Key considerations for developers taking a chance on real-money games
By: Aviad Dadon, Plunge Games CEO & Avihay Hermon, Strategic Advisor
Real-money games are a fast-growing segment in the video game industry. They offer a high-risk, high-reward model for both players and developers. They are similar to casino games but comply with laws and regulations to become something else. Here is how it works:
Gambling involves three elements: consideration, chance, and reward. When a player risks money, to play a game of luck with real rewards, they are gambling. To bypass gambling regulations, real-money games remove one of these three elements for different types of games.
*When the consideration is removed, we receive Sweepstakes.
* When chance is removed, we receive Skill Games RMG.
*And we get Social Casino games when the ability to win real money is removed.
Social Casino games are already a very saturated market. So it’s no surprise that developers have focused on Skill Games and Sweepstakes. These games are not without competition, but they still hold real opportunities. In fact, today we can see that Skill Games are dominating the charts in the US, where 9 out of the 13 top casino games are Real Money games:
The challenges of real-money games
Skill Games and Sweepstakes have certain characteristics that need to be considered to engage players better, for example, these genres are more popular among female players. Also, since Android forbids all real-money games, they are only available for web, iOS, and Galaxy store players.
In addition, Google does not allow the marketing of such games, which means the marketing costs almost three times more than the average gamer’s. Lastly, this market has bigger risks, as fraud and disputes become a real issue when real money is involved.
Due to the nature of real money, monetizing these players is more complicated, as you can’t use the Apple Store and players need to use credit cards or PayPal for direct sales.
The opportunities for real-money games.
While online casinos are legal in only seven states, Skill Games and Sweepstakes are legal in 40 states. Therefore, by bypassing gambling legislation, these games can target a significantly wider market. This partially explains how they have been showing double-digit growth for several years now.
Since the transactions are done outside the Apple Store, companies can skip the 30% tax on iOS. Furthermore, real money players are typically loyal and reach 100% return in 30-120 days, way above any other game genre.
The sweepstakes gaming market generated about $5.6 billion in gross revenue (total player purchases) in 2023 according to market research and consulting firm Eilers & Krejcik Gaming. That figure has been growing rapidly, but the economics of this segment are substantially different compared to other social gaming categories because operators spend a majority of that topline gross revenue on the cost of paying out prizes. In past years, this market was dominated by Australia-based VGW (titles include Chumba Casino, Luckland Casino, and Global Poker), but a variety of new incumbents have been successfully grabbing share within the space:
Source: Eilers & Krejcik research, Sweepstakes Gaming Market Monitor 1Q24
Real-money games: High stakes, high rewards
The gambling industry is huge, and real-money games can grasp a significant share of this market. As the casual mobile market keeps deflating, real-money games can open up a new market. Like in real life, real-money games offer high stakes and high rewards for those who are willing to take a chance on this genre.
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