iGaming Daily

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We've spent countless hours on this podcast discussing and debating the legal difference between sweepstakes products and real money gaming, but we've never really talked much about the practical differences for those actually playing the games, as well as the differences in the players playing them. We're gonna fix that on today's episode of iGaming Daily. iGaming Daily is brought to you by OptiMove, the number one serum marketing solution for the iGaming market. I am Jessica Wellman.

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Managing editor of SBC media and I am joined by a member of our sponsor squad OptiMoves VP of revenue, Mahdi Coleman. Mahdi, thanks for being with us today and thanks for supporting the podcast the way that you guys do. Absolute pleasure on both counts. All right. I'm thrilled today because I usually have to get on here and talk about the legal grammatical differences of sweeps versus social versus

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We're going to talk about something far more interesting, which is just like the industry and more practical for people too, that, you know, how does this sweeps market look compared to the online casino market? You guys have done this case study looking at that. Can you tell me a bit about what brought the idea to, put this research together in the first place? Yeah, sure. So, firstly, lovely to be here. Um, we just kind of.

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set the scene a little bit about who we are because that answers your question. by working in the CRM space, obviously we're exposed to a huge amount of customer data by definition. Optum has always taken a pretty unique approach, which is that we always have helped our clients understand their customer behavior in a lot more detail. we were a predictive modeling company before we even produced CRM as a software piece. And that's the DNA of our business.

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We've always been very focused on customer intelligence. so kind of one of the things that I've always really liked to do, firstly, because I like to geek out about it, also because I think our clients like it as well, is benchmarking analysis really across the world. we're very, very proud to work with some of the biggest operators in the industry. And on a per market basis, we see a massive chunk of the data itself of the players that are actually playing in a specific market. So between having

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the access to the data and then also our approach, which is to really think about customer intelligence and player behavior. It kind of stands to reason that we're in a position to be able to look at this properly. And so we produce a lot of white paper for the industry in a variety of different markets that does that, that looks at the ways the customers are behaving very specifically, how the nuances of change on a per market basis.

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And I've been fascinated by the growth in the sweepstakes markets over the last couple of years, probably much in the same way that everybody else is. I've tried to educate myself on it as much as I possibly can. And I knew that we were sitting on a goldmine of really interesting information. so, you know, kind of on a personal crusade, I wanted to know what that looked like myself. And I also knew that the industry would be, would be fascinated by it too. We're going to go a bit into the results as we go through the pod, but just like high level.

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I mean, did you have an idea of what the results might be and were you surprised with what you kind of learned about the differences between the two? the approach that I wanted to take in sort of the brief could have gone in any direction. I always think it's better to compare and contrast things, know, the data on their own doesn't necessarily tell you very much. And so, you know, what, what we have in the U S particularly is, is a small but active regulated.

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online casino market, online gaming market. And so I thought that that was the useful benchmark to place sweepstakes against. And so I figured that the best thing to do would be to look at the way that sweepstake businesses are performing versus their closest equivalent counterparts, which is the regulated US casino market. So that was the first thing was that, you know, why, why we took it in that direction. Then from that point on,

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I'm very aware of what's going on in the US casino market. We've worked in New Jersey, particularly for a very, very long time. And so I've always had a sense of the spend and the deposit rate and kind of how the acquisition looks like and churn rates, all that kind of stuff. So my expectation was that the sweepstakes market would underperform versus that.

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I don't think I appreciated the extent to which it would. I mean, you can look at that in one of two ways in terms of how you then build your business out of it. You can see it as that the market itself is just weak or you can see it as an opportunity. I prefer to take the latter approach. And that's kind of where a lot of the CRM strategy comes into play, which is if I know that the online casino regulated market can produce player values of X.

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And sweepstakes and producing this, how can I bridge the gap? So that's kind how I like to look at it. All right. Before we kind of dive into results, I assume people here have a certain knowledge of sweepstakes, but just it's always good to kind of clarify just, know, how are we defining what a sweepstakes casino is compared to online casinos and also compared to social casinos? Yeah. Okay. So like I said, I spent quite a bit of time trying to educate myself on this and I was blown away by what I found in

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in what this really was. It wasn't what I expected. This is how I understand it. So forgive me if I'm a little bit off, but regulated online casino is what you would imagine it to be. You can go online, you deposit, you've got your wallet, you can go and play roulette and blackjack and slot games and whatever else, live dealer, however the setup is. And that's only regulated in certain states in the US. Like I said, Europe, it's

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It's everywhere. Then you've got on the other end of the spectrum, you've got social games, pure social games, social casinos, companies like Playticker, Slotamania, apps like that pioneered, which was basically to have all the fun of online casino, but without a monetary transaction taking place.

