The great debate: Third-party slot suppliers or proprietary operator titles?

Since the dawn of time, casino games have been borne out of the desire for new experiences to play and wager on. The earliest card games spread by word of mouth across Europe as merchants travelled from city to city, casino to casino, and taught the games to new audiences as they went.

The games would evolve, most notably seen in the roulette wheel after it travelled from Europe over to America in the 1800s, where it gained an additional segment and offered players worse odds in the process. It was not unheard of for casinos and gaming halls to create new games to entice customers in and spend their money.

But when online casinos entered the scene in the 1990s and early 2000s, an industry of online slot manufacturers exploded in popularity alongside them. 

How are online casinos changing?

Each online casino wanted to offer something fresh, especially as online slots were much quicker to develop when compared to the cabinets seen in land-based properties. Within a few years, iGaming sites were offering seasonal slot releases at Christmas and Halloween, and more competition rose in the slot provider world to create the next new thing. Live game shows, arcade titles and crash-style games would soon follow.

But we are now approaching uncharted waters. Operators have now filled their virtual libraries with games on every last bookshelf, with aggregators pushing deals for recently founded game providers all the time.

The ecosystem has changed from operators collecting as many games as possible, to selecting the games they think will outperform the rest. 

Enter: Proprietary games. These are nothing new in the sector. Although the records are probably lost to time, it is almost certain that land-based casinos created some of the popular games we know today, though it was impossible to prevent eager patrons from teaching them to other gambling halls. In the online sector, however, it is much easier to keep proprietary games in-house. 

Why are online casinos creating exclusive slots?

In recent years, an increasing number of online operators have created branded, in-house games, including bet365, LeoVegas and Caesars. These titles are often simple in their design and mechanics, and can usually be found on the homepage of the casinos – heavily promoted by the operator.

There is some concern from software providers that this will be the future of iGaming, and that casinos will no longer sign favourable deals with, instead opting for their own in-house development teams.

The benefits are obvious: the operator has full control over the end product, RTP and promotions. Although the time, finance and resources taken to create the games weight down the other side of the argument.

Are online casino exclusives a trend or a new era?

Dedicated development teams are expensive and more than just one developer hunched over a PC in a backroom for weeks at a time. They include artists, sound engineers, mathematicians, QA teams and everything else in between. 

Paul Dolman-Darrall, G Games CEO, discussed this at length after Caesars unveiled its first online proprietary slot game, Ca$hline. 

“Should operators build their own games? My view – most shouldn’t. A few absolutely should,” he explains. “Studios win because they sell to 100+ operators. They spread the risk. They survive bad releases. And unlike operators, they don’t have to over-market games with average performance.”

Of course, many of the larger operators can make these releases work for themselves, but for smaller operators, Dolman-Darrall raises an important factor. 

He continued: “Unless you have serious scale, proprietary distribution strength, or a structural product advantage, it’s usually ego dressed up as strategy which will lower portfolio performance. 

“Yes, some giants (in particular DraftKings) claim to make it work for themselves, with a vertical integration strategy. 

“For everyone else, the smarter move is partnership, equity, or exclusivity in your markets etc. We have done deals with operators where we share risks, and the operator gets kickbacks, and the specific needs for their markets.”

Will third-party suppliers feel the heat?

The casino industry, like many other entertainment and technology-adjacent sectors, is always looking for the next big thing. In addition, operators are always trying to one-up the competition and stand out in unique ways to the audience. 

As for proprietary games, while they look great on quarterly reports and during investor meetings, they do not scale well. Most operators simply do not have the resources to commit to developing an entire library’s worth of in-house games, no matter how much executives crave a fully-exclusive library. 

The trend is likely part of an evolving industry and a sign that, while an operator already has a full library of games, it has the means to launch a few in-house exclusives for the sheer marketing flex of it.

Certain operators, with the biggest resources, will always be ahead in this regard. Expect this trend to grow – but never to the extent that dedicated third-party suppliers are fully displaced.