The current pandemic has accelerated an existent transformative process in the gambling market, not only the technological field but also in marketing and regulation.
By Michael Haile
Covid-19 19 destabilised the global gambling market. While the terrestrial gambling is practically non-existent, growth of the gambling market is bound to come from the online market. Gioco News has already carried an analysis of the impact of the pandemic in February’s edition.
The online gambling market was already competitive, but competition will inevitably intensify during 2021, for many operators mortally. To remain in the market operators will be obliged to offer innovative gaming experience for the purpose of acquisition and retention of players.
The global gambling grew from $58.96 billion Us dollars in 2019 to $66.7 billion in 2020. The number of players, at a global level, saw an incredible growth as many people are trapped within the confines of their home.
One of the most substantial change is that the bulk of the operators that did not have an online market are investing heavily to develop their presence in internet, and additionally, there has been a growth of start ups as many see an opportunity.
New technologies and market changes are a matter of fact in every sector but are an imperative for gambling operators to stay in the game as the competition is brutal.
Accessibility is the new principle, and that is why the underlying principle playing via smartphones is growing at such a dizzying rate and operators are investing heavily to make their games Smartphone and tablet friendly.
Gambling is an activity in which millions indulge daily, it is fertile ground for innovation, above all now, where there are not many entertaining activities outside the house, due to the multitude of lockdowns.
However,
when we consider the word innovation it is not necessarily only technological, but also also in the fields of regulation, marketing, brand management and business models of the companies that participate in this sector.
As Gioco News continues to clarify, the gambling industry has been a vanguard to absorb technological evolution in decades, a benefit that is presently being drove to its limits due to Coronavirus.
Gambling operators have recognized that they need to vary and transform the gaming experience to retain their customers. But is also true that the gambling market does not exist in a void. The most fundamental shift derives at the cultural level. What was considered a vice it is now accepted as another free time fun, with its issues such as gambling addiction, but too distant as the consumption of alcoholic products. However, this cultural acceptance attracts regulations, new companies, more sophisticated products, new technologies and innovation.
THE TECHNOLOGICAL MOMENTUM - Historically, the most onerous expenditure for online operators has been reserved in the utilisation of digital infrastructure, such as platforms. Yet, the requisite investments necessary to build, buy or rent such infrastructure has decreased by a large margin in these last few years while the required investments in marketing, research and development, brand differentiation and cost associated to manage regulatory affairs have increased.
However,
the advent of Cloud Computing (Cc) brought ground-breaking change. Now gambling companies can be based at furthest corner of the Earth but be able to offer services to players based in any jurisdiction. But of late Cc offers further advantages, such as the ability to use data intelligently and securely.
CC is not a new phenomenon. In different ways it has existed since the fifties of the last century, but at the outset it was the exclusive preserve of technological giants such as Ibm, through the use of mainframes.
The breakthrough for a wider utilization of Cc came with the launch of Web 2.0 in 2003 and the creation of Amazon Web Services (Aws) in 2006, which permitted small companies to access cloud services at a reasonable price.
Currently most operators are totally dependent on Cc but 2020 has seen radical change. Google and Microsoft announced that they will launch dedicated Clouds for their video games and Amazon is expected to make a similar announcement soon. These dedicated clouds will allow players to access sophisticated games without the need to own high-end gaming machines.
Furthermore,
recent innovations in Cc permits operators to utilize a recent original concept, “Data Modelling”.
“Modelling” has been traditionally been used for economic forecasting. The “Model” requires historical and current statistical data to create forecasts. For example, the Gambling Commission, the Uk gambling operator recently built a very sophisticated statistical model to forecast three-year sales forecast, but generally these models are awfully expensive to build. But “Data Modelling” and Cc has changed the paradigm as it allows operators to build models at accessible costs, but it also consents operators to predict player behaviour and analyse the games in which they are most interested. Consequently, it allows operators to develop, in quality and excitement, as much to invest into those games that are most desired and offer higher profit margins.
