How VС and Big Tech Investments Are Changing the iGaming Niche

The online casino industry is constantly transforming and evolving. It is under the influence of technological developments that significantly modify the market and competitive environment. The sector utilises innovative products based on blockchain, artificial intelligence, and the metaverse.

Rosloto experts explain how venture funds and Big Tech companies invest in the entertainment niche.

To order turnkey project development and a well-thought-out marketing strategy, please contact our managers, who will gladly provide assistance in launching your digital platform and ensuring its profitability.

Venture Capital in the Gambling Industry: Priority Areas

VC funds are companies that invest in promising startups with high growth potential. Usually, such ideas are risky, so investors receive a share of the new business. The main goal is big gains after the release of products (if these are digital solutions), the issue of shares, or the sale of startups.

Venture firms finance progressive technologies that help beginning operators quickly enter the market and compete with recognised brands.

It is worth highlighting several enterprises that are actively investing in the gambling niche:

1. Andreessen Horowitz (a16z). The fund operates in Silicon Valley. Its main areas of activity are Web3, GameFi, and crypto entertainment.
2. Sequoia Capital. The organisation supports startups in the fields of artificial intelligence and Web3 infrastructure development. The company has been operating since 1972 and is currently investing in iGaming projects.
3. Pantera Capital. It was one of the first to start working with cryptocurrency startups. Investments are directed to DeFi, blockchain solutions, and non-fungible tokens. Special attention should be paid to the financing of BetDEX, a decentralised betting platform.
4. Animoca Brands. The emphasis is placed on software, Web3 gaming, metaverses, and NFTs. Moreover, partnerships with blockchain startups were formed.

Let us consider the main investment areas of venture funds.

Blockchain, Web3, and DeFi

Specialised brands pour money in projects that change the traditional model of the online gambling environment through distributed ledger and tokenisation.

Key formats include:

1. Decentralised casinos. These are portals where users can play for digital tokens, make deposits, and withdraw winnings based on smart contracts.
2. NFT bids. We are talking about games in which customers can get non-fungible tokens. They are used not only for betting, but also for sale on the secondary market.
3. DAO management models. On such resources, players who own virtual coins have an opportunity to influence the rules of the games, changes in the work of brands, or the distribution of profits through smart contracts.

Among the most famous resources where people can make deposits using NFTs or cryptocurrency, we can highlight the Decentraland portal, the BetDEX decentralised betting exchange, and the Rollbit casino.

Metaverses and Immersive Technology (VR/AR)

The modern audience is demanding. Gamblers prefer content with full immersion and the ability to interact with other participants or objects.

Venture funds invest in immersive casinos and virtual entertainment clubs. On such platforms, bettors can not only see other users but also move around and pick up objects. Motion and gesture control functions are implemented into innovative solutions, bringing the digital world as close to the real one as possible.

VR betting and sports simulations deserve special attention. Gamblers can place bids and watch events in 3D from different angles: from the stands, through a video camera, from the referee's seat, etc.

Additional sources of income for operators are brought by immersive technologies — these are the sale of NFT clothing or unique skins and access to VIP lounges.

The prospects of the direction are confirmed by the studies of Research and Markets. Analysts of the company claim that the volume of VR/AR gaming will cross the mark of $17 billion already in 2026. PitchBook specialists share the same opinion.

Artificial Intelligence and Machine Learning

AI solutions help change and improve the user experience thanks to the data on the previous behaviour of customers. Operators get a chance to:

• personalise the iGaming platform’s interface;
• offer relevant content based on preferences;
• provide free spins, cashback, and other promotions;
• send messages during the maximum activity of players, etc.

Products based on artificial intelligence help entrepreneurs to combat fraud, comply with responsible gaming requirements, and identify risky behaviour of casino visitors.

Cloud Services

Technologies allow scaling entertainment platforms and dynamically increasing capacity during periods of high load. Due to this, no additional investment in the infrastructure is required.

Global data centres located in different areas of the world ensure continuity of work. This is important for casino sites, especially those specialising in live solutions and online broadcasts.

Clouds can store various software products:

• administrative services;
• payment options;
• games, etc.

Containerisation of program components allows updating entertainment, interfaces, and other elements without any downtime.

Using cloud infrastructure, entrepreneurs provide services to players from different markets, regardless of the location of the servers.

Big Tech as the Engine of the iGaming Industry Evolution

The largest technology corporations, including Google (Alphabet), Amazon, Meta (Facebook), and Apple, actively influence the development of the niche by controlling the facilities, user information, and monetisation.

Brands affect the users’ entry points into online casinos: search engines, social networks, app stores, browsers, etc. Thanks to this, they collect and analyse huge amounts of information on customer behaviour. These details are used to target ads and personalise promotions.

Companies provide cloud infrastructure that entertainment portals use for scaling and actively invest in the development of virtual and augmented reality, as well as artificial intelligence and other products that help create new gaming solutions.

Let us look at how the most influential corporations interact with the industry.

