The New Phenomenon of Hybrid Gaming

The complicated web of the U.S. gaming industry makes it difficult to usher in new innovations on a consistent basis. However, industry veteran Bruce Merati (l.) argues that the next frontier that will drive growth is not solely land-based or digital—it’s a hybrid of both.

The New Phenomenon of Hybrid Gaming

Due to restrictive regulations, legal gaming in the U.S. has historically lagged behind other countries in adopting new technologies. The slow evolution historically has been attributed to challenges in adopting new technologies, player psychology and the caution exercised by state regulators and casino operators in taking large leaps. For instance, in the last century, the transition from mechanical to electronic slots has occurred in subtle and incremental steps.

However, all the stars are now aligned for hybrid gaming, the innovative blending of live and virtual gaming experiences, to reshape the landscape of the casino industry in the United States beyond just iGaming broadcasted from a studio.

Although introducing new types of games is a slow and complicated process, advancements in wireless technology, proven player preferences and the availability of already existing rules and regulations for table games and virtual machines suggest that broadcasting hybrid gaming from the casino floor will soon be mainstream.

Legal gambling in the U.S. started in Las Vegas 90 years ago to attract players from neighboring states such as California. Since then, the industry has enjoyed a massive expansion with almost all states having some form of gambling. Nevada casinos started with traditional table games like blackjack, roulette and baccarat—they then introduced rudimentary mechanical slot machines with three or more rotating reels, coin acceptors and hoppers.

About 40 years ago, computer technology such as EPROMs and electronic boards propelled mechanical slots into a new era, generating substantial gaming revenues for the operators and the state. This evolution set the stage for the development of mega casinos and resorts, largely funded by slot machines, making Las Vegas a global mecca of entertainment.

Nevada played a pioneering role in legalizing and regulating the gaming industry. The state established rules and regulations for the business, setting a precedent that other states followed as they sought to generate new tax revenues to address budget deficits.

The next chapter was ten years ago when New Jersey legalized iGaming, creating an urgency for neighboring states in the Northeast to follow suit. The reversal of PASPA in 2018 created hopes for gaming manufacturers that iGaming would be spread to other parts of the country in the near future. However, the anticipated expansion, as hoped for by manufacturers, may face delays due to resistance from brick-and-mortar casinos.

Over the years, the industry has realized players like to play games they are familiar with and resist learning how to play new games. In the case of slot machines, slot manufacturers retained the familiar rotating symbols of mechanical slot machines by animating them on virtual reels controlled by the machines’ electronic boards. And, despite the shift away from physical coins and slots, the industry continued to refer to these machines as “slot machines” to retain traditional terminology for continuity and familiarity, even as the technology evolved.

Similar challenges exist with table games, where players often hesitate to learn the rules of a new game. Established games benefit from a built-in player base familiar with the rules and strategies, making the introduction of something new a challenging experience as casino operators wrestle with financial considerations with offering new table games, as the costs associated with educating dealers and staff about the rules and procedures of the game can be substantial.

In contrast to table games, slot machines offer a straightforward and user-friendly gaming experience. They are simple to play, require minimal maintenance, eliminate the need for dealers, and simply require pressing a button and can be designed with compelling math models, payouts and progressive jackpots, effectively capturing the interest of gamblers.

With the advent of computer technology, the gaming landscape underwent another evolution, leading to the introduction of slot machines mimicking popular table games like blackjack and roulette. These games appealed to the operators because they didn’t need dealers and pit bosses and players embraced them because they knew how to play these games. The internet then opened new possibilities for startups, giving rise to iGaming, an industry that bypasses physical casinos and brings gambling directly into people’s homes by offering virtual games reminiscent of brick-and-mortar casino experiences.

As internet speeds improved and mobile devices became prevalent, some European online gaming providers identified an opportunity to boost player engagement by introducing live dealer gaming. Dedicated studios were established to broadcast live dealer games for popular table games, such as blackjack and roulette, attracting significant revenues.

Subsequently, the integration of virtual random number generators (RNGs) into live games such as roulette marked the emergence of hybrid gaming, combining the familiarity of table games with the potential for substantial payouts and jackpots akin to slot machines.

Both outside the U.S. and in the states in the Northeast that have already legalized iGaming, the adoption of hybrid gaming such as roulette with high jackpots similar to slot machines has proved immensely popular. However, the U.S. gaming landscape, with its numerous land-based casinos, has been resistant to iGaming, viewing it as a potential threat. While the repeal of PASPA opened the door to legalized sports betting, the resistance to broader online gaming remains prevalent, especially in states with strong tribal casino presences.

With iGaming evolving very slowly in the U.S., the next frontier for new gaming revenues in the U.S. lies in broadcasting live games directly from casino floors across the country, integrating virtual RNGs to offer high payouts and jackpots that transcend the limitations of regular table games such as roulette and baccarat. This innovative approach, different from use of dedicated studios prevalent in Europe, provides a unique gaming experience accessible to players both on the casino floor and within legal jurisdictions, is poised to become a reality despite the challenges associated with introducing new types of games, fostering a convergence of traditional casino-style gaming with the convenience of online and mobile platforms.

In conclusion, the U.S. gaming market is a vastly different market compared to the European markets, which don’t have mega casinos lobbying against iGaming to protect their turf. The immediate innovative opportunity in the U.S. lies in offering hybrid gaming, a blend of using physical RNGs, such as playing cards or a roulette wheel, with virtual RNGs, similar to those used in electronic gaming in establishing a game’s outcome or a jackpot.

This approach aims to deliver an unparalleled gaming experience from the casino floor, with live streaming to captivate players both inside and outside the casino. As the industry explores this exciting frontier, the convergence brings traditional live gaming and virtual gaming all into one game, played inside a casino or remotely, ushering in a new era of innovation and live entertainment.

Articles by Author: Bruce Merati

Bruce Merati is cofounder of BC Technologies, a sportsbook system provider and CEO of Uplay1, a gaming IP company.