As noted, beforehand, marketing costs and research and development have been increasing of late, Cc and data modelling consent these costs through a more precise marketing campaign and a higher retention level.
But Betfair went a step further.
Betfair created a program, named Betfair Predictions that allows its players to construct their own models for sports betting and horse racing.
With the upcoming of 5G and Artificial Intelligence (Ai), operators will own tools that were, only few years ago, the privy, of the most advanced governments of the world while at the same time allow players to gain access to services and complex games without the need to acquire expensive gadgets.
Another innovative trend to follow is
the break down of the barrier that used to separate the universe of gaming (video games) and gambling; two developments embody this innovation, Loot Boxes (Lb) and Virtual Reality (Vr).
Loot Boxes is a video game, which is a game of ability, but owns a strong blend of randomization and chance, which would it make practically a gambling product.
In a Loot Box game, you play through your ability to go through the next level of the game, but you have to buy products to do so, to be able to do so, you need to get involved in that activity to be able to buy instruments, but what you buy is a guess, which is akin to a bet because you are exchanging money for a guess, which technically is a bet. Or through your ability, you win a Loot that is ability, but then what you win is still a guess, then technically is a bet. Where it gets messy is when money is exchanged. What I win a Loot Box might not be necessary for me, but it could be useful for another player to go the next level, so I can sell to him/her my instrument, let’s says using a Crypto Currency. I sell the instrument using Bitcoin, anonymously, I take another bet, I win, I go to the next level. And on a and on. I cannot think for a worst nightmare for any regulator. An unregulated, but sophisticated world where even kids can travel unregulated, without leaving traces, and this can be done via Facebook and associated companies.
The Gambling Commission in the Uk, to its merit, is currently analysing, if these products should be regulated akin to a virtual betting.
ANOTHER REALTY - One technology that is living happy days is Virtual Technology (Vr), which not by chance, but by fortune, is expanding through the online gambling world. Currently, these operators that use this technology well are not many, but it is exceptionally adaptable to the casino environment. But the pandemic is also changing this landscape. Truth behold Vr is still in an embryonic stage currently, as it is an explosively expensive and currently technologically challenging.
Vr is a virtual experience generated by a computer which resides in a contest which simulates a virtual “reality”, where the client is immersed in alternative universe.
You could be in London but play, real time, in a casino in Macau or Las Vegas, sit to have a chat in a different a casino in South of France with a friend in Australian South Wales, while never moving from your front room in Clapham in London.
Vr is a virtual experience created by a computer in a virtual environment which can create an ambience, more or less like the “real” world, in which the customer can immerse him/herself in a reality they want to experience through movement, sometime through smell, even touch.
Vr is not a new technology, it has been around for decades, but recently it has gone through an exceptional transformation and it is being currently in cutting edge use in various sectors. As an example, it is used to train pilots, to form doctors for surgery or even visit museums in faraway lands.
But is has not been a technology to travel through the gambling world, until when the technology suddenly has become an important asse in the last few months.
What endowment allows to spend an evening in Las Vegas or Macau, while sitting in their living room in Southern Italy?
But it is that Vr is that unstable it cannot be used? It is not, if you cannot go to a casino you can do it virtually. Nowadays Vr realizations programmers are working hard to create the word that yesterday we took for granted.
Also granted Coronavirus has been a challenge, people have been allowed, and allowed themselves to challenge a reality that was a therefore. Who would have thought it would take a virtual reality gadget to sit with your friends in a casino bar in Vegas?
NEXT CHALLENGE, AUGMENTED REALITY TECHNOLOGY (ART) - There are challenges in life, which puts the world in an upside position. Creation is a gift, and a curse, to but also it is a choice of those who see the future and created is an urban reality, but Augmented Reality Technology (Art) is lurking in the post Covid-19 world, which is an imagined future. While Vr is the next future, it has paved the way to Augmented Reality Technology (Art). The challenge of Art is twofold, highlight an alternative reality and change it, while you are in situ. In practice the first virtual adventures, but also the
But there is no doubt of its future development.
