This past Sunday, three of the most read stories in the New York Times involved the growing and ever-changing world of gaming and gambling. From competitive, professional e-gaming to lotteries now being devised to teach people about healthy savings to the continued troubles two of the biggest online games companies, Rovio and Zynga, are having, it is becoming more and more apparent that the digital and mobile gaming world is becoming more relevant, more fluid and in many ways more treacherous than ever before as brands and investors look to throw money good and bad into the space to see how to engage not just millennials, but a growing consumer base that wants to be more connected in the digital world than ever before.
Against that volatile and ever-changing mobile backdrop also came the final nail in the coffin for two of Atlantic City’s biggest resorts, the venerable Showboat and the quick to burn Revel, along with another massive employer going down the tubes in the coming weeks in the Trump Plaza. Put against that the massive marketing dollars being thrown about by arguably the two biggest players in the pay fantasy world, Draft Kings and Fan Duel, and the ongoing battle States are having to overturn federal law to bring relevance and dollars to sports gambling, and you have a virtual sports, gaming and gambling business that resembles the wild west, with huge investors trying to find answers as to how and where people want to engage in the gaming space, and what exactly they will, or won’t pay for.
Now the casino business is far from dead. Just looking at the companies lining up to open buildings in states like Massachusetts and New York and other states shows that sin is in, and those governments are more than willing to get their slice of the current pie. The problem is that the pie, at least as it exists today for boots on the ground casinos is not growing. The goal for these new venues is to keep people home, and to find the right critical mass of players to keep the new casinos vibrant and healthy. That is the same challenge Atlantic City will now face; how many are too many for the clientele that make the trip down and across the Atlantic City Expressway, and what will keep bringing them back?
Some legislators feel that sports gambling, via mobile device or in person, will be the difference and could be a billion dollar federally regulated industry that will create new revenue streams for governments, for the casinos and for the leagues that would get a piece of each transaction. After all the sports gambling industry has flourished in Nevada for years, and is a growing multi-billion dollar business globally, with clubs like those in the Barclays Premier League aligned with legitimate legal betting houses for years. The theory is not if, but when, the legal gambling spigot gets turned on that the revenue, and the fan engagement, will rise all ships. Today that remains a theory though, as lobbyists on both sides battle back and forth to keep Nevada as the sole spot for sports gambling. Arguments of match and game fixing abound on one side; arguments of a tight federal system that works in many parts of the world fill the other side. When the stalemate will break is open for debate.
On the e-gaming side, insiders say the business is exploding, with million dollar tournament and some events drawing in excess of 10-12,000 fans, all millennials, watching tournaments both live and online, with brands lining up to engage and drop product in and around those games. Whether or not professional e-gaming is a massive sustainable business is up for debate though. Yes some players make huge sums and some brands have found healthy engagement and some tournaments draw big numbers. But what happens when those millennials turn to the next big thing and abandon the game they are so loyal to. Or what happens when they become a bit older and turn to more traditional discretionary spends; like sports or music or family or even school. Will they continue to turn out in massive numbers? The jury is still very much out. It is intriguing, but so are the X Games and the Dew Tour and the UFC and competitive surfing and Comic-con and any number of platforms all battling for attention in a business environment that is becoming more targeted and much more competitive on a global scale with each passing week. Witness the issues Angry Birds has had in trying to stay engaged with an evolving and fickle audience, or the problems Zynga has had in keeping their massive scale with simple games.
Then there is the largest part of the population; those over 50. They are on fixed incomes in some cases and while they were the sweet spot of many casinos, they obviously don’t have the amount of discretionary income to keep all those brick and mortar casinos viable. They don’t really engage in e-gaming yet, but they do enjoy sports, so is there some type of hybrid that makes since in the digital world there that could cross over all platforms? They are avid lottery players, so the pay fantasy sports model could work for them, and the recent launch of effective savings programs tied to a lottery system seems to be hitting home not just with Baby Boomers but with a growing number of middle to lower income families who play traditional lottery in the hopes of hitting it big, but can now use an effective savings program that will help them get a chance at a bigger prize as well.
So where is all this e-gaming/gambling/traditional gaming business going? That is literally a billion dollar question. While right now all of these business seem to be working in legislative silos, the breakthrough success will come with more and more convergence down the line. Can e-game athletes mesh with traditional sports, and is there a pay system for consumers through a mobile, regulated environment that would bring revenue and excitement to consumers of all ages? Can federal regulators find a system where casinos now struggling as brick and mortar businesses battling for the same pie actually grow the pie and not just the pieces? Is some form of pay fantasy an answer in some way?
All has yet to play out, but thousands of brands are sitting on the sidelines waiting to see where all this nets out. For now, the collateral damage, especially in New Jersey, is pretty devastating in the form of lost jobs. Hopefully that is a temporary problem because one thing is for sure; the mobile digital gaming and gambling world is growing in interest on all fronts, and somehow, some way, the path to success needs to be carved.