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Unless you want to buy coins. I've never understood this, but there actually is quite a big business of people who just buy coins to play for fun. You're absolutely right. So when I say without monetary transactions, I mean in both directions. So there was no opportunity to win anything. But yes, you're absolutely right. These businesses make billions and billions and billions of dollars. And I cannot for the life of me understand why that would be, but you

06:42
That's why I'm not a business. is not my thing. It's my thing. don't get it, but it's real and there are VIPs. I think actually it's taught the industry, the gambling industry, a lot around gamification, which is a separate topic entirely. But when you're talking about leaderboards and you're talking about prizes and more that kind of world rather than just winning money, it does branch off into that whole kind of direction. So you've kind of got the two ends of the spectrum there, which is regulated online casino, there's social gaming.

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Sweepstakes basically takes the approach of the scratch card in the McDonald's, right? Which said, could go into McDonald's and I buy a burger. When I buy a burger, I get a scratch card. And on the scratch card, when I scratch it, I can win a prize. Now that's legal, even though in theory it's gambling. It's gambling because I've spent money.

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got a scratch card and I can win a prize or I cannot win a prize, right? That's that you can play scratch cards on online casinos. That's another game that exists more so often in the lottery world. But, but, but it isn't a problem because you haven't bought the scratch card. You bought the burger and the burger gives you the access to the scratch card and the scratch card gives you, so it's kind of this, um, this funnel essentially that creates it.

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Sweep state casinos basically produce the same flow which says I build a social casino and on there I go and I buy for a hundred dollars I buy 1 million social coins Okay, and if I were to play in this casino with those social coins, I cannot win any anything for that I can't win any money back even if I hit my number and roulette however as a result of buying the 1 million social coins Which are not redeemable for any cash prizes

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I also get a hundred dollars worth of sweepstake vouchers. And if I flick within my wallet between the casino, between the gold coins, the social coins and go over to the sweepstake coins, once I'm then playing with the sweepstake coins, those sweepstake coins are then redeemable for cash prizes at the end of it. So I haven't bought sweepstake coins. I've bought, I've bought social coins, gold coins. And I get given much like the burger to the scratch card. So that's the, that's the broad

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brush of what it is. And then I'm in the second wallet, effectively playing with a new currency, but that new currency is redeemable for cash money or the US dollars at the end of it. that's the basic principle. So with that principle, guess, as I was looking through the report, my first question was, again, I'm a language nitpicker, too much reading and writing about this. Like you were looking at conversions into first time deposits, for example, like

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technically there aren't even deposits on sweepstakes casinos. It's a purchase. So I guess just like how do you adjust the model to accommodate the fact that it is just like a little bit different in that, know, if I deposit a hundred dollars on real money casino, I know that there is an opportunity at some point for me to take it back out. Whereas if I'm purchasing something, it's in there and there you can't really.

09:54
You're right. out as easily. And actually, again, without going too much into the into the regulation, they have to be very careful with the language that they use. So sweepstakes casinos are legal because of the existing setup for this McDonald's burger type type thing. And you're right, they're actually not allowed to talk about deposits there. It's not even that you're nitpicking. If they were to use the word deposit, then they would be essentially.

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giving the game away, right? So you are right. So that's a matching that we've done on our side, but it's not one that they've done on their side. So there are different terminologies for how it is and a depositor translates into a purchaser. And I suppose we'd be using interchangeably for the purpose of analysing it through one lens where we're sticking to the terminology depositor, but you're right in saying that the sweepstake businesses themselves wouldn't call it as such and it doesn't operate in exactly the same way.

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totally in rep by what you said. So I almost forgot, guys, let's just take a breather for a second and we'll be back with more from Marty Coleman. I mean, you noted that in general, the amount of purchase or deposit is generally smaller, it's a little less frequent. So is it a different vertical of people playing these games compared to the motivated people in the seven states that are aware that

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regulated online casinos an option? Yeah. So, so I mean, let's hop back to the actual conversion one and then get to, and get to this question as well, because I think that, I think that the two should be discussed together because ultimately we're talking about who is the customer, right? And what does the customer do? So the first thing to say is that from a kind of a conversion perspective, you see much lower conversion from a registration to a first depositor in suite than you do in online casino. Um, and there's a whole world of.

