Attention to detail and communication can pay off
Zooming in on US industry figures shows that a continued focus on CRM can increase the lifetime values of players and grow operators’ revenues. In this article Enteractive reveals how vertical-specific data points can help operators maximize their CRM operations.
The online gaming and betting industry continues to evolve in the US and as it does, we are seeing how tax levels affect competition levels and how operators carry out their marketing strategies to recruit players.
It’s been noted previously how New York state’s high tax levels were affecting operators and the amount of marketing they could carry out as a result. Some operators may rein in some of the huge bonuses they have offered in New York, but currently at least the need to recruit players in such a high profile market will mean marketing dollars will continue to flow.
In fairness this will largely apply to the major brands such as DraftKings, FanDuel, BetMGM and Caesars, while others such as PointsBet are likely to leverage more product-focused strategies such as in-play betting and single game parlays to maximize player lifetime values.
At a macro level, it is also important to look at the data to see how promotional spend impacts US turnover and revenues. For example, some excellent recent analysis from Deutsche Bank shows that operators in Pennsylvania recorded gross gaming revenues of $451m from January to November 2021 and promotional spend accounted for $165m, or 37% of that total. In Michigan, the promotional spend came to around 62% of operators’ GGR, while in Virginia the figure was 53% and in Connecticut’s first two months of regulated sports betting it was close to 47%.
As the analysis points out, the amounts spent on promotions are deducted to produce operators’ net gaming revenue figures and the more that is spent on promotions, the more that is deducted from those gross revenues.
So for all the very strong growth in handle (turnover) and GGR, the underlying figures reveal the real costs operators are incurring as they compete for players.
In a further illustration of this promotional spend in the US, sports betting data from Arizona showed that when the state went live with regulated sports betting in September, promotions accounted for 100% of betting operators’ GGR. In other words, they spent as much on bonuses and free bets as they generated in gross revenues during that month. The subsequent level of promotional spend dropped in October to 73% of GGR and then to 37% in November.
Adoption rates multiply
Many industry observers have made the point that US online casino as a vertical is much more profitable than mobile sports betting and generates much higher margins for operators. Of course, the key issue is that currently it is only regulated in five states.
However, what has happened since 2018 when PASPA was repealed and the current sports betting regulatory wave was set in motion is that adoption rates across both online betting and casino, when the latter is regulated, have multiplied at warp speed.
This can be seen in the state of Michigan, and as one of the top 10 US states when it comes to population size, it also shows the potential returns operators could be generating if they maximize CRM and lifetime values.
Regulated online casino went live in late January 2021 and February data from the state’s gaming board showed that operators recorded around $80m in GGR in February. To put that figure in perspective, the result was higher Pennsylvania’s online casino GGR for the same month despite the state having launched regulated icasino in mid-2019. Further contextual data shows that New Jersey took slightly more than three years after launching regulated online gamblign in 2013 to reach that level of monthly GGR.
Compared to European markets like Italy, Sweden, Denmark, and Spain, it’s clear to see the fast growth of New Jersey and Pennsylvania (fig.1).
New Jersey alone has seen exponential growth in the last 5 years, rising from around $20m monthly GGR in 2017 to almost $140m monthly GGR at the end of 2021 (fig.2).
As mentioned above, the issue for US operators is that online casino is only regulated in five states and there is no certainty that further regulation of the space is on the cards. But when looking at the key products that are online sports betting and casino in the US, it is clear that the scarcity of the latter and ubiquity and huge competition levels that surround the former mean that operators must think very carefully about how they deploy their marketing budgets.
This is especially true as we enter a period where questions around profitability will become ever more present. One of the ways operators can optimize marketing and CRM budgets is by incorporating tools that enable direct communications with players to connect with them and reactivate them through one-to-one dialogue. That is what Enteractive specializes in and how it has helped leading brands in the sector reduce churn levels and maximize budgets, ROI and revenues.
If you’re interested to find out more about how Enteractive can increase your active players through personalised one-to-one engagement, get in touch on our contact page and we’ll get back to you to book a convenient time for a chat.