Technology driving a maturing U.S. online gaming market


Sports betting and online gaming trends recounted at 2023 Global Gaming Expo 


The 2023 Global Gaming Expo (G2E) presented a chance to learn and share knowledge about the state of the gaming industry and its future. The Grant Thornton Hospitality partners who attended came from the expo with some new observations and recommendations.


Despite plenty of developments in the sports betting industry in the past year, nothing has changed regarding the market dominance of the top four brands (the only entities with a market share greater than 5%): FanDuel, DraftKings, BetMGM and Caesars Sportsbook. Similarly, the iGaming market has also maintained course, with the same six states allowing iGaming as a year ago.

Alex Rhodes

Alex Rhodes is Grant Thornton’s National Managing Partner of Hospitality & Restaurants who serves the gaming industry.


“iGaming companies are looking at technology to gain an edge, to maintain market share or to protect their business.”


Alex Rhodes

National Managing Partner, Hospitality & Restaurants



However, the shocks to this apparent stability were recounted at the expo as well. For example, daily fantasy sports (DFS) is under siege from state regulators across the country, including Michigan, New York, Florida and North Carolina. The decision by Penn Entertainment to sell its sports betting platform to ESPN and Churchill Downs’ decision to shutter its TwinSpires online horse betting offering demonstrated the acceptance that the iGaming business model does not work in every setting. As Churchill Downs CEO Bill Carstanjen observed while speaking at G2E, sports betting should “translate” easily with horse racing but “that has been an entirely different model.”


The competitiveness of the U.S. online sports betting and iGaming markets remains high, as our teams confirmed. “iGaming companies are looking at technology to gain an edge, to maintain market share or to protect their business,” said Grant Thornton National Managing Partner of Hospitality & Restaurants Alex Rhodes. One of the big questions the industry is trying to answer is how loyal players will be to their apps.  




Online gaming matures


Here are a few concrete examples of online gaming trends that Grant Thornton Partner JJ Bennett, who specializes in gaming, observed following his attendance at G2E 2023: 

JJ Bennett

JJ Bennett is a Grant Thornton partner serving the gaming industry.


“Decreasing the players’ need to maintain separate apps, wallets and player incentives will increase customer satisfaction, the amount of play and brand loyalty.”


JJ Bennett

Partner, Audit Services


  • Application multi-state and service offerings: Sportsbook providers that operate in multiple states provide either a seamless app platform or require customers to download and use a separate app per state. The perception of a single app has proven to increase customer loyalty and satisfaction. This allows customers to have a single customer wallet without the need to separate deposits for each state. The immediate benefit is for sportsbook customers, while the long-term value provides multiple service offerings within one app across multiple states. Examples of this include fantasy sports, iGaming, and sportsbooks. “Decreasing the players’ need to maintain separate apps, wallets and player incentives will increase customer satisfaction, the amount of play and brand loyalty,” Bennett said. A great example of this platform offering is DraftKings.
  • Leverage physical casino: Gaming organizations that also operate a physical casino have created product differentiation through a combined user experience. Promotions are seamless across both the online app and physical location. Taking a virtual experience and supplementing it with diversified promotion provides user value. For example, an active online user may receive a free on-property meal or hotel stay. Creating an experience catering to a targeted customer will increase customer loyalty, activity and play within the casino.
  • Differentiated product offerings: Companies that have continued to differentiate their core sportsbook offerings have continued to gain market share and buzz in the market. One such example is Betr, which is “best-in-class" in offering micro-transitional betting opportunities. “The industry has continued to seek quicker betting options from the historical money line and spread bets,” Bennett said. “Providing players ‘next-play’ bets, such as the outcome of a single baseball at-bat, yields possibilities not historically available.”



Player data and promotions


Companies now have much more player data, and they are using it to offer very targeted promotions. While broad-based free deposit matches and free bets are still common in new jurisdictions, more mature markets are seeing promotions that are individualized to spark action. 