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conversion analytics and people that spend their whole lives just dealing with that. whilst there are many nuances, the basic principle there is the less steps that are required to do the outcome that you're looking to create, the easier it is to convert the customer. And so people spend a lot of time building the most efficient onboarding processes, registration documents, whatever it would be. This is another step.

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Okay. So a sweepstake casino was another step, is another big step, which is this process that we spoke about before of buying the gold coins and then flicking between the gold coins back into the sweepstake vouchers. And the reality is, that there's more complexity around that whole onboarding process for the client to get them converted into a first time player, first time purchase, a first time depositor to sort of match the terminology. So the first thing to say is that it's a bit weird.

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Right. That's the reality of the situation. It's a bit weird. It's a complex thing to, as we know, as we just tried to explain it and it three minutes. It's hard to get people to understand it. And in 2025, when apps and websites and everybody's been so used to things being simplified for them, this has gone in kind of the opposite direction. So, I think that that plays a very, very big part in it, in kind of the conversion. And I also think it then has a kick on effect to

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how customers are playing themselves as well, which is, I still think that there is an education process taking place for the customer themselves to understand that this is real and this is a home for them. Because if I can borrow from the European, and certainly from the UK, which is a highly regulated market, the UK gambling market became a recreational

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game, right? So everyone understands in the UK that you're probably going to lose money. You're not playing online casino or sports betting as a customer for a money making exercise. You're doing it for your recreation and for the same way that I'd spend 30 pounds or 30 dollars on going to the cinema. And that takes me to hours. I might decide to do that by sitting at home and playing on an online casino or having a sports bet and watching the football or the hockey or whatever. So the UK has really adapted itself to this kind of recreational

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market and has been built around a lot of trust and honesty and visibility and kind of discussion around that point. I still think that that element there is really lacking, certainly in sweepstakes for sure. And I still think that there's probably, I'll call it a lack of trust, although I don't know that that's the exact right word, but there's something kind of missing there between the customer and the brand. And so I think that the customer is still

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being educated that this is real and that it is safe and that it's okay and that they are protected. And the other thing as well is that because the market in general is booming, which of course it is, and if you look at the acquisition trends, which is another piece of the research that we did, the number of customers being acquired in sweepstakes is flying, right? And that's because it's entering new markets. It's a green field.

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tends to happen in newly open markets, which is what this essentially is, is that you get a crazy race to the bottom from an acquisition offer standpoint. And in an industry with unbelievably low switching costs from a consumer perspective, my desire to jump from brand to brand, effectively my loyalty can be bought. And I haven't yet had time to find my brand that I like and that I enjoy playing with. I haven't really had any customer experience there.

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worked with the service, I haven't taken any withdrawal rules, haven't received any ongoing marketing offers, but all the time popping up in front of me are these giant welcome offers to a variety of other different brands. And so I just think what you've got at the moment is a bit of a Wild West scenario where there's a slight lack of loyalty and trust, you've kind of got a poor onboarding experience from a conversion perspective, and then you've got this low switching costs between the different brands that exist out there.

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You had a whole section of it on kind of like the day one and how important day one is in a customer journey for sweeps. guess, you know, kind of to expand that question a bit. Is the window bigger with sweeps because maybe someone is playing the free amount they can play on the gold coin side to decide, do I like the games? Do I like the layout? And then later they get converted or is day one still like a top priority on the sweep side as well?

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Day one is a fascinating topic in of itself and we're actually quite lucky because we work, I personally look after all of our online gambling operation across the globe, but we also have a very substantial part of our business that focuses on everything that's not online gambling. And actually, you if I look at e-commerce and I say why it's lucky because there's a lot of learnings that you can get from outside industries and bring into yours. And so when we're working with e-commerce brands, one time purchases is a life cycle in of itself.

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Right. Which is that a lot of people are buying a t-shirt and that's it. That's all they ever do with you all. More broadly, it tends to be Christmas or Black Friday or something like that. And this notion of a one-time purchaser is so acute in e-commerce that we actually build a separate life cycle for it and really try and delve into all of the consumer behavior that takes place just in that one individual moment or on that one day, what they've looked for the window shopping, kind of stuff, and then use it from a retention strategy perspective.

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We then brought that into the gambling world and it remains very, very true that what occurs on day one is enormously indicative of where the customer journey is going to go later. So if you were to look at winter loss ratio on day one, that can have a massive impact on where the customer goes a week from now, whether they're going to be churned or whether they're going to be active. And it's not as simple as you would think, which is that if they win, then they remain. And if they lose, they disappear actually.

