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Vertical and Horizontal Growth: How Casino Brands Develop

Updated 25 june 2024

The gambling niche is a profitable sector of the economy with good prospects and a promising future. At the same time, operators must deal with intense competition, legislative changes, and other stress factors on a daily basis.

Gambling business growth: general info

Experts of the CASEXE studio will explain how vertical and horizontal expansion allows operators to cope with industry challenges, scale their projects, and increase income.

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Why Business Growth is So Important

The process means an increase in volume and income over time. Each entertainment company strives to develop, strengthen its presence, enter new markets, and improve its activities.

According to global studies, the success of an enterprise is impossible without its continuous progress. As soon as a firm starts to plateau and remains like this for a long time, it immediately becomes inferior to competitors. This is true for all sectors of the economy, including gambling.

Analysts from McKinsey claim that 80% of brands that, for one reason or another, stopped moving forward soon ceased operations. Most were closed, and some of them have been reorganised or acquired by other corporations.

Advantages of the growth of the business:

  1. New features. If companies had not developed, gamblers would hardly have seen new slots, advanced mechanics, and functions. The desire to become more successful led Bally to create the first electromechanical product and Microgaming to launch the world-famous jackpot series.
  2. Access to other markets. This may be a traditional geographic region or a highly specialised niche, for example, on the supply of live content. The main thing is the operators’ wish to improve their projects.
  3. Maintenance of competition. Sometimes, business growth is almost the only way to stay afloat and keep up with other entrepreneurs. Otherwise, casino owners risk losing customers and making less profit.
  4. Improved quality of service. Gambling, like many other sectors of the economy, is a client-oriented direction. Therefore, if the company develops, the interaction with the audience also gets much better. Users are offered personal managers, generous bonuses, access to new products, etc.
  5. Increase in revenues. Those operators who are focused on growth make more money in the long run. They suffer minimal losses during a crisis and quickly gain momentum in a favourable financial environment.

What Affects the Expansion of Gambling Brands

Let us consider the main factors:

Balanced Business Plan

The document describes the strategic direction and contains goals, resources, schedules, as well as other useful information. A mandatory item is the forecasting section, where project owners indicate the expected KPIs (related to money, clients, staff, and marketing) and ways to achieve the intended results.

The plan is created for 3 or 5 years. Its availability is essential for the acquisition of a licence. Most banks and financial institutions will also want to familiarise themselves with the document to understand on what the issued loans or credits will be spent.

Effective Management

The progress of a casino enterprise is impossible without good governance. The executives are the link for many operational processes within the company.

They are also responsible for:

  • strategic planning;
  • establishment of business connections and partnerships;
  • tracking the results;
  • creation and support of the brand’s image.

A poorly managed gambling firm quickly becomes ineffective. It loses valuable personnel, incurs losses, and becomes less attractive in the eyes of investors.

Flexibility

Entrepreneurs must constantly adapt their business strategy to remain competitive. To do this, they study new technologies, analyse the latest trends, and monitor the actions and achievements of competitors.

It is important for operators to constantly monitor legislative changes related to licensing rules, the amount of taxes and fees, innovations in the advertising of entertainment for money, and other nuances.

Vertical Growth in iGaming

Vertical growth in iGaming: features

This kind of development is an effort to capture a larger share of the market where casino owners work.

Their actions are aimed at:

  • expanding the customer base;
  • increasing the average check;
  • earning more and increasing brand awareness.

Such growth often destabilises competitors. The wish of many businessmen is to be included in the top 3 in terms of income, attendance, and profitability.

As a rule, it is not necessary to obtain new permits for the vertical development. Enterprises just work in the primary market and invest in the improvement of existing or related services.

Thus, a bookmaker can launch an eSports line and receive additional income. In most jurisdictions, changing the betting format does not require another licence.

How Projects Can Grow Vertically

Let us consider the main options:

Upgrade of Already Launched Solutions

It means the need to add more options to an already established online casino or bookmaker’s office:

  1. Updating the entertainment library. Entrepreneurs can integrate current slots, cards, roulette, and arcades. An excellent option is to add games that were not previously presented on the website. These are crash products, multiplayer fishing, cluster slots, and other types of content, the popularity of which is growing rapidly.
  2. Change of the bonus program. To develop a business, it is necessary to take a radical path. For example, the creation of a proprietary jackpot, payments for which will be covered from the operator’s funds.
  3. Launch of branded services. Operators can set up a chatbot, change the work of the technical support service, organise a forecasting tournament, and much more. Another option is to implement an exclusive loyalty program where players can collect points and exchange them for valuable prizes.
  4. Innovations. Cryptocurrency settlements, VR and AR solutions, as well as tools based on artificial intelligence work well in the gambling sector. They provide high-speed transactions and make the user experience authentic.

