Virtual reality (VR) technology is fast entering mainstream conversation. Along with gaming, a growing number of industries, from retail and recruitment to healthcare and education, are having their eyes opened to the possibilities afforded by VR.
And gambling is no different.
Virtual reality is considered by many to be the gambling industry’s next big opportunity. VR games go one step further than live dealer games by allowing players to enter immersive online environments using a headset that tracks movements and actions.
Without ever leaving home, players can enter a virtual casino space with real casino sounds and interact with other users over realistic live table games and slot machines.
The iGaming industry is already embracing the technology and, whilst still in early stages, VR casinos do already exist.
But where is the industry at? Are VR casinos a promising trend or just a fad?
Let’s find out.
As the casino landscape continues to migrate online, the online gambling market is growing rapidly. In 2022, Slotegrator analysts identified a 15% rise in interest in opening online casinos, and we’re starting to see a similar upwards trajectory for emerging VR casinos. According to Technavio’s 2020-2025 VR gambling report, the VR gambling market is set to register a compound annual growth rate (CAGR) of 53.1% during this period.
It's likely that VR uptake in the online gambling world has been bolstered by increased adoption of online gambling more generally. Key iGaming trends for 2023 center around market growth and this is in no small part thanks to the continued migration of casinos online. This migration is being consolidated by the overwhelming popularity of online live dealer games, stream betting, and esports, and the emergence of promising new markets across Europe, North America, Latin America, Asia pacific, and Africa.
Players are already enjoying online gambling experiences enhanced by social elements, live dealers, 3D graphics, and mobile-first platforms. For many, the natural next stage in this evolution is VR. Much will depend on the ever-changing regulatory environment, but in the wake of increased liberalization, it’s possible that VR casinos will become more accessible soon.
Despite iGaming’s indisputable popularity and some promising figures, the success of VR casinos is not guaranteed. There are many potential roadblocks to consider including the high cost of VR headsets, privacy concerns, and regulatory ambiguity; all of which may restrict market growth and the adoption of VR by online gamblers.
VR gambling is still very much in its infancy, so we don’t have to look too far back to identify its origins. It all began with the foundation of Tyler Luckey’s company Oculus in 2012. By 2014, Facebook’s Mark Zuckerberg bought the company for three billion dollars and by 2016 the Oculus Rift became the first widely known VR head mounted display (HMD) to hit the consumer market.
The seed was sown for a wider market in virtual reality and numerous competitors have since emerged including the likes of Samsung, Sony, and HTC. By 2017, the first virtual reality casino was born. Founded in 2014 by the Alea Gaming group and now operating under SLTM Ltd, SlotsMillion is an online casino licensed by the Malta Gaming Authority and the UK Gambling Commission.
Using the SlotsMillion virtual casino application with a headset, users enter a 3D casino environment where they can walk around, play slot games, and hang at the virtual bar. However, the application is still quite limited, and, at present, players are restricted to solo gambling experiences and a modest range of around 40 games.
Nevertheless, SlotsMillion has been a catalyst for the development of more VR casino platforms including JackpotVR, Social Club VR, Blackjack VR by Playspace, and MetaTable Poker, to name a few.
At present, VR casino games are still very much a niche in the world of online gambling. And whilst their offerings are still basic, this is just the beginning. The goal is to take VR casinos beyond 3D lobbies and create fully immersive casino game rooms where users interact with players and live dealers - just as they would in a brick-and-mortar casino.
As virtual reality hardware advances we can expect these experiences to become even more exciting. For example, players may be able to walk through a 360-degree simulated environment of the Las Vegas strip or enjoy gambling experiences enhanced by VR gaming features – think immersive fantasy role playing games (RPG).
If the number of people buying VR headsets increases, we could soon see VR become a mainstay of the gambling industry. But this remains a very big if. And if gamers are anything to go by, headsets aren’t necessarily as popular as initially anticipated.
Data published by YouGov reveals that due to the high price of headsets and a lack of compatible content, 32% of American gamers and 24% of British gamers see no practical application for VR. But if hardware remains financially inaccessible, compatible content is less likely to emerge, and if content is hard to come by, fewer users will be willing to invest. It remains to be seen whether this vicious cycle can be overcome.
That said, there are signs of promise. The VR market is growing, and according to research published by Statista, the global VR market is projected to increase from “less than 12 billion U.S. dollars in 2022 to more than 22 billion U.S. dollars by 2025”.
The benefits of virtual reality gameplay are clear. Realistic, immersive environments. Live social elements and multiplayer games. Game personalization and tailored bonuses. The list goes on. But, in large, these are still hypothetical benefits, dependent on VR gambling’s future potential more than the present reality.