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going back to this notion of recreational betting, it's actually the customers that lose a small amount, but that turned over their money multiple times. They tend to be the ones that have gained more loyalty in the platform because they were enjoying themselves. They're neither winning loads of money and have withdrawn it and kind of run off or they've lost loads of money and they disappeared because they've lost loads of money. So you've got this notion of things that happen on day one. When it comes to things like purchasing or depositing by far and away, the biggest indicator

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on predictive outcomes is the jump between the first deposit to the second deposit or the jump between the first purchase to the second purchase. The entire CRM strategy, the bulk of the CRM strategy, let's just say, in the very, very early moments of the customer behavior from that day one perspective is how can I get the customer from deposit one to deposit two? If I'm looking at their longevity, if I'm looking at their risk of turn, if I see sort of that drop off of a cohort,

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the customers that go from one to second, first to second deposit or first to second purchase, their risk of churn drops by more than almost any other indicator that you can create. So it's massively important in the world of sweepstakes, especially given everything that I just said before, which is that you already are on quite thin ice. I think that's what the data has shown that like, even though everything I just said was a concern for any business across the world,

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If I compare that from online casino to sweepstakes, you can already see the gap between them is pretty vast as well. So I think it's an even more acute problem in sweepstakes because of that conversion risk, because of that switching cost, because of the lack of trust and understanding of really what it is that they're playing. So day one is more acutely important in sweepstakes than anywhere else I've seen.

19:49
All right. We are almost out of time, but I know we've spent so much time on acquisition that I do want to end with a bit of a retention piece of this. You know, the retention disparity is up there, like you just said, from your perspective, how do you differentiate? know, do they bonus the exact same way? What are your options in terms of retention? Do they even out across the two verticals in a similar way? Yeah. So, so that was really interesting. So, so

20:16
Everything that you and I have spoken about, like you're already pointing out, has been around day one, what it looks like at the right of the start. And there's a clear difference between the two. What was also quite interesting though was to note what things looked like on day 28. And by day 28, basically sweepstakes are caught up, if not in terms of monetary value, because it hasn't, it still remains a spend amount two and a half times lower. But from a loyalty perspective, and by that I mean activity in frequency.

20:45
Um, it, it's basically reached the same level as it has done, uh, in, online casino by that point, not from a spend level. So, so it, it, it, it's trending towards it, which tells you that, um, going back to what you were earlier questions of like, know, what type of customers you actually have. I still think that you've, you've basically got the same customer.

21:08
It's the same person. If the regulated casino market existed, that customer would be playing there. it's taking them a longer period of time to arrive at that kind of point. And yes, not necessarily from a monetary perspective, but certainly from an activity perspective. so I think that it's very, very clear that that first month in sweepstakes, your ability to generate a maximum amount of activity and like I said, move from one deposit to two deposits.

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And actually probably with Sweepstakes, make sure you move from two to three to four quite quickly. So, trying to generate all of these different ideas around loyalty and activity. And there's a number of different ways that you can do that. If we think about, okay, let's talk about user preferences is just a concept. You always want to mix and match user preferences. So you don't just want a mobile only customer or a web only customer. You want customer that plays on web and mobile. So if you have a web only customer giving them offers in on the mobile app,

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would be a way to kind of bring the two together. If you're talking about sports betting, or there's not necessarily relevant to sweepstakes and you've got somebody that bets pre-match or in play, you don't want one or the other. You want somebody that bets pre-match and in play. So it's always a case of when it comes to consumer preferences, when you can mix and match in the right levels, you're able to achieve an increased level of loyalty and activity because basically the customer's touching more different parts of your platform and your product.

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And so it's the job of the CRM team, of the retention team, to make sure that in that first month is kind of an incubation period. You're providing them with opportunity to touch as many different parts of the platform as you possibly can. And in doing so, generate that increased level of activity. Because as we've seen, by the end of that 28 days, you tend to have a customer that's now bought into who you are as a business. you go all in 28 days and then perhaps the long tail of keeping them on board is less expensive. Correct.

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I wish that I could keep asking questions because there is a lot to unpack here. I did read the report. I recommend if you guys want to get a copy of it, reach out to Mahdi and the Optimove team and get in contact with them. And if you want more info on all of the latest gambling news, tune in for another episode of iGaming Daily tomorrow.