[C O L U M N I S T:
B I N G O
BINGO
]
By Joe Saumarez Smith
CEO, Sports Gaming
Want to make a pro?t? Bingo!
Joe Saumarez Smith, owner of Crown Bingo and gaming advisor, looks back at a decade of online bingo and asks why, despite it being one of the most lucrative verticals, it remains the industry’s “red-headed stepchild”
f someone had told you 10 years ago that online bingo would be bigger than poker then you’d probably have suggested they seek professional help. Yet in 2012 most major online operators admit that bingo is a substantially bigger pro?t generator than poker and sits third behind sports betting and casino in the minds of ?nance directors. Yet online bingo is still, to some extent, the red-headed stepchild of gambling products; I can think of several listed gaming companies whose bingo teams consist of two or three people, versus the plethora of personnel allocated to other products. On a per-employee basis, bingo is undoubtedly the most pro?table online gambling business there is. How did this happen? The main reason is that bingo is a fantastic gambling product. A low-stakes, easy-to-play game with potentially huge returns to the player with the added excitement of being highly sociable. The online bingo world is bemused by the buzz around social gaming as online bingo was the ?rst online social community that had any real traction. Has the industry changed in the past decade? Of course. In 1995 you could ?t the online bingo industry into a backroom of a pub... which happened with surprising
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regularity. It was a small community who shared ideas and sat in the path of stratospheric growth as the bingo demographic – women aged 23 to 40 with young children – moved online with a broadband connection. The early players – Parlay, Globalcom and Virtue Fusion on the software front and Gamesys/Jackpot Joy (Noel Hayden), Cashcade/Foxy Bingo (Simon Collins and Patrick Southon), Think Bingo (Dylan Schlosberg), Crown Bingo (Dan Smyth), Tombola (Phil Cronin) and UK Bingo and Bingo Ireland (Michael Brady and James Harrison) as the leading operators with major af?liates led by Phil Fraser, Raj Ramanandi and Scott Logan – shaped the industry for the likes of William Hill, Paddy Power and Bet 365 to capitalise on using the power of their brands. As bingo grew rapidly, Mecca and Gala also got their acts together – it took them a long time, but they used their vast bricks and mortar presence to recruit players while many of the major af?liates decided to become operators too, not always with spectacular results. Bingo grew from being virtually non-existent online (apart from US-facing sites) in 2004 to being a £600m
On a peremployee basis, bingo is the most pro?table online gambling business there is
pro?t industry by 2010. The growth of bingo was extraordinary. Nowadays it would be hard to start a new online bingo brand with a budget of less than £3m. Increasingly, smaller brands are being squeezed as software suppliers focus on their larger clients and neglect the brands that helped them get going in the mid-2000s. The industry is growing but at a much smaller rate, and companies are having to work harder to get existing customers to stay loyal and pay more to acquire new players. The downside of this is that there has been a lack of innovation, with bingo software companies milking the cash cow they have built and adapting their product for regulated markets. Major operators such as Cashcade and Wink Bingo have been acquired and, it would be fair to say, somewhat neglected by their new owners, who have other priorities to focus on but love the cash bingo generates. Where does online bingo go next? Mobile looks to be the next big thing as bingo players acquire smartphones and tablets and want to be able to play whenever they feel the urge. So far no one seems to have cracked the ideal product, although several new software suppliers seem to be getting close. Existing bingo software suppliers are hampered by systems they developed in the early 2000s which struggle to adapt to technologies such as HTML5. Mobile looks like a major disruptive force in the industry, giving new nimble operators a chance to attack the incumbents and further build a hugely exciting part of the online gambling world.
Joe Saumarez Smith is chief executive of Sports Gaming, a leading gaming management consultancy
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