Analysis: Who will speak for casino?

Things are looking a little bleak for the future of online casino. It is the focus of discussions on problem gambling in many regulated European markets and looks set to be first against the wall in any crackdown, with neither the industry or regulators able to get to grips with how the vertical can exist in the new responsible gambling-focused world. Sports betting is spun as light, fun and throwaway, and casino is dark, problematic and addictive. In short, casino is becoming a dirty word.

In Sweden we hear talk of the danger to consumers, while in the UK it is the heart of concerns and with the appointment of a new culture secretary who has previously been outspoken on FOBTs, this is not a time for feverish optimism. What online casino is facing is a dual crisis; a crisis of regulation and a crisis of confidence. It’s looking into a mirror held up to it by the media and regulators and wondering: are we the bad guys?

The casino problem

Casino is the largest segment in all the major regulated markets, bar Spain. It’s the engine of the online gambling sector and in markets where it’s categorically illegal there are still dozens of active, thriving online casinos. Regulatory and legislative goals may be to limit its reach or to eliminate it entirely, but the letter is essentially impossible and the former can be achieved through regulation as well as through prohibition.

The Spanish and Italian markets began with sports betting and poker, with casino following later when regulators and legislators had more confidence in the stability and safety of the online market. The only market that has kept online casino outside of the tent is France, which coincidentally has the largest land-based casino market in Europe with around 200 casinos and over €2bn in annual revenue. It also has a large black market servicing the online sector, and herein lies the problem. Online casino can be controlled but it can’t be contained, at least not entirely.

Good legislation that controls and contains excessive spend and that works for operators and consumers should be the goal everyone works towards. Responsible gambling needs to be at the heart of product development and there needs to be some honesty around affordability and retention methods. High-roller dominance feels like an unsustainable model going forward, and casino gaming needs to move into the high-volume lower APRU sector. But that doesn’t mean leaving everything behind. And genuine VIPs should be allowed to spend their money.

So how do you adjust this for the modern responsible gambling-focused world that is ready to turn off your marketing taps if you don’t play along? The answer is not easy to find. The trouble is the metrics baked into the model. Revenues per player are higher, acquisition costs are higher, retention rates are lower and operating costs can run higher when you add in 10% revenue share deals for game content while the potential player base is far lower. These are all solvable problems, but the industry does not always do a great deal to help itself in pursuit of this new model.

Its own worst enemy

When faced with a squeeze on profits, the typical reaction to rising pressures is in turn to try and squeeze more out of the existing player base. The latest in a line of potentially value-creative and image-destructive moves is arguably the dual screen mode, which while doubtless catering to a direct requested need from customers, feels more than a little tone deaf. Operators are also reluctant to let go of the tools that have got them this far, such as VIP programmes and heavy bonusing, and it’s a brave operator that takes a proper step back. But there is a battle for minds as well as wallets to be fought here.

The wider assumption is operators are preying on the weaknesses of the simple minded. And it’s entirely up to the industry to prove they aren’t and to act in a way that backs that up by catering to player motivations and actions that fit the entertainment-driven model. What really is the fundamental difference between spending £50 a month on Candy Crush and spending £50 on Starburst? Very little, but one habit is far less culturally accepted.

Casino gaming promises entertainment and operators are responsible for making sure it lives up to that promise. Casino content is compelling and engaging in a way that baffles casual observers, and simple slot games and classic table games alike see players coming back time and time again. This is both difficult to explain and difficult to believe, but someone needs to find a voice and speak up for casino gaming as a product, as a vertical and as a concept and set out a path for its future.

Either there’s a tacit acceptance it’s a problematic product that it’s better being offered by responsible operators or there’s an argument to be made that it’s something consumers can find entertainment and escape in. So the question becomes who is going to speak up for casino? Because there are plenty lining up on the other side to take it down.