Land-based gambling operators must engage an omnichannel strategy

Renowned analyst Eduardo Morales Hermo, senior advisor and consultant at iGamingCo and Ficom Leisure, continues to share quality content for the Gaming & Media Experts’ section. In this case, he argues that this is the time for companies to complement their land-based offer with a decided approach into the digital world.

By Eduardo Morales Hermo, senior advisor and consultant at iGamingCo and Ficom Leisure*

Email: emh@ficomleisure.com
Website: https://www.linkedin.com/in/eduardo-morales-hermo-b985091b

With the COVID-19 pandemic, a paradox is occurring that a few months ago very few imagined: the closure of land-based gaming establishments has caused that the only way to gamble is through digital channels, the Internet and/or mobile. This is not something that has affected small casino, bingo or gambling companies, but also big global gaming groups which are present in large gaming hubs such as Macau or Las Vegas. The vast majority of land-based gaming operators that haven’t considered their gaming offer through the online channel have become ‘invisible’ to their customers. In that sense, it is possible that this pandemic disaster make land-based gaming operators reconsider their need to develop an omnichannel strategy. In fact, those companies located in jurisdictions where online gambling is regulated and allowed should incorporate the gaming offer through digital channels. I mean, not only by opening a website and waiting for the fish to come, but also by carrying out an active development and promotion strategy for its digital offer combined with its land-based offer: a well-designed and well-developed omnichannel offer.

AN OPPORTUNITY TO BOOST IGAMING REGULATIONS
It is evident that the dimension or the size matters. For that reason, it would be necessary to take into account if it is worth it to those smaller or individual companies, but even for these, there are options that can allow them to capitalize their land-based business on digital channels by reaching agreement with third party online operators. On the other hand, many large groups of casinos and land-based gambling in jurisdictions where online gambling is not allowed, per example, some territories of the United States and Asian markets, cannot launch an online supply channel either. It is also clear that this situation created by the Coronavirus will make the U.S. land-based gaming industry to increase the pushing to policy makers at the federal level in order to promote an initiative that implements the regulation of online gambling sooner rather than later. The opening of the sports betting venues in the U.S. is allowing the land-based gaming operators to discover the additional revenues that can be obtained from a different and new customer base, especially in those states where mobile channel is allowed. They can check how 70% of revenues come through that channel. It is a must to define and specify a federal (or state by state) online gaming regulation. Something similar could be said about the Asia-Pacific region, in those territories where regulated online gambling is non-existent, and the unregulated offshore offer is in its own right. In general, countries that do not put in place a regulation for land-based gambling and online gambling are benefiting the unregulated offer, offshore or illegal, no matter what it is called. The regulation must be balanced and complete, with the inclusion of responsible gaming policies (preventing access to minors and vulnerable people) and the security for operators to be able to develop a sustainable business, socially and economically transparent.

ISSUES TO PONDER WHEN MAKING THE LEAP TO DIGITAL BUSINESS
We know that the proportion of iGaming contribution to the total global gaming economy does not go beyond 15% of its gross gaming revenue. However, including the digital channel as a new division is fundamental for any gaming company in today’s industry landscape. Companies that took this key step have grown and capitalized on their position as land-based premises to feed their online business. Naturally, each company should do a previous study and analysis on market possibilities for launching an iGaming vertical. It is relevant to notice that online gambling represents a different business model, requiring some specific strategies that guarantee its viability. In the online gaming business, there are several ‘leagues or levels’ in which an operator can participate. The operator must be aware of the proper level to be included in, so its structure and investment are adapted to the possibilities that each business has. From the inner process of a company, people with experience and knowledge of the operation and marketing of online gaming should be chosen so they can make the correct evaluation and take the adequate decisions to advance in this synergy. The strategy of starting an online gambling business goes much further than transferring products and services from land-based to digital and mobile environments. A company must take into account each and every one of the aspects that influence whether a sustainable business can be put in place. Otherwise, it will hopelessly fail. From my point of view, I notice negligence in the managerial areas of some companies that, having all the resources to advance to the online world, do not contemplate that possibility. It would be logical for them to plan and execute a precise strategy that would allow them to capitalize on the power of their land-based properties and their customer base in order to evolve towards a complete gaming offering that crosses digital channels to present an omnichannel model. It is not worth at all just obtaining a license and launching a website to vegetate, with the consequent operating expenses, without any return. It would only be a company throwing money away. I am sure that many land-based operators have already a complete multi-channel offer, and others are in the process. However, for those who haven’t or are undecided or do not believe in the model, I encourage them to analyze it pragmatically and try to make an attempt to offer your players an attractive digital proposal.

TRANSFORMING A LAND-BASED CLIENT INTO AN OMNICHANNEL CONSUMER
In recent years, more and more consumers are opting to play online through different devices. They can be traditional land-based players, only digital players or those that are becoming valuable omnichannel customers. Today’s consumers (no matter what their age is) are always ‘connected’ through a ‘terminal’ that is permanently with them, their mobiles. These players should be a priority objective for land-based gaming operators. iGaming growth may seem slow in relation to land-based gaming, but it is constant and by no means cannibalizes or substitutes the terrestrial option. Land-based casinos and bingo halls will always have a particular appeal for players: a direct participation, the social aspect of any environment, the leisure and entertainment accessories that complete the offer, and the excitement of the personal experience. Thus, land-based gaming operators with proper dimensions and capacities must include the online gaming offer to reach a greater universe of consumers and have them contribute to the spreading of the brand. Transforming a land-based client into an omnichannel client will more than double its value in terms of revenue per customer, and favor their loyalty to a single brand in two complementary channels.

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*Eduardo Morales Hermo is a 50-year experience businessman who has extensively worked as executive in corporation management and product development. For the last ten years, he has been advisor and consultant in the gaming industry, both in-person and via interactive channels. He graduated in Management Studies; Marketing and Organization Behavior; Quantitative Methods and Operations Management; Economics and Finance, by Emmanuel College (University of Cambridge); MBA/JD Join Program De-Gree (LMBA), by the University of Maryland, USA; New Technologies applied to Gaming and Entertainment, by the UNLV University of Nevada, Las Vegas, USA.

He has more than 20-year experience in online gaming, strategy planning, product and business development, implementation and restructuration of gaming corporations, regulation making for in-person and online gaming via interactive channels. He was CEO, General Director and stockholder of gaming corporations in several European countries. Currently, he works as advisor and consultant at Intelligent Gaming Company and Ficom Leisure, and has participated in more than 30 projects.