In recent years, the gaming industry experts are observing the battle between online and offline casinos. They explore features and trends, as well as make plans and forecasts. Slotegrator's experts have carried out their own analytical study and come to interesting conclusions.
Table of contents
Growth and drop
The 2015 results defined the growth in incomes of online casinos and the drop in incomes of land-based casinos.
According to statistical studies of the Center for Gaming Research at the University of Nevada, only within six months (the end of 2014 to the beginning of 2015), revenues of land-based gambling houses fell by 2.17%. The total drop in revenue was 11.5% in 2015.
However, this segment still holds a leading position in the global offline gambling market.
The Revenue structure of the global offline gaming business.
The proportion of online gambling in the total income of the global gaming market continues to grow.
The Revenue structure of the global online gaming business.
However, as we can see, the online casino revenues compared to the land-based casino revenues are still not very large. In 2015, despite the drop, the land-based casinos brought their operators almost €118 billion while online casinos, regardless of the growth, provided only €7.8 billion.
What influences the growth of land-based and online casinos?
It is a surprising fact, but many experts predict that online gambling is unlikely to break through 10% mark in the total share of gambling revenues.
Why is it so? As Slotegrator experts note, the market of online casinos is modern, fast-growing, and technologically oriented. Its growth is primarily influenced by the development of modern IT. However, virtual platforms will never be bigger than land-based gambling houses, as their growth relates to the development of new gambling areas with large casinos such as Macau, Singapore, the Philippines, and others. Over the past 10 years, incomes of Asian land-based casinos rose from $7.7 billion to $56.6 billion, i.e. almost by 7.5 times. Despite the slight decline in 2014-2015, the experts predict growth this year.
Online casinos are far ahead of their land-based counterparts in terms of the number of players due to the huge Internet audience and the availability of playgrounds. However, the bets on the Internet are incomparably lower than in land-based casinos. For example, a minimum bet in the online casino roulette is $1, while in a land-based casino it is $5-10. In general, online slots can be played at $0.01 per spin.
The scope of online casinos is very attractive for investors and players. It is less risky, more comfortable, and brings the same level of enjoyment. Therefore, taking into account the development of the Internet and mobile technologies, online gambling will continue to grow.
In 2015, the land-based casinos' income was about $132 billion, according to the data provided by PricewaterhouseCoopers (PwC). In 2017, it is expected to reach $182.5 billion. According to PwC experts, the income of land-based gambling establishments will keep increasing by 9.3% per year.
The major markets ensuring stable growth include the Asia-Pacific region, which grows at a rate of 18.3% per year and exceeds US gambling establishments in terms of land-based casino revenues, as well as Europe, Middle East, and Latin America. According to Global Gaming Outlook by PwC, by the end of 2015, the Asian market revenues will reach $79.3 billion; US - $73.3 billion; Europe, Middle East, and Africa - $18.3 billion; Latin America - $5.6 billion.
The online casinos' revenues are also growing at an incredible pace. According to H2 Gambling Capital, the net revenue of online gambling in 2010 was $ 6.24 billion, and by the end of 2014, it reached $8.7 billion. Slotegrator experts predict that by 2017, this figure will increase to $18 billion. Such rapid growth is also supported by the data of France Press agency, which states that the online casino revenues increased by 28% only within the period of 2010 to 2014.
Revenue forecast for online and offline casinos in USD billion.
Expenses of land-based casinos are quite substantial. They mainly consist of maintenance costs: gambling halls, equipment, facilities, payments for services of personnel, and fairly high taxes. Online casinos’ expenses are much lower but still substantial. The key ones include the cost of site creation and optimization, licensing, gaming platform, and content.
It is also necessary to remember that the success of any institution depends on the advertising. Therefore, the amounts spent on marketing campaigns can be very impressive.
Online and land-based casinos visitors
People come to a land-based or online gambling establishment without the wish to find a noisy company or communicate actively. It is important for them to be able to fully escape from everyday worries and thoughts by being engaged in the game.
