Gambling Makes Billions Without Innovation

Last week, we outlined The Game Innovator’s Dilemma, which shows how large, successful firms become reliant on sustaining technologies that only improve their existing products. Often times, these firms’ successes can hamper their ability to adapt to new market conditions and adopt disruptive new technologies.Nowhere is this Dilemma more apparent than in the gambling industry. Just think about the four major gambling games that you see in modern casinos: poker, blackjack, roulette, and slots. By implementing sustaining technologies, gambling companies have barely kept them current. Yet the gambling industry makes money hand over fist in amounts that would make any game company jealous: over $458 billion all told. Just to rub it in, let’s take a quick look at these four popular games and the innovations that they’ve undergone in since they were created.

poker is a gambling game with almost no innovation
1829 – Started as a Louisiana parlor game.
1850 – Flush was added
Civil War – 5 Card Stud created, Straight added
1875 – Wild Card added
1925 – Community card variations (Texas Hold’em) created
1979 – Video poker
1990 – Online poker
Moving poker online is basically the only real “innovation” in the game in the last 85 years. 
blackjack is another gambling game without innovation
1601 – Blackjack was first referenced by Spanish author Miguel de Cervantes.
1979 – Video Blackjack
1990 – Online Blackjack
Other than bringing the game to new media, the 400 year old game of Blackjack has seen zero innovations.
roulette: yet another gambling game with no innovation
1796 – Blaise Pascal introduced roulette in France in the 17th century.
1801 – The color green was selected for the Zero spaces to avoid confusion.
1843 – A roulette wheel with a single Zero space is used.
The last innovation in roulette was over 150 years ago.
there has been no innovation on slot machine gambling mechanics
1887 – The slot machine was invented by Charles Fey in San Francisco, CA.
1963 – First fully electromechanical slot machine developed by Bally.
1976 – First true video slot machine introduced.
1994 – Bonus reel added.
The biggest gameplay innovation in slot machines was the addition of a bonus reel 17 years ago.This then raises the question, why are these games still popular after decades or even centuries of stagnant gameplay? While some can argue that familiarity brings players back to the same gambling games, new games that exhibit gambling mechanics have shown that player appetite is for the gambling, not the game. In the process, these gambling game mechanics have made companies that leverage them in disruptive ways (like Zynga) incredibly successful.

So how is it that these games are still dominating the industry after hundreds of years with zero innovation? The answer is simple: gambling regulations have put a massive wall between existing gambling companies and any competition. Surmounting these regulations is no easy task: it can take millions of dollars and over 18 months just to get your first license!

Starting this Thursday, we will dive into each of the four popular gambling games listed above and show you how they work and the opportunities to innovate on their gameplay. Stay tuned and subscribe to our blog to follow this series.

You're reading Gambling Makes Billions Without Innovation Posted on October 25, 2011 Posted by Betable