Gaming Insider: Social casino revenue headed above $2.7 billion

15 September 2014

LAS VEGAS -- Eilers Research gaming analyst Adam Krejcik estimates the expanding social casino phenomenon in the U.S. will eclipse $2.7 billion in revenue this year.

That’s a pocketful of virtual gaming tokens.

The growing activity is one reason Station Casinos, Inc. signed on with the myVegas social gaming site.

The casino operator views social gaming as a way to keep its current customers engaged when away from the company’s 17 Las Vegas-area casinos while introducing the brand to a new audience.

The myVegas site has served as the social gaming arm for MGM Resorts International for more than two years. The site has more than 1 million registered users, according to a spokeswoman for PlayStudios of Burlingame, Calif.

PlayStudios is headed by former Wynn Las Vegas President Andrew Pascal.

MGM Resorts allows customers to redeem their points earned from playing on myVegas for rewards such as restaurant vouchers, show tickets, nightclub passes and free room nights at many of the company’s 10 Strip resorts.

Station Casinos has joined the myVegas program, offering customers the ability to redeem rewards for restaurant offerings, entertainment options, and room nights at Red Rock Resort, Green Valley Ranch Resort and Palace Station.

Pascal said the “real world rewards” social gaming players can win on myVegas “sets us apart from all the other casual games out there.”

Social gaming applications, such as myVegas, are free to download. Customers can purchase virtual gaming tokens — often for less than $1 for thousands of tokens — to increase their chances at the various rewards. State gaming regulations prohibit the rewards from being anything casino-related.

Krejcik said Eilers Research lists PlayStudios as the eighth-largest publisher of social casino games worldwide with a run-rate to achieve more than $60 million in gross revenue this year. The revenue comes from customers buying tokens.

“They are also one of the fastest-growing social game companies we follow with revenues up more than 300 percent year over year, and we see further room for growth given our forecast,” Krejcik said.

No one had to explain the benefits of social gaming to Station Casinos Senior Vice President Staci Alonso.

Before joining the casino operator, Alonso was the senior marketing executive for IGT - International Game Technology when the company purchased social gaming giant DoubleDown Casino. Initially panned by analysts, the $500 million purchase has become a moneymaker for the slot machine manufacturer.

Alonso said a long-standing relationship between Pascal and Station Casinos President Steve Cavallaro helped move the deal along. But the company was also impressed by the results myVegas has shown with the MGM Resorts properties.

“We sold out all our breakfast offers for the Feast (buffet) and several room nights on opening day,” Alonso said of the program, which launched at the beginning of the month.

“Our main priority was to use this opportunity and platform to introduce the Station Casinos brand to regional guests,” she said.

Like MGM Resorts customers, those seeking to redeem their myVegas reward at one of the Station Casinos properties must be a member of the gaming company’s players loyalty program. They also have to physically come into the property to redeem the reward.

“It allows us to determine that the customer is over age 21 and they will most likely enjoy other parts of the property on their visit,” Alonso said.

The program allows Station Casinos to display its properties to customers outside the Las Vegas market. Red Rock Casino, Resort & Spa and Green Valley Ranch Resort, Spa and Casino are considered the company’s higher-end resorts, while Palace Station Hotel and Casino is near the Strip.

Station Casinos offers 10 different rewards for myVegas customers, including dinners Palace Station’s Charcoal Room, Red Rock T-Bone’s Chop House and Green Valley’s Hank’s — the properties’ high-end restaurants. Alonso said the company has the ability to change out the rewards.

Krejcik said agreement between PlayStudios and Station Casinos will help attract new customers to the gaming company and drive additional revenue for PlayStudios.

“The partnership between PlayStudios and MGM has worked out well for both companies,” Krejcik said. “We do not see this deal impacting that relationship.”

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