Social Gaming vs. Casino Gambling by: Victor H. Royer

Why “social” isn’t the same as “casino”

The latest buzz-words in corporate boardrooms seem to be “Social Gaming”. At the same time, executives from all areas of the casino industry appear to be using the words “social” and “casino” as if they were synonymous. Or at least interchangeable. Recent corporate excitement on this topic has reached new heights, as the “social gaming” market topped $2.7 billion in annual revenue. OK, great. Nice. Ummm … but aren’t we forgetting something? Global casino gambling still makes over $160 billion annually. That’s a lot more than this “social” something.

So why this sudden euphoric excitement over “social gaming”?

Well, you see, casino execs – in an ever-escalating frenzy to satisfy fickle investors, lenders, banks, hedge-funds, M & A regulatory processes, and (in some cases) Bankruptcy Courts – have seized upon this concept as somewhat of a “Golden Fleece”, a mythical “savior” of the apparent attrition of traditional casino revenue.

This is all well, and good. Adding another profit center to a company’s portfolio of successes is hardly a problem, and is – indeed – a justifiable entry into the positive revenue source column in the company’s income spreadsheet.

So, why am I arguing this point?

Well, no – not this point.

My bone of contention, so to speak, is with the apparent co-mergence of what are essentially two entirely different, and separate, concepts. The “social” and “gaming” idea, versus the “casino” and “gambling” mantra. The two are not the same. They are not interchangeable. Or transferable, as is now becoming clearly apparent even to those who first saw “social gaming” as the “next big thing” in corporate casino profitability.

The issue here is the misunderstanding of the actual product, and the business model.

What is “social” is not what is “casino”. What is “gaming” is not what is “gambling.”

And that’s the problem.

Corporations that own and operate casinos are not in the business of “gaming”. They are in the business of “gambling.” These same corporate operators are likewise not in the business of “social” – they are in the business of “casino.”

Gaming equipment manufacturers, and slot makers in particular, are also not in the business of “social gaming” – they are in the business of making “gambling machines” and “gambling games” for “casinos”, and not for children’s arcades. Their product is not “social gaming games”, but “gambling machines for adults”.

This disconnect between what actually IS the business in which we are, and what “looks like” something that “might be” gambling, but is not, is the problem that is misdirecting marketing, research, development, funding, construction, operations, and overall business models in all aspects of today’s corporate-owned and multi-merged industry.

The “Business of Gambling” has become the “concept of social gaming”.

That’s not where the money is, so to speak (ending with a preposition notwithstanding).

Take IGT as an example. Not because IGT is somehow the cause of any of this, but because – as the biggest fish in the global gambling pond – they are the most visible example which can illustrate the point.

For the purpose of disclosure, let me also tell you that I have had a 30+ year relationship with this company, have loved them a lot, and have written four books about their games. But, I also wrote books for Aristocrat, and lately for Bally, WMS, Konami, and GTECH as well. So, to make sure there’s no misunderstanding, I am NOT intending to lambaste anyone, or play favorites in this article.

OK, so back to the point –

IGT has had great success with Double Down Casino. At any moment, there are over 2 million active players on this site, playing a variety of games, including social media versions of many of IGT’s iconic and beloved games. That’s wonderful. As a result, IGT Interactive is also a growing asset in the company’s combined portfolio, now enhanced even further with the merger with GTECH, and the newly re-branded company as a combined IGT, with IGT North America, and IGT International. So far so good.

But let’s look at the very latest data, and facts.

From the current Eilers-Fantiny Slot Survey (4^th Quarter 2014), IGT has yet again lost ground in ship-share, down by the greatest margin yet versus the other Big 5, as well as the smaller fish in this barrel. The full report can be obtained by contacting Todd Eilers at: teilers@eilersresearch.com

This is not surprising, though, because IGT has been steadily loosing market share for a very long time. From being the 800 lb Gorilla in the world of slot makers, it’s now down to just one of the monkeys. Yes, it’s still a bigger and better monkey than most – but it had almost run out of food, needing to be rescued by GTECH.

OK, so back to the point –

Of the 2 million or so active players on Double Down Casino, the social gaming platform – all being exposed to IGT’s brand and iconic casino games – how many translate into actual casino gamblers? 

Well, you see – that’s also the point!

None.

Yup. None.

Or, if you want to nickel-and-dime-it, maybe a trickle.

And while my example here is illustrative, the fact remains that the “social gaming” phenomenon is far from being the “Golden Fleece” that will “save” corporate profitability, and make the world of “social gaming” exceed the world of “casino gambling.”

And that too, IS the point.

What is “social gaming” is NOT, and will never be, “casino gambling.”

You see, people who do “social gaming” on “social gaming platforms” are NOT the same people who play “casino gambling games” … and they do NOT play for the same reasons.

Those who play Double Down Casino on Facebook do it for fun. For entertainment. Most of them do it at work, or on their phones or tablets while stuck in traffic, or long commutes to and from work. And, sometimes in competition with each other over long days and nights, or weekends, when the average person is bored and can’t find anything to do.

These are not casino gamblers, and very few of them, if any, will ever become such players.

That’s why the transference ratio, and profitability equations applied to social gamers versus casino players, just don’t work, or come out as predicted.

Casino gamblers do NOT come to the casino to “socialize.” They come to GAMBLE. Pure and simple. A hard fact. Nothing fancy. Nothing mysterious.

But these very same customers, who collectively account for over 80% of all revenue for casino operators and slot manufacturers, are still being totally ignored, particularly in this mad rush to all things “social gaming” and “all things Facebook, Twitter, Instagram”, and whatnot. Yes, promotion is great – BUT, if not targeted correctly – and at the right audience with the right message – no amount of “social gaming” can, or will, translate into actual casino gamblers who will come to YOUR casino, and put their money into YOUR slot products, or table games.

It is this disconnect between the “myth” of “social gaming” and the “facts of casino gambling” that’s the issue, and the one that’s causing reduction in overall casino play, slot machine drop, casino and supplier profitability and – most of all – the apparent total disregard for the bread-and-butter of the casino business: The Casino Gambler.

Yet the solution is simple – Don’t forget the Gamblers!

Put MORE staff on your casino floor, not less. Make response times to player’s needs FAST, and not slow, as it is now. Make slot machines that are great GAMBLING games, with the thrill of victory versus the odds of defeat – that age-old challenge that still resonates in all humans everywhere.

Realize that your most profitable customers are CASINO GAMBLERS.

Treat them well. Cater to them and their needs. Make the casino friendly for them – and this does NOT mean more nightclubs, restaurants, or noise (or any “social” nonsense). Casino gamblers want solitude, and good service. That’s it. Give it to them, and you’ll be making more money from just these few than from all the millennials you are now trying to attract with social gaming. It won’t work that way. But give them a good gamble, and teach them the thrill of victory and the money that comes with it, and they will be yours for life!