Spending buys new online casino and online sports betting customers, an iGaming leader session agreed last week during SBC Digital North America.
But spending to attract customers can mean unprofitability while burning through piles of cash if the conversion rate is low and those customers are not retained for at least six months. That was the cautionary warning.
And reaching long-term profitability means moving those retained players on to additional channels, the much-buzzed-about omni-channel approach, each leader agreed.
Given the webinar’s emphasis on iGaming, the surprising key to long-term profits is establishing partnerships with strong local brick-and-mortar casinos, the leaders added.
Those were the central takeaways in the SBC Digital session moderated by Cathryn Lai, a senior vice president and general manager for Scientific Games in the US.
Members of Lai’s leader panel were:
- Adam Greenblatt, CEO of BetMGM
- Jon Kaplowitz, head of Penn Interactive
- Richard Schwartz, President of Rush Street Interactive
Each company has an online presence in Pennsylvania linked to retail casino properties. Penn is part of the PA-based Penn National Gaming, which is set to open a new retail casino next month in York County.
The leaders were answering this central question: How will decisions iGaming operators make now impact growth in the future?
For the most part, there was consensus, but let’s take a look at their various positions.
BetMGM brand power, efficient marketing spend
There is a balance to strike between acquiring new users and reacting quickest. That’s the view of Greenblatt. He’s a South African by birth with wide and deep experience in Europe and now the US.
“If you’re not in a market, you’re not participating and not in the discussion. So being there, ideally from day one, is absolutely a priority without compromise. But then it becomes about the relationship between what you pay to acquire players and how much they leave behind during their lifetime.
“For BetMGM, having MGM in the name is an unbelievable strength as people associate it with a leading gaming experience in the world bar none.”
For BetMGM, efficient spending is key.
“Through integration of our technology from the top of the marketing funnel down to product, within 10 days we can tell you with a 95 degree of confidence how much that player is worth.
“And so that relationship between how much we spend on marketing through external channels and the value of players coming through those channels allows us to spend more effectively and over time become a winning recipe.”
And while innovation is important, BetMGM volume has come from traditional games and familiar titles, he said.
Greenblatt also said how much a “player leaves behind” answers how much spending is wise to draw new players.
Penn Interactive leans on Barstool personalities, digital marketing
Kaplowitz joined Penn two years ago after stints at Comcast, Sony Pictures, and the World Poker Tour. At Penn, he’s responsible for Barstool Sportsbook and Hollywoodcasino.com, as well as retail sportsbooks operations across the country.
“We’re in a unique position because we have two distinctive brands and audiences. We have our mychoice brand with 20 million card-carrying loyalty members, and we have a young 100 million-strong social media audience through Barstool. They’re very complementary – they don’t cannibalize each other.
“We have a different strategy to some of our competitors. We’ve said publicly that not only do we want to be one of the biggest operators in the US, we want to be one of the most profitable. By leaning into our two audiences, we can acquire customers at industry-leading cost for acquisition, which gives us a lot of firepower.
With its unique Barstool audience, Penn keeps its focus on cost-effective digital marketing including the use of social media influencers built-in to the brand.
“Our approach to marketing is a bit different. Our big thing is ‘how do you cut through the noise?’ You see commercial after commercial. We think it becomes noise.
“So we’re going to focus on what we think we do better, which is digital marketing, use of influencers, and talent-driven marketing because of our Barstool connection.
“There will come a time where operators need to ratchet down the spend to break even. And in those moments we feel we will be at our strongest.”
Penn says patrons want a seamless experience
Kaplowitz said land-based patrons want their experience to be similar to gaming online.
He also said he expects to have Barstool in at least eight states by the start of football. And a dozen states by the end of the year. Penn’s first branded Barstool lounge on the East Coast will debut when Hollywood Casino York opens in early August.
According to Kaplowitz, their customers tend to consume sports differently. They watch highlights online or listen to a personality, and are not glued to a live game broadcast. That fact informs Penn’s sports betting products and marketing approach.
Rush Street Gaming’s leader
Schwartz said iGaming in the US is a generational opportunity with one of the largest entertainment mediums rapidly digitizing two decades after most others due to the recent easing of compliance and legal restrictions.
And that has meant lower costs to find and retain players, added the lawyer with two decades in the gaming industry.
“We’ve spent the last eight years building a unique and differentiated online casino product. Unlike sports betting where the entertainment primarily takes place outside the app – on the court or sports field – with casino you are manufacturing fun in the app itself.”
Rush Street, the owner of the BetRivers PA brand, is seeing the fruits of its marketing labors including in new markets.
“We announced in our most recent earnings call that in the past we got return on our payback in six months for new players through the door with us. And that was for New Jersey.
“We’ve now expanded that to say – across all markets in the country including sportsbook-only markets, we’re getting payback in six months or less. That’s extremely exciting for the business as it means we can invest more in marketing and deliver profits long-term.”
Rush lacks the younger customer base which comes with Barstool, said Schwartz, so they depend on “classic land-based titles.”
Lai wrapped up the conversation
The moderator, Lai, pointed out the phrase “omni-channel” was a new buzzword a year ago. But now everyone in the industry is using it.
The reason is a player who shifts seamlessly from playing online to playing in person brings more value. And that explains why casino operators are trying to move into cashless operations.
She also said there is more convergence. Operators are attempting to lure sports players to iGaming, which is in just four states but expanding.
Why online is an industry focus
Future gaming growth in PA is all about online gambling as habits have shifted and been reinforced by COVID-19.
According to regulators, the May gross gaming revenue figure for PA online casinos was just more than $110.7 million. That was just shy of the record $111.6 million set in March, and just above April’s $105.4 million figure.
Online slot revenue was more than $76.7 million in May, and online table games accounted for nearly $31.4 million. The combined total gross gaming revenue from all sources, including land-based casinos, was $413.1 million in May.
BetMGM is one of the three brands under the market-leader iGaming operator, Penn National. Rush Street, with its BetRivers, PlaySugarHouse, and Borgata brands accounts for second-highest in market share in PA. Here’s a look at online GGR from May 2021.
|Licensee||Online Brand(s)||Total Revenue||Slots Revenue||Table Games Revenue||Poker Revenue|
|Hollywood||Hollywood | DraftKings | BetMGM||$43,471,799||$27,521,047||$15,671,987||$278,765|
|Rivers Philadelphia||SugarHouse | BetRivers | Borgata||$30,704,877||$26,773,912||$3,863,711||$67,254|
|Wind Creek||Wind Creek||-$1,034,051||-$1,135,972||$101,921|
Image via Dreamstime.