While it may seem that it is not so essential to improve existing products, project owners need to stand out among the competitors and gain a larger market share.

Any changes always require careful planning. That is why it is so important to calculate all risks, correctly distribute available resources (financial and labour), and outline planned KPIs.

Creation of New Releases

Companies can add:

  • live games;
  • poker room;
  • betting on sports and cyber competitions;
  • fantasy disciplines.

The key advantage of diversification is the ability to work in one country with a single licence. Entrepreneurs are already well acquainted with the rules of operating in the chosen jurisdiction and, therefore, have an advantage over other brands.

Today, almost all major providers own both betting platforms and iGaming sites. Thanks to this, they maintain a huge market share, easily attract “doubting” audiences, and quickly respond to any changes in the industry.

Operators can also start producing unique HTML5 slots or other content. Such activities will also ensure rapid vertical growth, especially in the niche where the enterprise has proven itself well.

Horizontal Growth in the Casino Niche

Horizontal growth in gambling: key benefits

This is a type of business scaling by entering new markets. Companies may be established abroad. All this expands their geographic presence, making such firms global and recognisable.

Advantages of the horizontal development:

  1. Access to resources. These are products, technologies, benefits, tax discounts, holidays, grants, joint financing, loans at minimal interest, etc. The list may vary depending on the selected country.
  2. Talent search. It is difficult to imagine the growth of brands without young but promising specialists, experienced managers, and experts in the field of analytics/forecasting. Entering new markets provides access to an unlimited labour force.
  3. Risk protection. Horizontal expansion is one of the most common methods of risk diversification. Entrepreneurs redirect cash flows and capital to be more resilient to unforeseen situations in the future. If, for example, there was a strong devaluation of the national currency in a certain country, then operators will not lose much due to the correct distribution of assets.
  4. Revenue growth. The described type of development provides an inflow of a solvent audience, which is quickly converted into decent profits. Of course, there will always be some expenses at the start but they are going to pay off already in the first months of work.

Replication of a Business Model in a New Market

This is the most popular option for horizontal growth, which brings good results in the short term. If a casino enterprise operates in its usual market, then most likely it will open a branch in another region.

Benefits of repeating the achievements:

  • Experience and deep knowledge of the industry. Thanks to them, entrepreneurs will not make mistakes at the beginning of the journey. They will successfully overcome all the initial difficulties, quickly find a reliable software vendor, enter into an agreement with a payment aggregator, and launch engaging advertising.
  • Use of existing assets. These are labour and material resources that can be quickly redirected to the development of an iGaming startup in a new country. For example, it is possible to hire a well-coordinated technical support team and increase its salary for the acceptance of bets from foreign players.

Finding a jurisdiction to expand the business is a key task of entrepreneurs. As a rule, they choose neighbouring states due to the similarity of mentality and language, as well as modern IT infrastructure and geographical proximity.

Many project owners pay attention to offshore zones. Their main advantage is a loyal fiscal burden, which attracts brands from all over the world. Such territories also have a rather favourable attitude toward gambling.

In Malta, Curacao, Alderney, Kahnawake, and other countries, all types of entertainment for money are allowed, and local governments actively support this sector of the economy.

The Main Things about the Growth of Casino Enterprises

The development of iGaming sites is a key aspect of their success and prosperity.

Aspects that entrepreneurs need to take into account:

  • Business growth opens a lot of opportunities. These are access to new resources, current technologies, valuable personnel, increased competitiveness, improved customer service, and income expansion.
  • The company’s progress depends on many factors. This is the presence of a balanced business plan, effective management, as well as flexibility and adaptability to external factors.
  • Vertical growth is chosen by those who want to work more successfully within the same market. To increase their presence, operators need to add popular solutions, change the bonus program, and offer unique services.
  • Horizontal development is beneficial for firms that wish to conquer new territories. The choice of country is affected by many factors. These are the attitude of the authorities toward gambling, the tax burden, the interest of the population in the placement of bets, and much more.

The CASEXE studio helps its clients with the launch and promotion of iGaming startups. We can implement projects of any complexity level, from traditional online casinos to innovative platforms that support blockchain transfers.

From us, it is also possible to order the following useful services:

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Author: Matt Grant
iGaming business expert
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