Players of land-based and online casinos have a different motivation. Let’s consider the motivation of land-based casino players. The attendance of a gambling establishment is a way to emphasize one’s status and wealth. Someone is attracted by the atmosphere, free food, drinks, twilight, beautiful women, a sense of excitement, and friendly staff. The motivation of players of online casinos is different, as they mainly want to spend free time in a comfortable environment without having to go somewhere.
Visitors of land-based casinos are mostly people who are quite respectable and have a stable income and an established social status. However, under the influence of modern tendencies of the time, this audience has been gradually changing by demographic characteristics. Previously, a classic player was a middle-aged man. Today, about 40% of casino visitors are women aged about 45 years. About 30% of all offline players are people aged 51-65 years.
The audience of online casinos is vast, diverse, and considerably younger. They are men and women aged 18 years and older of different levels of wealth and status in society. This is mainly because many online casinos make it possible to play for free or making minimum bets in order to attract and retain high traffic. As a result, according to the statistics, a huge part of the audience consists of fans who like to bet in their leisure or work time. The emergence of mobile versions of casinos allowing you to play "on the go" has expanded this audience segment. The game brings such people psychological satisfaction. They usually do not want to spend substantial amounts of money on their hobby.
A separate category of target audience involves professional players who are available both in land-based and online institutions. These people benefit from the game. They usually do not need additional sources of income in order to secure a decent standard of living. However, their percentage in the total mass of gambling establishments visitors is not very high.
The transition from offline to online
Today, many land-based casinos consider moving their business online. Transition to the online sector opens up many opportunities to operators: audience accumulation, an increase of the variety of services and goods and, as a result, business development in general.
Moreover, in many countries, land-based casino operation is severely restricted or completely prohibited, that is why gamblers have to turn to foreign online resources in order to play for money and just have fun. The demand for online gaming portals is constantly growing. The target audience of this gambling segment varies depending on the country, but the number of online casino users is growing year by year.
It is impossible to say which type of operation, whether it is offline or online, is easier or less expensive. These two types of gambling businesses have fundamentally different technologies, legislation, and types of licenses. Nevertheless, the transition from land-based to online type may be very smooth and safe, without losses and risks for the operator.
Pros of transition from the ground to the network:
- No player loss.
- A high percentage of returns, while working with original software (a useful way to retain players).
- Possibility to organize tournaments and thematic activities.
- Possibility to complement system with new games and constantly expand the choice of services.
- Online slots do not require maintenance. Machines for land-based casinos eventually require technical upgrades or even a complete replacement. Moreover, the price of a gaming machine may be as high as several tens of thousands of dollars while in an online casino, everything goes through integration.
- While land-based gambling houses may be visited mostly by those living “next door” to it, online casino opens its doors to everyone.
- It is possible to play in an online casino in any place with Internet access and a computer. Advanced technologies offer an opportunity to gamble using mobile devices and tablets.
- Various visual designs of your project.
- Online communities and forums dedicated to online casinos and gambling in general, allow players to get together for discussion and communication.
- Player privacy.
- Lack of live communication. Possibilities for communication with players in online casinos differ from those for land-based ones, but due to advanced technologies, operators always stay in touch with customers via chat or other types of feedback.
- Risk of winning loss. Sometimes players may come across fraudulent websites, which use unlicensed software and game content. To avoid this, it is necessary to check all documents and permits that are to be published on the casino website.
- Possibility of casino website blocking.
- Cheap online casino platforms.
Online and offline casinos: what is next?
Many factors influence the future development of the gaming industry. They include the overall economic growth on a global scale and the growth of individual regions in particular. An important factor is the legislative policy of the states.
Both online and land-based casinos will continue to grow within the overall development of the industry, according to the experts of Slotegrator, the company that has been involved in the distribution of advanced solutions for online casinos for many years. As can be seen from the analysis, the audience has a high demand for entertainment, and the interest of users is growing. Based on this, we can safely talk about the positive dynamics of development in the future.
The percentage of shares of online and offline casinos in the total income of the gambling industry is unlikely to change significantly in the near future. About 90% of revenues will come from the land-based segment, and 10% will appear from the Internet.