One key concept that was discussed during the conference was perceived promotional value. Sportsbook operators accept a customer acquisition cost, but if a promotion is provided to a customer in a way in which they don’t find perceived value or the product doesn’t stand out from competitors, it will not garner the desired outcome. One such example is how boosted odds are marketed to customers. The average customer would perceive a 30% bonus as being of greater perceived value than a +100 line promo adjusted to +130. Thus, while the cost of providing the promo remains the same, the value derived by the users of the promotions increases. It is not sustainable for sportsbook providers to increase the cost per customer to win market share.


Another topic discussed was the use of promotions to differentiate player trends and promote more profitable betting activity. One such example is offering risk-free parlay bets which introduce players to parlay betting without the risk of loss to the customer. The benefit yielded by such activity is the player familiarizes themselves with different types of bets, which will most likely increase their odds of betting parlays in the future. Parlays have mutual benefit because the player’s perceived value increases while the casino’s hold on such bets also increases. This creates a win-win scenario for providers. 




Steps to counter cybersecurity threats


There have been three large-scale gaming industry cybersecurity incidents in 2023, and each company responded differently. The most well-known is the MGM Resorts cyber breach in September 2023. At G2E 2023, MGM CEO Bill Hornbuckle shared that the cyber attack disruption cost the company over $100 million and resulted in the complete shutdown of the casino and hotel’s systems for four to five days. Caesars Entertainment took a different approach when their systems were compromised by a cyber attack – they paid a $15 million ransom. In April 2023, Canada’s Gateway Casinos’ Ontario locations were shut down for about two weeks to recover from a cyber attack of their casino systems, and they did not pay a ransom.

Caesar Sedek

Caesar Sedek is a managing director serving the gaming industry.


“The cyber threat is not just a theory anymore, as the sophistication of attacks continues to ramp up, as well as the damage.”


Caesar Sedek

Managing Director, Cybersecurity Risk



“The cyber threat is not just a theory anymore, as the sophistication of attacks continues to ramp up, as well as the damage,” said Grant Thornton Managing Director of Cybersecurity Risk Caesar Sedek, who specializes in gaming. According to Sedek, gaming executives should:

  • Embrace a “Zero Trust” security model: Companies should adopt a zero-trust approach, where trust is never assumed, even within their own networks. This means verifying the identity of every user and device trying to access their systems, regardless of whether they are inside or outside the corporate network. By implementing strict access controls and continuous monitoring, organizations can significantly reduce the attack surface and detect anomalies more effectively.
  • Strengthen identity management: A strong identity and access management system is critical in safeguarding against cyber threats. Implementing robust user authentication, role-based access control, and regular reviews of user privileges can prevent unauthorized access to sensitive data and systems.
  • Implement detective measures: Logging and monitoring are essential components of a comprehensive cybersecurity strategy. By maintaining detailed logs of network and system activities, organizations can quickly detect unusual behavior or potential security breaches. Automated systems can analyze these logs for suspicious patterns and alert security teams in real-time, enabling a rapid response.
  • Develop an incident response plan: Companies should have a well-defined incident response plan in place before a cyber incident occurs. This plan should outline the roles and responsibilities of key personnel, the steps to be taken in the event of a breach, and a communication strategy for both internal and external stakeholders. Regularly testing and updating this plan is crucial to ensuring an effective response when needed.
  • Backup and recovery: Regularly backup critical data and systems, ensuring that backups are stored securely and can be quickly restored in the event of a cyberattack. This can be a life-saver in case of ransomware attacks like the one experienced by Caesars. Having a well-tested data recovery plan can minimize downtime and financial losses.

The increasing sophistication of cyberattacks demands a proactive and multi-faceted approach to cybersecurity. Gaming companies should invest in technologies and strategies that not only prevent attacks but also enable the companies to respond and recover swiftly when incidents occur. With cyber threats now a harsh reality, organizations that prioritize cybersecurity will be better equipped to protect their assets, customers, and reputation in this digital age.  




