Money won is twice as sweet: how mobile gambling is changing the game

This post was previously published on Digitas.com.

The Color of Money is a film whose depiction of the gambling hustle still resonates today. However, today, the hustle takes place on digital screens, made possible by our technological advances and our dependence on them for social contact through the pandemic. We’ve spent the last few years building and engaging digitally from work to play. The rise of mobile gambling is just another addition to those experiences.

To quickly define it, mobile gambling is playing a game of chance on a mobile device with real money at stake. The most straightforward example is playing slots on your phone to win a jackpot. Making an in-app purchase for a mystery gift box based on your interests is an unconventional example.

Various external market forces paved the way for the rise of mobile gambling. The gaming market was set to reach $222 billion in 2022. Mobile gaming took 60% of the forecasted market share and continues to be the primary driver of growth for digital games consumption. Meanwhile, the Supreme Court legalized mobile sports betting in 2018 and mobile sportsbooks have since dominated the gambling app space. New entrants are starting to redefine the playing field.

Amid all this development, we’re seeing players in gambling and gaming move towards mobile gambling. While they appear to be coming at it from different angles, the results may speak to a shared ace in the hole.

Trend #1: The gambling industry is rapidly expanding into hyper-casual mobile games

Since the Supreme Court gave the states jurisdiction in 2018, mobile sports betting has taken off. Currently, over 30 states have legalized some form of sports betting, with more on the way. With a projected revenue of $7.9 billion in 2025, according to eMarketer, it’s created a buzz within the app development space. Apps like Caesar’s Sportsbook and DraftKings Sportsbook make it easier than ever for users to wager on sports. While most bets are placed on traditional options like American football, basketball, or hockey, esports are also making an appearance on the books as their popularity grows.

However, sportsbook apps aren’t the only way for a brand like Caesar’s to profit from mobile platforms. In 2020, mobile casino games had the 4th highest consumer spend among the mobile gaming genres, with $7.2 billion. (Role-playing games was first place with $21.9 billion).

Since then, the genre has had plenty of new entrants who do more than just sportsbooks. Various state lotteries have launched their own mobile apps, and the third-party lottery app Jackpocket lets users easily play their local state lotteries. Real-money casino apps like Solitaire Cash, Bingo Tour, and DraftKings Casino are popular on iPhone and Android app stores. DraftKings Casino has 4.7 stars across over 25,000 ratings, and many reviews are from real players who’ve cashed out.

Traditional casinos, such as the MGM Casino, have also launched their own apps. These include slots and/or common gambling games like roulette, blackjack, and poker. Extra features such as live-streamed casino experiences from real casinos or studios with live dealers, and AR/VR options allow users a way to immerse themselves without physically playing in a casino.

To sum it up, gambling is getting a mobile makeover.

Trend #2: Game mechanics that mimic gambling are paying off in hardcore games

On the flip side, some of the highest-grossing games incorporate the psychology of gambling to maximize user spend, with the most popular strategy being “gacha”.

The concept of gacha isn’t new in gaming. For those unfamiliar, the term gacha originates from gachapon, a vending machine popular in Japan that randomly spits out a toy when you put a coin in the slot. In gaming, it’s a monetization method where players purchase an item without knowing what they’ll get, like buying a mystery box.

This trend crosses genres beyond the hyper-casual games that the gambling industry is entering. Gacha games are frequently spotted in role-playing games, which fall under hardcore gaming and are decidedly on the opposite side of the genre spectrum.

Gacha is a game mechanic that generates revenue for hardcore games, especially those within the East Asian gaming industry. Games like Fate/Grand Order (FGO) from Sony Japan have had smashing success with the strategy, and similar games are a dime a dozen across the Asia-Pacific region.

FGO, in particular, is notorious for its ridiculously low “drop rates,” the chances of getting a rare item. Its rates are somewhere between 0.8–1%, but players still take the gamble. As of August 2022, FGO’s total revenue has exceeded $6.3 billion, and Japan accounted for 80% of that revenue.

