. The regionals still are predominately gaming revenue. However that is because they have less non-gaming revenue opportunities. Competition is fierce in the online space, especially, in the balkenized world of European online gambling. This may force both online and offline gaming content providers to form joint venture  across borders and within different gaming models to stay competitive. Essentially, the two operating groups may have to collaborate to remain competitive.

  Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.