Customer protection


Similar to the focus on cybersecurity and protecting company computer networks and systems, gaming companies are also keenly focused on protecting their customers. Grant Thornton Partner Shawn Stewart, who specializes in gaming, noted industry trends discussed at several conference sessions included helping to prevent account takeover and to better educate and protect users from identity theft. Account takeover is deemed to cost companies over $1 billion annually and takeover attacks have been increasing by approximately 12% year over year.

Shawn Stewart

Shawn Stewart is a partner serving the gaming industry.


“(Customer protection) measures are seen as differentiating by more savvy customers who increasingly opt to play on platforms with sophisticated controls necessary to best protect their accounts and information.”


Shawn Stewart

Partner, Business Advisory Services



The risks and consequences of account takeover include fraud, financial loss, chargebacks, a loss of trust in the gaming company, lost customers and regulatory penalties, Stewart said. Beyond losing single customers, gaming companies also run the risk of losing entire gaming communities from their platforms. This issue tends to be more prevalent when the platform supports social interactions across a community and an account or certain accounts that play key roles in a gaming community are taken over.


Stewart said account takeovers also provide avenues for identify theft where perpetrators can gain access to information stored for tax purposes, names, addresses and other personally identifiable information. The most common cause of account takeovers and Identify theft occurs when bad actors attempt to spoof messages or other communications as if they were sent from the gaming company. From there, they engage in some form of social engineering designed to gain account credentials or information necessary to steal identities through these interactions.


Gaming companies are now investing in more advanced measures to prevent account takeover and identity theft. These include:

  • Enhanced education programs for users
  • More robust onboarding verification procedures
  • High-risk moment controls for large transactions
  • Bot mitigation strategies
  • Enhanced communication protocols that users understand to be legitimate
  • Multifactor authentication
  • Geolocation controls
  • Advanced account monitoring, including enhanced user prompts and monitoring
  • Suspicious activity and fraud monitoring routines that increasingly leverage AI
  • Advanced data encryption.

“Such measures are seen as differentiating by more savvy customers who increasingly opt to play on platforms with sophisticated controls necessary to best protect their accounts and information,” Stewart added.




AI enabling gaming  


Discussion of AI and machine learning was one of the new, hot topics throughout the conference. Discussions of AI technology use focused on responsible gaming, content generation, fraud detection, and personalization, as noted by Mike Reaves, Head of WW Solutions, Betting and Gaming for Amazon Web Services. For example, to promote responsible gaming, predictive algorithms could be applied to identify problematic play in real time and create workflows to drive automated interventions. In order to personalize a user’s experience, AI can be utilized to predict player game and contest preferences and make recommendations, Todd Haushalter of Evolution Gaming predicted that AI is likely coming to the pit with OCR and technology computerizing lower limit tables. Grant Thornton Partner Josh Bushard, who specializes in gaming, noted this should be done with caution so as to not alienate the people who travel to a land-based casino to have a traditional, tactile experience. Regulators are increasingly concerned about players using AI to gain an advantage in sports betting and online poker.

Joshua Bushard

Joshua Bushard is a partner specializing in gaming.


“Using technology to compete is a ‘one true north.’ This is not the time to see where the cream surfaces. Gaming companies need to make a bet and fail fast when they don’t succeed.”


Joshua Bushard

Partner, Audit Services Practice Leader



As some conference panelists observed, technological innovation will continue to drive the future of gaming, which could include:

  • The expansion of the game show genre where players participate in television game show-style games, providing for more social interaction by and between players
  • The continued application of technology in land-based casinos
  • Moving further away from cash and ATMs to encourage players to utilize their phones for electronic payments.

For states that have iGaming, there may be great opportunities for growth if one were to look at the current footprint of land-based casinos as an indicator, where the sportsbooks and poker rooms take up relatively small floor space. Integrating online and land-based casinos via loyalty programs and other promotions is another organizational consideration which could provide a more “sticky” and consistent player experience.


The gaming market is shifting rapidly but also maturing in some ways, Bushard said. “Using technology to compete is a ‘one true north.’ This is not the time to see where the cream surfaces,” Bushard added. “Gaming companies need to make a bet and fail fast when they don’t succeed.”




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