US Advertising Industry Waits For Online Gambling Legalization

The US advertising industry will indirectly benefit from the legalization of online gambling in that country. The marketing publication Advertising Age ran an article over the weekend estimating the extent of the benefits and describing it as “the next boom for the advertising industry”. The article cited figures from the well-known online gambling consultancy H2 Gambling Capital, whose Simon Holliday stated that around $3.5 to $4 billion could be invested in marketing over the next five years by operators. This is more than the amount spent by General Motors on USA advertising in 2011. Holliday added that by 2017 the US online gambling business could generate more advertising revenue than the insurance sector.

Holliday provides backing for his estimates. The gross value of the online gambling market has been estimated at $1 billion in 2014, crossing $13 billion in ten years from then. He said that driving players to their sites would be the greatest imperative for online gambling companies. The Advertising Age quoted Holliday, “It is probable that 25 to 30% of company net revenues will be spent on advertising and marketing budgets in the initial years, as there is a land grab.” Most of the business is likely to go to digital media and agencies.
Mitch Garber, the head of the interactive division of Caesars Entertainment, also featured in the Advertising Age article. He explained that five years ago, the combined expenditure of all online gambling companies in advertising was very small, being limited to Search Engine Optimization for attracting visitors to the website. The scenario is changing dramatically and more time and money will be spent on interactive advertising. According to Garber, the focus would be on advertising on television for attracting players, although magazine and billboard advertising would remain in the picture.

There were other views expressed in the Advertising Age article. One advertising executive pointed out that the target demographic for online gambling advertising would be the young adult. He also pointed out that major land casino operators could double their marketing budgets in order to compete in a legalized online gambling environment in the United States. The executive also highlighted some of the impediments. Advertising agencies would have to procure licenses in states in which they are supporting online casino advertising. This process is both costly and time-consuming. Google’s anti-online gambling policies will also have to change. John Schadler, founder and managing partner at Las Vegas-based agency SK&G said, “There will be a rush at the inception of the online sites to gain market share and notoriety.... That requires initial branding efforts and initial media spend at a pretty strong level.”