Fuel Digital Enablement and Value in Gaming & Hospitality
2022 IT Benchmark Report
- Digital is the new normal. COVID-19 was the volatile breaking point that forced change in the industry on an IT, business, and customer level.
- The gaming and hospitality industry is focused on keeping the lights on. The industry must be agile to support the business to suit shifting customer preferences and expectations. To do this, IT needs to be “digital” – able to innovate, support exceptional online and on-property experiences, provide insight-creating data tools, and keep the operations secure especially in a highly regulated environment.
- Unfortunately, IT organizations fall short when it comes to digitally enabled or transformed business and IT capabilities.
Our Advice
Critical Insight
Based on the results, gaming and hospitality IT departments are currently co-leaders of digital, an insupportable position for bridging the digital transformation gap. IT must gain total digital ownership by improving the business executive perception of IT and evaluating pressing processes to enable digital transformation.
Impact and Result
Use Info-Tech’s data-driven IT diagnostics as a baseline to determine IT’s capability to digitally transform the business.
Break down digital into five growth categories to devise improvement initiatives: Digital Strategy, New Customer Frontiers, Continuous Innovation, Workforce of the Future, and Resilient Operations.
Analyze from the three perspectives to see where your IT department stands:
- Do you have support from your business users to transform their departments?
- Do you have the mandate from executives to innovate?
- Can IT execute digital?
Fuel Digital Enablement and Value in Gaming & Hospitality
2022 IT Benchmark Report
Executive Summary
Your Challenge
- Digital is the new normal. COVID-19 was the volatile breaking point that forced change in the industry on an IT, business, and customer level.
- The industry deals with a high level of digital threats, disruptions, and new entrants within the space. Organizations must determine how they will sustain and differentiate themselves in this competitive environment.
- There is an accelerated pace and direction for digital transformation. Organizations are now trying to understand its implication on their own businesses: What are the opportunities? What are the risks? Where does focus need to be placed?
Common Obstacles
- The gaming and hospitality industry is focused on keeping the lights on. The industry must be agile to support the business to suit shifting customer preferences and expectations. To do this, IT needs to be "digital"; able to innovate, support exceptional online and on-property experiences, provide insight-creating data tools, and keep the operations secure – especially in a highly regulated environment.
- Unfortunately, IT organizations fall short when it comes to digitally enabled or transformed business and IT capabilities.
- The industry has the perception of being infrastructure-heavy. Organizations will need to push past "keep the lights on" operations to digitally transform and innovate the business.
Info-Tech's Approach
- Use Info-Tech's data-driven IT diagnostics as a baseline to determine IT's capability to digitally transform the business.
- Break down digital into five growth categories to devise improvement initiatives: Digital Strategy, New Customer Frontiers, Continuous Innovation, Workforce of the Future, and Resilient Operations.
- Analyze from the three perspectives to see where your IT department stands:
- Do you have support from your business users to transform their departments?
- Do you have the mandate from executives to innovate?
- Can IT execute digital?
Info-Tech Overarching Insight
Based on the results, gaming and hospitality IT departments are in an unsupportable position to bridge the digital transformation gap. IT must gain total digital ownership by educating the business departments to transform, improving the business executive perception of IT to innovate, and evaluating pressing processes to enable.
COVID-19 was the volatile breaking point that forced gaming organizations to reassess their digital priorities and strategies
Digital Shift |
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Old Paradigm |
New Paradigm |
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New business models define the digital transformation – not technology
Industry 4.0 |
Organizational Growth |
|---|---|
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Disruptions driving digital transformation in the gaming industry
The Addition of online products
- iGaming has become a lucrative product, earning $3.71 billion among 6 states alone (American Gaming Association, 2022).
- Online sports betting has expanded drastically in North America since the pandemic with 87% of states gaining legislative approval after 2019.
The Acceleration of Platform Provision
Platform provision consists of:
- Being asset light: Operators leverage REITs to unload assets and focus on the brand. For example, GLPI owns 35 Penn Entertainment properties.
- Digital acquisitions and spin-outs: Operators look to acquire digital assets and/or build digital units to focus and succeed in the online market. For example, in 2015, PENN Entertainment formed its digital entity, Penn Interactive Ventures.
The budding future of web 3.0
- Crypto and NFTs are becoming value creators for all industries. Experts predict crypto gambling will reach a value of $93 million by the end of 2023 (Yahoo, 2022).
