The word “hearing” can be inherently misleading. Meetings that are held to “hear” testimony are called “hearings,” but the core value in such meetings might be what is not “heard.”
That is arguably what occurred during a recent hearing of the Illinois House Gaming Committee. A broad array of speakers – including myself – offered testimony on legislation proposed by Rep. Edgar Gonzalez to authorize iGaming in Illinois.
The well-run hearing captured the views of disparate groups supporting and opposing the legislation. My testimony – provided at the request of our client, the Sports Betting Alliance – summarized various findings developed over a span of several years. Those findings include the reality that iGaming has already proven to be an effective means for land-based casinos to identify and market their services to a broader demographic that could be encouraged to visit those casinos.
Illinois is somewhat unique among gaming states, particularly those states that offer or are considering iGaming, in that Illinois presently licenses more than 9,000 establishments that feature video-gaming terminals (VGTs). Such establishments are understandably concerned that the authorization of iGaming– in which adults would have the option of playing slots or table games from their phones or homes – could cost them revenue. Legislation authorizing any new form of gaming offers permanence, and cannot easily be undone.
The views of these Illinois VGT operators, as well as similarly held views by other opponents of iGaming, need full consideration. The hearing in Springfield made that clear. However, some key points were not “heard,” yet also deserve full consideration.
The authorization of iGaming is neither an immediate path to success for proponents, nor is it an immediate path to cannibalization or failure for opponents. Rather, iGaming is a starting point for large and small operators to develop marketing strategies and campaigns that identify online players, and market to them.
The potential effectiveness of such campaigns is not automatic. Rather, it depends on whether an operator has the resources and the creative wherewithal to encourage and reward online players and convert them into on-site customers.
In 2021, MGM noted in its Annual Report that “as part of our commitment to the success of BetMGM, we have integrated our MGM Rewards program with BetMGM and have BetMGM-branded on-property sportsbooks and kiosks to drive higher-value customers at lower acquisition costs through a robust omni-channel strategy.”
Earlier this year, BetMGM CEO Adam Greenblatt made a similar statement in a public call: “It’s about super-powering the superpower with MGM Resorts. What this means is more direct player acquisition, more omni-channel crossover products and experiences, more loyalty, and rewards tie-ins.”
From the standpoint of smaller VGT operators, iGaming can also be a call to creativity. Is their player loyalty limited to those machines, or do they offer compelling services that also encourage players to visit their properties? Can such smaller establishments develop joint marketing strategies with larger gaming operators to their mutual benefit?
The experience in other iGaming states shows that, on balance, digital gaming can be an entry point for new customers to visit casinos and spend money on site. What is often not “heard” at legislative hearings is that such spending is not easily captured by data analytics. When iGaming customers become gaming customers, they join rewards programs that encourage them to redeem points and spend money in multiple cash registers, ranging from slots and table games to hotel rooms, retail stores and restaurants.
That spending, in turn, can generate capital investment as well as employment. For example, when iGaming players discover a restaurant at or near a casino, and that restaurant increases employment to meet that demand, the data is not easily discernible.
That was not directly “heard” in Springfield. Nor was the reality that some establishments – gaming and non-gaming – may not offer the necessary creativity or the capital infrastructure to capture the opportunities offered by iGaming. That reality will play a role in determining which participants succeed or not, if gaming expands.
The existence of digital gaming – legal and illegal, authorized and unauthorized – is a reality. That reality does not mean that every gaming state must evolve into an iGaming state. Rather, we have learned the hard way that every gaming state must carefully consider how any expansion of gaming should be structured to advance that state’s gaming policies. That is not easy, nor has it always succeeded.
Policymakers need to consider whether such an expansion can identify and capture opportunities that advance their particular policies. The policy goals to be considered may range from fiscal benefits to urban development to tourism growth to employment, and beyond. With that in mind, any expansion of iGaming needs to be structured to advance those policies.
That was not directly stated at the recent hearing in Springfield. But that is what policymakers need to “hear.” States such as Illinois cannot “unbuild” what they have already authorized and built. When considering the expansion of gaming, elected and appointed officials should view iGaming as a critical element of an omni-channel strategy.
Meeting that goal does not mean that lawmakers are anointing winners– it means that the winners will be those who invest in their facilities, who leverage opportunities and who are creative in crafting their marketing strategies. That is what I heard. Loud and clear.
