Gaming machines perform well on ‘price elasticity of demand’
Gaming machines are among the best performers in the UK betting and gaming market on the economic measure of ‘price elasticity of demand’.
This is a principle that is used to estimate how much an increase in price might reduce demand – and therefore profits – so retailers and operators know what price point will maximise their earnings.
HM Revenue & Customs recently published a study of much of the UK market for different types of gambling, from lottery draws and scratchcards to bingo, and from the betting and pools markets to online gambling.
Gaming machines were included amongst the different categories – and proved to be one of the best performers on price elasticity of demand.
HMRC found that a 1% increase in bingo prices or in terrestrial betting shops leads to a 1% decrease in demand from gamblers.
But among more modern forms of gambling, such as remote betting (including online and mobile) and gaming machines, the drop in demand is only half as much.
This offers much greater opportunity to drive profits – and shows why premium £1 per play titles can work alongside 50p games on the same machine, without either having a negative effect on overall profits.