Google (Alphabet)

In recent years, it has been easing restrictions on casino advertising in many jurisdictions, including the countries of North and Latin America. Today, the volume of targeted marketing has increased significantly.

In some countries, the promotion of bookmakers, lottery businesses, and fantasy sports is allowed. This has had a dramatic impact on the competitive iGaming environment.

At the same time, changes are taking place in the Google Play rules — applications with entertainment for money are becoming available in regulated markets.

Google’s cloud services have also found their application: operators use them to analyse client data and build ML personalisation models.

Amazon (AWS)

The corporation occupies a leading position in the cloud computing niche. Large providers use its services to scale their platforms.

The brand’s CDN is applied to stream live games. The system broadcasts such entertainment as poker, blackjack, roulette, and many others. Since the servers are located in many parts of the world, this guarantees high-quality transmissions and minimises video delays, as well as buffering.

Operators use a Data Lake that stores both structured and unstructured information about players:

• how much time they spend on the portal;
• which slots were launched most often;
• when they log out;
• which deposits were make;
• how often people lose, etc.

Amazon Redshift is applied to process personal details and segment gamblers. Based on this, the Amazon SageMaker machine learning modelling platform predicts user behaviour, prepares unique offers, identifies online fraud, etc.

Meta (Facebook)

The corporation’s social network has strict marketing rules. Special requirements have been developed for operators who have received licences in reputable jurisdictions.

For the purposes of promotion, project owners use behavioural targeting. This method is based on such details as favourite pages, viewed content, etc. Thanks to the collected information, it is possible to segment clients as accurately as possible and offer them relevant ads.

The company invests in its VR platform, Quest. The service allows players to fully immerse themselves in virtual reality and feel the atmosphere of land-based gambling establishments. The PokerStars club is already operating on the resource.

In the Meta Quest space, customers can:

• walk around casino halls;
• sit at poker tables;
• place bets (by eye movements or gestures);
• interact with other users or objects.

The corporation highly appreciates the prospects of virtual entertainment spaces and continues to develop this area.

Apple

The brand is changing the access policy for betting applications in the App Store, allowing legal operators to distribute their content. However, such products must meet stringent requirements, including geo-restrictions, age verification, etc.

The number of iGaming portals integrating the Apple Pay service is growing rapidly. Its advantage is the simplicity of transactions, which has a positive effect on the user experience. The firm is against collecting excessive amounts of personal data, which complicates the organisation of marketing campaigns by casino owners.

Changes in the Competitive Environment Because of Innovations

Investments of venture funds and the involvement of Big Tech corporations have affected the gambling sector’s landscape.

Emergence of Technological and Marketing Barriers for Beginners

The arrival of tech giants and venture capital has led to an increase in the threshold for entering the market. Startups cannot fully compete with well-known brands only with ideas. Significant financial injections at the very beginning are required to apply software innovations and access modern tools.

Displacement of Small Brands

Venture capital projects have an opportunity to act aggressively and use hybrid business models (for example, combine a casino and a metaverse).

Large companies are absorbing niche startups. For example, the Animoca Brands investor is putting money into the iGaming ecosystem, Web3, and other related areas. The firm has its share in more than 400 projects and completely controls some of them.

In 2022, the enterprise acquired a controlling stake in the TinyTap Israeli educational initiative. Thanks to this, it received not only new technology but also a loyal audience. Other competitors are not able to race against the giant since they do not have the appropriate advertising capacity, client bases, and innovative software solutions.

It is also worth mentioning projects such as Decentral Games or BetDEX, which have replaced smaller startups.

Acceleration of Innovation and Challenges for Regulators

Large-scale financial injections into the casino industry have stimulated the emergence of new developments and gambling formats:

1. Play-to-Earn (users receive real money or virtual coins for participating in sessions and passing levels);
2. NFT betting (bids are made using digital assets and non-fungible tokens);
3. sweepstakes in the metaverse (players try to predict the results of online events).

Regulators are not keeping up with the emergence of new formats. The vast majority of countries do not have a legal framework for smart contracts in gambling.

Entertainment sites are somewhere in between, which can lead to the formation of a grey market, increased risks of money laundering, non-compliance with the rules of an adequate attitude toward betting, etc.

The Main Things about Venture Capital and Big Tech in iGaming

The industry is actively changing. This process is influenced by the activities of investment and technology corporations.

Key aspects that entrepreneurs should take into account:

• Venture funds invest heavily in the development of innovations. Solutions with the elements of virtual and augmented reality appear more often and become extremely popular.
• Big Tech companies offer cloud services, analytics tools, databases, and AI services, thanks to which operators can qualitatively segment the audience for personalised advertising campaigns.

Modern technologies are radically changing the landscape of the entertainment sector, making it difficult for small startups to compete with well-known platforms.

The article was prepared by the Rosloto studio. Our specialists have vast experience in launching an online casino. We will help you open a profitable business and achieve success in the gambling industry.