- The potential for casino involvement in the metaverse is staggering. Decentral Games' ICE Poker Virtual Casino has made over $7.5 million from November 2021 to February 2022 (Business Insider, 2022).
The Frictionless & Convenient world
Mobile app strategies are converging with contactless and digital strategies to provide a seamless and easily accessible customer experience.
- Omnichannel: Grosvenor Casino experienced a 12% increase in revenue from omnichannel efforts (Rank Group PLC, 2021).
- Hyper-personalization: 90% of customers find personalized advertising appealing (Deloitte, 2020).
The gaming CEO views digital as promising
2022 Top Board Priorities for Information Technology
Thomas R. Reeg – Caesars Entertainment q2 2022 earnings call
"When we started digital, we didn't have the ability to segment customers … so you, in effect, underinvest in your best customers and overinvest in your worst. That's no longer the case. And we see the fruits of that every day as results come in and it's great to see."
60 million
Number of Caesars Rewards loyalty members
Jay Snowden – Penn National Gaming q2 2022 earnings call
"Over the past few years, PENN has transformed our business through a highly differentiated strategy, focused on organic cross-sell opportunities, which is reinforced by our investments in our market-leading retail casinos, sports media assets, owned technology, including a state-of-the-art, fully integrated digital sports and online casino betting platform and an in-house iCasino content studio."
$1.6 billion
PENN's 2022 fourth quarter revenues
Raymond Pineault – Mohegan Gaming & Entertainment q3 2022 earnings call
"We're exceptionally pleased with the results that our digital is performing. And we anticipate, as we've said all along, that we will continue to run a profitable Digital Gaming business."
28.7%
Mohegan Gaming's increase in revenue for 3 months ending March 31, 2022
William Hornbuckle – MGM Resorts International q2 2022 earnings call
"Our investment in BetMGM is an important enabler to our omnichannel strategy and a key competitive advantage that allows us to drive incremental earnings between our brick-and-mortar and online channels."
29%
MGM's iGaming market share in the industry
The shift has redefined the pace and direction of digital transformation across the gaming industry
Understanding the implications for your industry is key for gaming CIOs to support the digital aspirations of their organizations and to help steer their transformation.
The speed and pace of industry change is at an all-time high…
…posing risks to incumbents and opportunities for all.
- What are the implications for my gaming IT department?
- Which IT initiatives will make the greatest impact for digital?
- How do I drive innovation?
- What are my peers doing in digital?
- What are the IT risks and considerations if I don't act now?
Our data is sourced from five analytical diagnostics
CIO Business Vision Diagnostic
Take Info-Tech's CIO Business Vision Diagnostic to learn what the business sees as important as well as their satisfaction with various core IT services.
CEO/CIO ALIGNMENT DIAGNOSTIC
Take Info-Tech's CEO/CIO Alignment Diagnostic to determine the vision of business executives and whether IT is aligned.
Management & Governance Diagnostic
Take Info-Tech's Management & Governance Diagnostic to gain real insight into which processes your IT staff thinks are important and effective.
IT Staffing Diagnostic
Take Info-Tech's IT Staffing Diagnostic to gain real insight into where your IT staff are spending their time, perceived effectiveness, and barriers to success.
Security Governance Diagnostic
Take Info-Tech's Security Governance Diagnostic to understand strengths and weaknesses of IT security governance and management.
Your gaming organization has the opportunity to enable a digital business
| Digital Business Growth Opportunities | |
|---|---|
Digital Strategy |
Organizations must meet new digital threats ahead, simultaneously focusing on operational responsiveness and resilience. |
Continuous Innovation |
Skills to support technological innovation will be necessary to develop internally and procure through partnerships. |
Workforce of the Future |
Digital transformation is not necessarily about headcount reduction. The workforce and culture are integral to the future of the organization. |
New Customer Frontiers |
The global pandemic has unlocked new needs and opportunities for gaming and hospitality organizations to create value for their guests and players. |
Determine where IT stands based on three perspectives
Mandate from executives to innovate
IT needs to be viewed by executives as an "innovator" for the business. Therefore, IT must be able to make the case for the mandate of digital evolvement in the organization.
Support from business departments to transform
Support is required from business end users since their departments will be impacted by the enterprise-wide, cross-functional digital transformation.
IT's Ability to Execute
Succeeding in digital transformation will depend on IT's maturity level. IT must determine how effective their processes are on many levels: staffing, technology, skills, processes and procedures, etc.