The growth of online casino-style gaming (iGaming) in the U.S. has faced disappointing progress despite its potential for significant tax revenue and market growth. Although there was hope that states like Illinois, Indiana, Maryland, and New York would move forward with iGaming legislation in 2024, many efforts have stalled. This stagnation is largely due to concerns over cannibalizing land-based casinos. Additionally, there is resistance from key stakeholders, such as labor unions and retail casino operators, who fear they may not benefit from online gambling in the same way as large operators like MGM and Caesars.
A notable challenge is the fragmented landscape of gaming operators, where smaller or regional players feel excluded from the potential benefits of iGaming. This fragmentation has led to a lack of unified support, which hampers the legislative momentum needed to pass bills.
This struggle is reminiscent of state legislative reaction to the scale of lost sales tax for e-commerce. Retail’s powerful new market entrants had to find an “equilibrium” with entrenched legacy powerhouses and politics. Gaming has much in common with retail, perhaps the future of internet gaming can be seen in retail’s journey.
The Retail Journey
Where has retail ended up? With omnichannel.
Amazon bought Whole Foods and deployed Amazon stores. Walmart built its own e-commerce platform along with strategic partnerships tied to its online subscription plans. In the independent space, service providers like Shopify have solutions that can get any product online quickly.
The ecosystem has rebalanced in a way that has merged the channels that were once viewed as existential threats. The resulting innovation and efficiency in getting product to market has democratized retail and provided income to home-based entrepreneurs in a way never before imagined. This creates a grass roots economic engine that benefits communities and individuals. It has also birthed new industry segments like fast fashion and new industries like mobility-as-a-service and peer-to-peer lodging.
Just as in retail, omnichannel solutions can provide opportunities for all stakeholders and deliver a triple win.
Omnichannel in Gaming
Omnichannel describes a user capability and a user experience. It represents minimal friction within a channel, across channels and when switching channels. While it requires the integration of systems and data, the integration does not mean omnichannel at all. Online and in-store data was integrated into retail 10 years before an omnichannel experience was delivered.
For some time gaming omnichannel has been referenced as having the same game online and in casinos or integrating player data between online and casino. Offering the same product online and in retail was never omnichannel. Omnichannel isn’t a product designation. Neither are shared customer data nor “know your customer” programs omnichannel. Fundamentally, these describe the operator experience, not the customer experience.
The first generation of omnichannel in gaming has centered around the ability to earn rewards across channels while playing in your preferred location. This experience has been implemented as a loyalty program. Caesars, MGM, Penn, and Draftkings are leading the way to deliver incentives to cross channels within their brand and drive traffic to their properties.
This approach, if anything, confirms the fears of the fearful. Loyalty programs make big brands bigger. Their value to the operator is that they drive business to their brands at the exclusion of their competitors. These systems are closed.
On the other hand, product companies and distributors have, for years, been adapting to their need to develop loyalty and improve their customer, sales and distribution network across geography and channel. Product companies view the system as open. The more pull they can generate from the public, the more locations and channels they get to access.
International Game Technology PLC (IGT), a manufacturer of land-based casino games and iGames has just launched an omnichannel game in British Columbia. Their solution provides a lottery style win potential to players anywhere in British Columbia and integrates that win potential with on-site casino players. Every player is funding a jackpot that can be won anywhere which includes in a casino. It is also offered through the provincial lottery system.
Omnichannel Progressive
IGT is the first supplier in the world to offer omnichannel jackpot games with shared jackpot liquidity across the land-based, online and mobile versions of the games.
Let’s take a quick step back to understand the different types of progressive jackpot slots:
• The Standalone: these slots have a built-in progressive jackpot that increases every time someone plays the specific slot. These were the first types of progressive jackpot game to appear on the casino floor.
• The Local: these slots are linked to either a bank of machines or a group of machines in the same casino. Once again, every wager on a featured machine adds to the cumulative jackpot.
• The Wide Area Progressive: this is where the jackpot extends beyond the immediate area of machines, linking different casinos sharing the same games. The jackpot growth is rapid.
• The Online Progressive: this is the ultimate extrapolation of the concept; every linked online slot, either by game or jackpot format, is feeding into the same progressive pool.
• The Omnichannel Wide Area Progressive: this is a brand-new innovation that connects both online and offline slots.
The typical progressive caters to a single channel and is closed to other channels. Omni channels drive more value in all channels all the time.
The Triple Win
The British Columbia experience provides a model for the alignment of incentives across channels. In their case, the channels are all operated by the province. But, that does not invalidate the proof. It simply provides a controlled environment in which to conduct the test.
The implementation integrates a state-wide big win (lottery style), provincial revenue, online gaming, and land-based casinos. If we could suspend regulatory complication for a moment we could imagine that the odds of winning the jackpot could be altered, with the knowledge of the player, to drive certain behaviors without changing the odds of winning the game.
If the political environment of a state is such that land-based should be protected then the reward potential could lean toward in-person. If the state wants to increase revenue to the benefit of citizens then a segment of the pool could fund high priorities like education or infrastructure.
The benefit is that all stakeholders get value from the appeal of each channel to its primary market segments: the traditional lottery player, the land-based geographic and socio-economic demographic, new online gaming demographics and underserved geographies, and the online player crossover from sports betting. With a percentage contribution to a charitable cause, entirely new constituencies could be reached across the entire geography.
Conclusion
We are past the time when gaming channels should view each other as competitors. It is time we bring to bear technological, gaming, and legislative innovation to create a better future for gaming, players and communities.
IGT and British Columbia have modeled an approach worth trying. They have demonstrated a path whereby stakeholders can come to a mutually beneficial solution and subsequently unify the legislature.
About the author:
Michael Lee, a former Accenture senior executive, spent 25 years delivering multi-channel and omni-channel architectures for Fortune 500 enterprises including Amazon/Whole Foods, L Brands, Lowes, The Walt Disney Company, and U.S. Bank. Michael is currently the Managing Director of QDStaff, a talent consulting and recruiting firm for mobile game studios whose clients include the world’s leading iGame creators.