SECURITY - We are always under the scope of a digital criminal, always, as we live under the shadow of a digital life, which we often blunder. A theft of identity, or a burse, is always around the corner. Operators are conscious of this factor, as we all are, and they are conscious that this factor also bungle their expansion. A small but shrewd operator, licensed in Malta, King Billy, started to use a security technology usually used by international banks such as Citibank and Hsbc.
The technology is called Embedded Hardware Authentication and Behavioural Analytics (Ehaba), but it is starting to go a long way in the gambling business, as regulators are now becoming more attentive to protective measures that operators take, to safeguard player’s interests. Ehaba functions this way: the operator provides the player a virtual token, which is embedded into the account. Apart from the usual password the player has another layer of security, as the token not only recognises the identity such as identifying Internet Protocol (Ip) of the player but also his or her habits. If the habits diverge substantially from the usual access is denied. Through the behavioural analysis operators are also more aware which products sell more and they can do a cost benefit analysis more easily. But the software also allows operators single out which players have a gambling problem.
MARKETING - When change comes, it is rare that a sector is exempt. In 2020 gambling operators spent marketing spend heavily through social media, Google and You Tube and less on television and other forms of traditional means of mass media, also due that regulators are becoming more intolerant of advertising through sporting activities, such as football games and other means of mass communication. But some British operators have caught up to this sentiment, so they have started to offer Premium Games and hose racing through their websites, where they do not need to pay advertising while they can at the same time offer odds on bets.
HOW DO I PAY NEXT - A blockchain is a data structure that makes it possible to create a digital ledger of data and share it among a network of independent parties. Blockchain was the pathway into creating Crypto Currencies. Essentially, blockchain was created for cryptocurrencies to make sure all transactions are indelible and can never be deleted or copied. People favour this type of currency for its anonymity and independence from a central source.
UK’s gambling regulator has recently announced that operators are permitted to use crypto currencies as a wager or to pay prizes. Bitcoin is the most famous crypto currency, but there are others, Ethereum (Eth), Litecoin (Ltc), Cardano (Ada), Polkadot (Dot) etc. The use of a crypto currency has allowed operators to dip in into a market that other wise would have been beyond their reach, but there are risks associated to using a crypto currency. Not having a central command invites speculation but also innovation. Crypto Currencies are unnaturally unstable (double negative), their value fluctuates too much of degree, making them a gambling product of themselves. One Bit Coin went from $36,000 American dollars at the beginning of January to $53,000 at end of February. Even when you do not pay banking fees that is a huge risk to take. A gamble on top of a gamble.
BUSINESS MODELS - The expansion, or transfer, of the gambling market from a “brick and mortar” to online has consequences for operators and investors. Now terrestrial operations are “once upon a time” business models. The new gambling model requires less personnel, a higher level of skill, higher level of investment destined to technology, training, regulatory matters and internalization. 5G and Covid will see that these processes will see an acceleration akin to the industrial revolution. Already gambling companies look more like videogame companies and social platforms such as Facebook. Also, to survive, and adopt these new gratuitous but necessary rules, will make the survivors more efficient.
RULES AND INNOVATION - Let us start with the idea that regulations and laws have a constructive or deleterious impact on innovation, however many regulators are acquiring the necessary skills to analyse which regulatory powers impede or let loose innovation. For example,
the Gambling Commission of the United Kingdom has announced, in its triennial business plan document, that innovation of the market is a plank mark of its analysis when making regulatory decisions.
Conclusion, innovation is imputed within the gaming business. But the innovations of the last year are so far reaching that will transform the gambling market into an area beyond what is today. But operators will need to work hard to differentiate from each other, so to assert their brand.