Casinos must update games to survive, 2 executives say

Casinos cannot survive if they keep doing business as usual, say two management executives with experience appealing to current and future generations of gamblers.

“The gaming industry itself and the product have not really evolved. It's not much different from what it was 25 years ago,” says Ivory Gaming co-founder Christian Goode, who has developed and run traditional casinos, including Resorts World New York City, which became the world's largest grossing casino less than two years after opening.

“We're trying to prevent extinction” of casinos, adds Bradley Tusk, the other co-founder of Ivory, which has offices in New York and Las Vegas. Tusk also operates Tusk Strategies, a New York-based political consulting firm whose clients include Uber, Walmart, Google and numerous others.

Their premise, shared by many in the industry, is that casinos must pivot from the table games and slots that appeal mostly to Baby Boomers and instead focus on what attracts Generation X, born between 1965 and the early '80s, and Millennials, born between the mid-'80s and the early 2000s.

Their solution, outlined in a phone interview with Player's Advantage, would be a massive change not only in what games casinos offer but also in how players gamble. And they plan to launch their effort by the end of the year.

“(Millennials) don't want to play craps or roulette or blackjack or pull a lever on a traditional slot machine,” Tusk says. “They will gamble if you give them things to gamble on that they enjoy.”

One major attraction is e-sports, in which players compete head-to-head or in tournaments in video games such as Halo, World of Warcraft or Counter-Strike Global Offensive. E-sports are already big business outside casinos. The 2016 championship series in the League of Legends game paid $6.7 million in prize money to teams and attracted a peak audience of 14.7 million viewers, according to organizers.

Earlier this month, the nonprofit Nevada ESports Alliance began operations, saying it will promote “the development of best practices at the intersection of the e-sports and regulated gambling industries.” Last year, the Downtown Grand in Las Vegas began offering e-sports tournaments, with cash payouts to winners. Ivory Gaming cites studies showing that the e-sports industry was worth $748 million in 2015, and is expected to grow to $1.1 billion by 2019, with the U.S. consumers providing most of the money spent on events. About 75 percent of e-sports followers are 18 to 34 years old, with an average annual income of $69,000.

Tusk and Goode also say casinos should offer daily fantasy sports betting — not only the team rosters that players put together in current contests, but also allowing in-game betting, such as whether the next pitch will be a strike or ball, the next play a run or a pass. Other new forms of wagering include games using virtual and augmented reality.

Ivory plans to partner with selected Native American casinos to set up e-sports and daily fantasy sports sections. Tusk and Goode would not identify the casinos yet but say the centers will be running by the end of the year because tribal casinos do not have the same restrictions on new games as do state-licensed casinos in Pennsylvania or elsewhere.

Goode says an e-sports facility could be roughly the size of a poker room within a casino, but the cost would be “significantly less” than turning that space into a slot machine center. Slot areas cost about $20,000 per machine, he says. The cost of an e-sports area would depend on the amenities and decor. As always, knowing the customer is essential. For example, gamers like food served on sticks so their hands don't get messy.

“If it ends having a higher (profit) than the floor itself, then more and more of the casino becomes the e-sports part,” Goode says. “You can do it gradually over time as the demographics shift.”

Tusk acknowledges doubts from casino executives who dismiss e-sports and DFS as just another fad. “I worked with Uber back in 2011, and the taxi guys said the exact same thing.”

He predicts that in a decade, “every form of gaming conceivable” will be legal and available online, leaving casino operators struggling to find ways to get people off their couches.

“This is a perfect starting spot. Today, maybe it takes a very small portion of a casino gaming floor space. But 10 years from now, we think it takes the majority, if not all, of the floor space.”

Mark Gruetze is the Tribune-Review's gambling columnist. Reach him at PlayersAdv@outlook.com