How Casinos Can Profit from the Rising Popularity of eSports

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Friday, October 20th, 2017 | Written by Shane Larson

Is there a way for casinos to profit from eSports, the increasingly popular competition format that pits players against each other across video gaming platforms, with big prizes on offer for the winners. This is a hot topic which the gambling industry continues to ask itself, especially with eSports representing one of the biggest monetization challenges for the casino industry.

While there are many obstacles that need to be overcome by casino operators before a solution is found, the casino operators themselves present one such obstacle, as they must first become more open-minded and willing to try out different approaches before finding the right answers that work.

Declining Slots

The average age of slot players is increasing, which is one of the primary reasons for jumping onto the eSports bandwagon. Illustrating this point, data offered by the Nevada Gaming Control Board and the Las Vegas Convention and Visitors Authority (LVCVA) show that the average slot revenue per room per day has been on the decline since 2008, while the average food and beverage revenue per room per day has gone in the opposite direction and continues to increase.

Commenting upon this trend, Blaine Graboyes, the CEO of GameCo, says that the average gaming venue on the Las Vegas strip has reduced its slots offering by 450 units over the past ten years. This has resulted in an increase in winnings per unit, but essentially the casinos are receiving the same amount of money from slots gamblers, except from less machines. One major downside to this development is that the casinos are failing to attract new customers to their properties, and are also failing to increase their revenues. In order to combat this, the casino industry is therefore increasingly shifting its focus towards introducing new games in order to attract a new generation of gamers.

New Generation of Customer

Changing the culture of a company always presents a huge challenge, especially when it already has an established tried and tested business model. Nevertheless, casino operators need to move with the times and reach out to a younger generation of players. Commenting upon the pressing issue, Robert Rippee, director of the Hospitality Lab and eSports Lab, recently speaking at Global Gaming Expo (G2E 2017) in a segment entitled “Esports: The Five Biggest Challenges in Monetizing Esports in a Casino Resort,” stated:

“We have an entire generation that, from first, second, third, fourth grade, we have been teaching them to game on computers. This generation has a very, very different perspective on game play and how they are rewarded psychologically and sociologically when they play games.”

While older players are more interested in playing simpler games, such as slot machines and bingo, younger people, by contrast, prefer complex games that allow them to share in-game achievements. Esports gamers are therefore more intent upon exploring and learning new things during their games, which makes complete sense when you consider the toys and games each generation grew up playing.

Commenting upon this point, Mike Stewart, director of design at YWS Design & Architecture, who was also in attendance at the conference, explained that baby Boomers grew up with Tinker Toys and wind-up Evel Knievel toys, while the next generation of kids grew up with toys containing digital elements, like Transformers.

Nuances of Esports

A further challenge that casino operators need to deal with involves getting a better grasp on how the whole eSports industry actually works. As Rippee subsequently explains, the industry operates more like an ecosystem, supported by a range of different players, enthusiasts, and spectators. Case in point, every eSports tournament held by the Downtown Grand features its own unique facilities, including, lounge, bar, and food service built around the audience for that particular tournament. In other words, different video games have their own particular followers, which in turn have their own special preferences.

Also, while a lot of casino operators feel that ticket sales represent the only means to generate money from eSports events, they are obviously not exploring the multitude of possibilities that exist deep enough. In fact, a lot of the money associated with eSports is actually derived from brand media sponsorship, meaning casinos can thus make money from eSports by building authentic relationships with the players, and members of the community.

In conclusion, in order to succeed, vendors have to be considered an integral part of the community, and that takes authenticity. With this in mind, a vital fact for casinos to accept is that the eSports industry represents a real community, filled with people that talk to one another, and trust the brands associated with their events. Consequently, a traditional sponsorship approach will not work at all well when applied to eSports.

Check back next time when we will be discussing some of the most talented players currently making a splash in the exciting, growing world of eSports.