This strategy works beyond Japan and Asia-Pacific. Genshin Impact proved it by topping the chart of worldwide consumer spend on mobile games last year. At #1, Genshin Impact grossed $2.8 billion in consumer spend globally as of March 2022, and its top markets by spend are China, the U.S., Japan, South Korea, and Germany. This free-to-play role-playing game by Chinese developer HoYoverse is downloadable on mobile, tablet, or desktop, and players can spend in-game currency to try their luck with the gacha system. Most players start out free-to-play but can choose to spend money to increase their chances.

In free-to-play games, the term “whaling” refers to when someone spends massive amounts of money on microtransactions to get the character or item they want. With a 0.6% chance of acquiring something super rare, the money can quickly add up. It’s precisely this behavior that average users perform and enjoy watching their favorite streamers perform that placed Genshin Impact at the top of the revenues chart last year.

So, the gacha game mechanic works — and we’ll be seeing more of it. Not long ago, the Chinese government cracked down on its gaming population. Many of their gaming industry giants may look to western markets to make up for the lost volume. They’ll bring their most successful monetization tactics, and gacha’s worldwide success guarantees it a spot among them.

Students of human moves: The psychology that drives mobile gambling

Of course, this is all interesting to see, but a bigger question is why these trends are concurring. My hypothesis is, as both industries may have realized, there’s been a shift in consumers’ perception of spending on digital platforms.

1. Accessibility

Gambling has always been a game, or a series of games, that you could only play under a highly regulated set of circumstances. However, we’ve seen a close relative of mobile gambling take off in the last few years. The rise of investing platforms like Robinhood, on top of the phenomena of crypto, has transformed “gambling” on stocks from something people needed a retail brokerage firm for to something people can do on a phone app at a moment’s notice.

The embrace of mobile investing and overall ease of accessibility boosted by phones may have desensitized us. It appears that people’s willingness to spend on mobile platforms is growing, potentially because they’re less conscious of what they’re actually spending.

2. The Dopamine Hit

As we know, phones are a vehicle for instant gratification. We get it from our hyper-casual games, messages, validation on social apps, or mobile payments that don’t require taking out our wallets. (This study from 2020 links excessive smartphone use to impulsivity). On phones, every win gives us the same hit of dopamine.

3. Reduced Loss Aversion

Mobile devices, and consequently mobile games, abstract the payment system to reduce loss aversion when users make a purchase. It’s an experience that echoes the use of credit cards — research shows that people spend more on a purchase when using a credit card than they would using cash. Scientists hypothesize that credit cards reduce the pain of payment and “release the brakes” on spending because we’re less conscious of the money leaving our account when we aren’t physically handing it over.

Given all of this, bringing gambling to the mobile screen makes perfect sense for both industries. As people become less conscious of their spending habits, revenue will go up because they won’t feel like they are truly spending money.

And why should they? It’s just a game.

Your move, Marketers

As marketers, it’s natural to note where money flows and the opportunities behind it. For those in the mentioned industries, finding ways to harness these mechanics and innovate on them can be a huge space to play.

The application of gambling features isn’t limited to mobile gaming, of course. From spin-the-wheel coupons to rewards programs, many companies are already incorporating luck-based games into experiences to cleverly initiate a value exchange that can appeal to greater audiences. Sites like Colourpop ask customers to submit their email to spin their exclusive “free” coupon wheel. Meanwhile, rewards programs turn a purchase, such as a coffee at Starbucks, into a lottery ticket.

While it’ll be interesting to see how marketers incorporate aspects of mobile gambling into their brand experiences, it’s important to consider balancing the ethical concerns of encouraging gambling behaviors. Many countries still outlaw gambling for various moral and religious reasons, on top of its potential socioeconomic consequences. With valid concerns around underage gambling, gambling addiction, and even loss of life due to gambling debt, good execution is tantamount to good intentions. It will be threading a needle to surprise and delight without harm. Of course, the numbers speak for themselves: if done at all, this is something worth doing well.

Alison Dai
Experience Strategist
Digitas | New York, NY

Allison Dai is an experience strategist. She combines the art and science of marketing to find new and exciting ways to engage with consumers.