A hot topic in the US casino market at the moment, especially as Pennsylvania and other states are considering legalizing online gambling, is whether online gambling is cannibalizing the brick and mortar (“B&M”) casinos. In fact, the contrary is true – data clearly shows that online gaming supports and supplements B&M casinos. Of course, this premise is only accurate when the B&M casinos are the ones issued the online licenses and brand names are shared between the land based properties and the online sites.
At Rush Street Interactive and Rush Street Gaming, we are following these numbers very closely as we have an interest in growing the overall casino market, both online and B&M. We clearly see that adding the online component is expanding the market as a whole. There are mainly two ways of expanding a market: the first is to attract new players; the second is to increase the value of existing players. We can confidently say that online gaming is doing both!
The online player is generally younger than the B&M player. The numbers we are looking at suggest that online gaming is attracting players, on average, 8-10 years younger than the traditional B&M casinos, hence online casinos are introducing new players to the casino market. Only about 10% of the online
players are coming directly from the B&M business, meaning that 90% are new to our gaming brand.
The hope and belief is that these players will then also translate into B&M players, and the numbers we are seeing support that point. Even though our New Jersey online site, Playsugarhouse.com, has been only been operational since last September, we are already seeing this trend. The online site is educating new, younger, casino players who then become more likely to visit a B&M casino.
Why are millennials attracted to online gaming, apart from the obvious shift in behavior due to technology? One interesting factor is the price point online. To play a hand of blackjack online starts at 10 cents… many B&M tables have minimum bets starting from $10 (or more). Simple mathematics tells you that you can play 100 more blackjack hands online for the same entertainment budget. When it comes to slots, the price point is expressed in a slightly different way, but similarly, it is a question of time on device. While many slot manufacturers have increased the holds and speeds of spins for the physical slot machines, the same player budget therefore lasts longer online.
Further, we see that B&M players who sign up online are even more likely to come back to the B&M casino… and their value increases! That value, on average is 15% higher, compared to before they signed up for an online account. This is consistent with other industries in the sense that the more touch points a customer has with one brand, the more likely it is that customer will spend more with the brand.
I saw the same trends in Europe when it came to mobile and desktop gambling. A customer who used both devices is valued more than twice the single platform user. By adding a third platform, the B&M casino, it makes perfect sense that the customer increases their value overall, and in each of the platforms. It also makes perfect sense that once a player has been able to try the thrill of casino gambling online, with a lower price point, they would want to try their luck at a land based casino. We believe in this so much that we are giving players in our loyalty programs land based perks and benefits to visit the casino. If they do, we believe that they are more likely to stay with us online as well.
To cap off with a sports analogy: the more games you watch on TV of your favorite team, the more you want to actually be in the stadium to watch the next game live. And once you’ve been to the stadium, you are more likely to watch the future games on TV as well. It’s no more complicated than that!
