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Converged experiences: U.S. operators blend land-based with digital

In a report last year, ratings agency Moody’s predicted a surge in merger and acquisitions between online and land-based gaming operators as the latter seek to cement new revenue streams after the chaos wreaked by Covid-19.

They predicted that once the pandemic eases companies will seek economies of scale and those with stronger balance sheets will look to take advantage of more attractive valuations.  

The first attempt at a mega merger this year ended in failure when the U.K.’s Entain rebuffed a more than $11 billion advance from MGM Resorts, its partner in BetMGM.

However, MGM has not lost its appetite and CEO Bill Hornbuckle is still looking at a major acquisition to become a global player in the digital space. Many other operators in the U.S. are ramping up partnerships to offer sports betting and other services in the states where it’s permitted. 

Even Las Vegas Sands, whose former Chairman Sheldon Adelson opposed online gambling, may now be looking at possibilities, according to recent media reports.

The appeal is understandable. While land-based operators, especially those relying on tourism, have seen their revenues plunge, online operators have reported record sales. Take Entain for example, which reported a 41 percent jump in net gaming growth in Q4, its 20th consecutive quarter of double digit online growth.

“Marrying bricks and mortar with a digital experience, we’ve seen it in all other kinds of industries and we absolutely see it in the experiential business that we operate and we’re really excited because when you marry them together the multiplier effect can be as much as 10 times,” Hornbuckle said in a Bloomberg Television interview.

While the omni channel approach clearly has potential, IR entertainment development and marketing veteran John Raczka suggests there are elements IRs should bear in mind to get the most out of the opportunity.

Raczka told AGB about how he sees physical casino operators’ venturing into online sports betting contributing to IR entertainment ecosystems on-premises.

“How sports betting is programmed and consumed will influence just how much sports betting can help convert less gaming-minded millennials into becoming more active gaming participants,” he said.

“Through digital platforms, sports betting already mimics the digital distribution of the filmed entertainment model, making sports betting available whenever and wherever you want it via your PC or mobile device.  And because millennials can be most efficiently reached on digital platforms, the “consumer push” dynamics of these channels can effectively support clever deployments of innovative sports betting environments available only at brick & mortar casinos that can best amortize the buildout costs.”

Raczka points to examples such as how Las Vegas’ newest casino, Circa Resort & Casino, is cross leveraging its 3-story, largest sportsbook in the world with Stadium Swim, the property’s innovative pool deck with six swimming pools across three tiered levels and a 40 foot tall HD screen airing sports programming.

“This fusion of pool party environment with bigger than life sports program viewing is the kind of social real estate vehicle that has great potential to drive trial sports betting activity.”

Caesars Entertainment is also addressing millennials’ fondness of immersive, themed environments with their physical sports betting investments. Caesars Palace recently announced it is launching Stadia Bar this Spring, which reportedly will offer enhanced sports program viewing environments one can rent for small groups, including VIP leather-wrapped domes that will evoke the feel of sitting within a vintage leather football helmet. 

“This vertically themed destination is a good example of experiential retail being applied to sports betting activities that can be promoted online to share with friends offline.”

While the U.S. is abuzz with the possibilities of omni channel experiences, Asian operators continue to be hamstrung by lack of regulation in the field. When the U.S. legalized sports betting in 2018, some said it may create a regulatory domino effect, but there has been little progress and in some cases just steps backwards.

The Philippines is leading the way forward, with small steps to allow its operators to be able to accept bets from VIP players online. The so-called PIGO licenses have generated a ripple of interest, though the experiment is very much in its infancy.

Cambodia banned online gambling following pressure from China and is showing no signs it might be willing to reconsider, driving its industry back under ground.

Perhaps one other notable exception in the Asia Pacific region has been SkyCity Entertainment. Although New Zealand does not allow online gambling companies in its territory, it does not stop its citizens gambling on overseas sites.

As a result, in 2019 the company launched an online gambling site based out of Malta in partnership with Gaming Innovation Group. Despite the restrictive environment at home, SkyCity recently reported the unit had 30,000 active users and an EBITDA margin of 40 percent, well above its expectations.

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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