Unfortunately, as we’ve already alluded to, there are some sticking points. Whilst the idea of adrenaline-filled virtual casinos is an attractive prospect, there are some not-so-insignificant drawbacks to consider too.
Potential obstacles include:
In theory VR should be able to facilitate high frame rates and high-resolution images but, right now, the quality of available graphics on VR applications is relatively unsophisticated when compared to the latest video games on, say, PS5. This could potentially put off initial users and hamper future uptake of VR gambling platforms.
This is one of the biggest issues facing VR gambling right now. Many people simply cannot play at VR casinos because the equipment needed to participate is just too expensive. In 2022, the average cost of a VR headset in the United States was 430 US dollars and it’s expected to remain around this price-point for some years. That’s not to mention that a high specification headset could easily set someone back thousands of dollars.
The world of VR casinos is very new. And that means the regulatory landscape is still catching up. It seems fitting that Metaverse casinos have been described as a “regulatory wild west”. In the United States, where gambling is regulated at the state level, it could be something as fundamental as basic legality that stands in the way of operators.
At present, there is no regulatory framework for VR gaming in the United States. It’s not even entirely clear which bodies should have the authority to regulate these platforms and any prospective operators would need to obtain the permission of the relevant state’s gaming commission.
A case in point. In November 2022, US regulators cracked down on the virtual casino, Slotie, for allegedly “luring investors into an illegal gambling operation built in the metaverse”. And earlier in the year, five state regulators filed emergency orders against a virtual casino Flamingo Casino Club for allegedly operating in the metaverse.
Despite showing exciting potential, if VR casinos are to become more than just a ‘nice idea’, operators and technology suppliers will need to put in some groundwork. Online casinos without VR features (live dealer games for example) are already popular.
Whilst these platforms might not offer the glitz and glam of immersive VR, what they do offer is arguably more important - real money games, mobile-friendly applications, social promotions, and no expensive equipment required. These platforms have already set a precedent for the bare minimum expected by users, so prospective VR casinos will need to offer this and more.
In tangible terms, these are the product and service enhancements that we anticipate operators and VR technology providers will need to meet to see success.
In order to establish reputability, operators will need to prove their trustworthiness by putting their product through rigorous testing, audits, and proving iGaming compliance by obtaining official gambling licensing from recognized authorities. Security will also need to come into the equation. Most existing online casinos currently use SSL encryption. Potential options for VR casinos include biometric security, and distributed ledger technology (DLT).
To compete with established online casinos, VR gambling platforms will need to increase the variety of games on offer to match standard casino offerings. That means classic table games like roulette, blackjack, and poker as well as plenty of slots. Building on this foundation, VR casinos will have the opportunity to compete with existing online casinos by offering simulated games and enhanced, immersive experiences on virtual tabletops.
Opportunities for real-money games are still few and far between in the world of VR gambling. To compete with existing online games, VR casino operators will need to introduce user-friendly payment options (a virtual cashier, for example). Payments are likely to be in the form of cryptocurrency transactions, which are already becoming established on online gambling sites.
If VR casinos are to enjoy mainstream success, there are multiple barriers to entry that will need to be overcome. Unless headsets become more affordable, VR environments are unlikely to become a standard feature of every home.
From the operator perspective, VR casinos will need to ensure that their platforms are compatible with existing and emerging tech. The difference between online and land-based casinos in terms of accessibility is already huge. If successful, VR casinos will bridge the gap to facilitate a life-like gambling experience on demand.
If VR operators are to compete with the real-world experience as they claim to, communication features will need to improve. At present the social aspect within most VR casino environments is minimal. Operators should be looking to facilitate opportunities for live, table-side conversations and chats between players.
Luckily, cloud communications is continually maturing. Communications platform as a service (CPaaS) is making it easier than ever before for businesses to integrate real-time, direct communication with their users and customers. CPaaS continues to expand its offerings to facilitate everything from video conferencing to live chat messaging, so VR casinos should have plenty of options for in-game chat available to them.
At the time of writing, the VR casino landscape is still relatively infantile. But that’s not to say it doesn’t show promise. Whether VR casinos are a realistic trend or destined to be forgotten will depend on the realization of some essential developments, without which mainstream adoption is unlikely to materialize.
If industry predictions are anything to go by, it could be easy to assume that a VR renaissance is on the horizon. The VR hardware market is growing, but just how much of that growth will be fuelled by mainstream uptake of VR devices is far less certain.
For now, VR exists as the hypothetical future of iGaming. Its destiny is far from being written in the stars. We’ll have to wait and see whether VR casinos become the next big gambling trend or fall flat to the mounting challenges facing new and existing operators.