The igaming industry has taken off over the past decade, with technological advances and changing consumer behaviors driving this trend. Technologies like artificial intelligence (AI), virtual reality (VR), augmented reality (AR), and blockchain have changed how people play games online, making them more immersive and accessible than ever thought possible. While there are some similarities between traditional casinos and their online counterparts, they offer a different experience, with the brick-and-mortar experience revolving around the physical presence of customers and social interaction, while the online experience emphasizes convenience and technology.
As the igaming industry continues to grow, it raises some important questions about what impact it will have on land-based casinos. While there have been concerns that igaming could cannibalize the traditional casino sector, various studies suggest that igaming can complement and enhance the economic performance of land-based casinos. In this article, we look at the economic impact of igaming on traditional casinos.
Growth of iGaming
With revenues expected to reach $107.3 billion by the end of 2024, there’s no denying that igaming has experienced unprecedented growth over the past few years. There are several reasons why igaming is experiencing a boom right now, including technological advancements, increased accessibility, and changing consumer behaviors. While smartphones have been around for nearly two decades, they’ve become increasingly sophisticated in recent years, allowing them to handle more complex gaming applications with advanced graphics and real-time interactions, making them more useful in mobile gaming. Although people can play online casino games on computers, many prefer the convenience of mobile devices, which allow them to play their favorite titles from almost anywhere.
Online casinos also offer a wide variety of games, including themed slots like Sweet Bonanza. This slot game channels the inner sweet tooth of players, taking them on an adventure in a colorful digital world where they can spin the reels to try to match the numbers. Sweet Bonanza is just one example of the many casino games that have helped make online casinos a success. Some platforms are experimenting with technologies like VR and AR to make the online experience even more realistic. iGaming has expanded into markets around the world, including Latin America, Asia, and Africa, opening up even more growth opportunities for the industry.
Revenue Impact on Traditional Casinos
With igaming experiencing so much success, there were fears it might have a negative impact on traditional casinos. The good news is that doesn’t seem to be the case. Instead, in some instances, igaming has had a positive effect on brick-and-mortar establishments. There have been a few studies on this topic to date, including from iDevelopment and Economic Association (iDEA) and Eilers & Krejcik Gaming. Both studies found that igaming platforms can complement and enhance the financial performance of traditional casinos.
For example, in the US, in states where igaming has been legalized, land-based casinos have experienced an average increase in quarterly revenue of 2.44%. Casinos in New Jersey that expanded online saw their profits grow both online and offline. While there’s not enough information to explain this phenomenon, it’s clear that a combination of online accessibility and the physical casino experience attracts a broader demographic, allowing casinos to diversify their overall revenue streams.
Changes in Consumer Behavior
From card games like blackjack to video games like Pac-Man, once upon a time, gaming was an in-person experience, with people going to casinos and arcades to enjoy their favorite titles. The internet changed all of that, but these changes didn’t happen overnight. Instead, it took some time for online gaming to begin to make its mark. A lot of this had to do with waiting for technology to catch up with people’s preferences. In the dial-up era, people could connect and play games online, but the connection was slow and often dropped. So, it’s no surprise that the high-speed internet era led to online gaming taking off and gaming platforms taking full advantage.
People started turning to online gaming for entertainment, and the igaming industry took notice of the trend, developing games and casino experiences adapted for computers and mobile devices. The ability to play these games on the go did lead to a decline in foot traffic in some casinos, but even with this shift, many people craved the physical casino experience, so the brick-and-mortar establishments continued to thrive, especially among the older demographic. Still, the appeal of being able to access a wide range of games while commuting or relaxing at home has changed the dynamics of casinos, with more and more people choosing to play these games online.
Adaptation Strategies of Traditional Casinos
As traditional casinos began to see the writing on the wall, they knew they had to adapt their business strategies to remain relevant in the online era. Some of the biggest names in igaming are traditional casinos that have successfully pivoted to the online world. These casinos have developed hybrid models that bring together online and offline experiences, allowing visitors to experience the best of both worlds.
The hybrid model has features like live dealer games, where players can experience the excitement of a live casino from the comfort of their own homes. Many casinos have partnered with tech companies to create platforms that attract consumers interested in a virtual casino experience.
