The Business of Online Pokies: How Casino Operators and Developers Drive Innovation and Revenue

Online slots have become one of the dominant forces in the gambling industry. As a result, they’ve become central to the relationship between casino operators and developers. 

When looking at innovation, it’s easy to begin by scrolling the back-catalog of any major online casino. Here, you will see the fruits of their labor, where there are thousands of slot games, all with their own stories and features. But how does the large output make business sense?

The Role of Casino Operators

Some bettors mistakenly believe that the casinos develop their own games, but this is no more true than Ballagio claiming that Blackjack is their game. Instead, casino operators take on the administrative burden of trying to get licensed and comply with regulations to safely host casino games. 

These games are developed by separate developers, who then provide games to casinos for a fee or a cut. So, with the development side of things not in the hands of the operators, they have much more time to tackle the challenge of getting customers. With so many options available for a minimum $10 deposit casino in Australia, these platforms must compete by offering appealing incentives, establishing strong brand identities, and utilizing various strategies to attract customers. In such a competitive market, the focus is often on improving player experience through features like flexible deposit methods and additional perks.

Casino operators must also handle the treasury, where deposits and withdrawals must be handled safely and quickly, as well as monitor fraudulent activity and suspicious accounts.

Game Developers Drive Innovation

In a literal sense, it is the game developers that are behind the near-infinite options for pokies, with themes ranging as broadly as the film industry. It’s not just the sound design, characters, and storylines, but the features and gameplay. New mechanics are added all the time, with it being a constant iterative process.

A symbiotic relationship exists because the developers can see directly which games are most popular. With a broad catalog stretching across many casinos, the casinos signal what’s in demand by what games they want to take on. Therefore, developers can pivot to developing more of what’s popular, or seeing trends with certain mechanics or storylines.

In other words, developers cannot be innovative in a vacuum – they need the profit incentive from the casino, as well as the fast feedback on recent releases. Currently, gamification features like missions, levels, tracking progress, and leaderboards are all adding more depth and engagement with pokies.

Another reason why innovation is so vibrant in this field is that it’s fast and low-cost to develop a game, and it’s very quick and easy to see if it’s a hit. Therefore, developers have the freedom to be more experimental without large financial backing. The economics for casino games are better than video games, which also means it attracts some of that talent over too. 

As discussed, casino operators are also lightweight because they don’t build games in-house. This means they act more as a storefront, enabling more of them to exist, which plays into the hands of developers who have more customers to distribute their games to.

The Revenue Model

Online casinos make their money by having a built-in house edge that the developers need to accommodate. This is perfectly normal, much like the double 0s on a physical roulette wheel. In the long run. The casino therefore has a slightly probable edge which they can forecast easily because it remains a fairly stable percentage figure. When it comes to poker, the casino may take a percentage of the pot or charge for tournament buy-ins.

Developers generate money in two main ways. Either licensing fees, which is a straightforward cost to run a game on your casino website, or revenue sharing, in which the developers receive 10-20% of the casino’s profits from their game. This flexibility allows innovation to happen even for small start-up casinos, where licensing fees may cost too much and revenue sharing is viable for both parties.

The real calculation comes with figuring out how much money the casino can give away as a free sign-up to entice users – when does it become a loss for the casino? This is complex because the lifetime value of a customer will depend on a few things like retention and if they’re a high roller. So, casino operators are continuously tweaking their bonuses and tracking consumer behavior to see if it’s paying off.

Final Word

Casino operators and game developers have a very good relationship in 2024. Both need each other to exist, and both benefit greatly from having an environment that enables innovation and creative experimentation. There is very little chance of development going in-house at casinos because there are multiple revenue models to negotiate – both of which are seemingly more economical than casinos attempting to be tech companies and hiring developers.