Waterhouse VC Highlights Enduring Strength of Land-Based Casinos Through 'Permission, Place, and People'

Despite the rapid advancement of artificial intelligence in the iGaming sector, Tom Waterhouse of Waterhouse VC asserts that land-based casinos retain significant competitive advantages in their unique combination of permission, place, and people.

This perspective comes as prominent investors like Barry Diller, chairman of People Inc (formerly IAC), are making substantial moves in the traditional casino space. People Inc has proposed acquiring the remaining majority of MGM Resorts, valuing the company at over $18 billion, while hospitality magnate Tilman Fertitta aims to purchase Caesars Entertainment in a $17.6 billion deal. Diller views these as "real-world assets" that AI cannot readily replicate or disrupt, emphasizing their foundational value.

The Unreplicable Assets: Permission, Place, and People

Waterhouse explains that gambling is not solely dictated by consumer preference but heavily shaped by regulation. Land-based casinos benefit from scarce physical gaming licenses, which governments often leverage to foster tourism, hospitality, and entertainment. Examples include MGM's integrated resort in Osaka, anticipated around 2030, and the emergence of licensed resorts in the UAE. This scarcity creates intrinsic value, underscoring why, over a decade after New Jersey legalized online casino, only eight U.S. states have made it legal (seven are currently live).

The second critical asset is the physical place itself. A license anchors a business to a specific, visible, and taxable location that supports local employment and attracts tourists. This is particularly evident in new licenses in Japan and the UAE, which mandate comprehensive resort development rather than just gaming facilities. Finally, people are drawn to these places. The vibrant atmosphere of a busy casino floor, with its hosts, regulars, groups, and the palpable excitement of shared wins, offers a social dimension that digital screens simply cannot reproduce.

Online's Dominance in Speed and Engagement

While land-based casinos boast unique advantages, online platforms excel in speed and interactivity. Online operators can reach global audiences via smartphones, swiftly personalize offers, cross-sell products, and re-engage players in real time. Content development is rapid; a game can be built in weeks and distributed to numerous operators overnight. For instance, SPRIBE’s Aviator game reportedly handles hundreds of thousands of bets per minute. This agility is reflected in market figures: European online gambling revenue hit €47.9 billion in 2024, representing 39% of total gambling revenue, with online casino alone reaching €21.5 billion—two and a half times its land-based counterpart. U.S. iGaming also saw significant growth, up 27.6% to $10.74 billion in 2025, compared to 2.3% for traditional casino gaming.

Bridging the Gap: A Digital Layer for Physical Play

Traditional land-based innovation has often centered on individual gaming machines, with a few manufacturers dominating the slot market. This machine-level focus, coupled with fragmented vendor systems, has made floor-wide innovation challenging. While many operators like MGM, Caesars, and Penn have launched online casinos or social gaming platforms, these strategies typically guide customers away from the physical venue. Waterhouse argues the real opportunity lies in reversing this trend: enhancing the physical floor with technology that draws players in and enriches their on-site experience.

The goal is not to transform physical casinos into online replicas, but to integrate a digital layer around existing physical elements—machines, tables, and the environment. This means introducing real-time information, competitive elements, dynamic rewards, social play, and live events. Imagine floor-wide competitions during major sports events or live leaderboards among friends, all without altering the core gaming hardware. Waterhouse VC exemplifies this vision through its investment in Slot Check, a company that provides players with near real-time machine performance data and supports challenges and social interaction on the casino floor, bringing the engagement mechanics of online gaming to the physical space.

Ultimately, Waterhouse VC's strategy focuses on backing infrastructure that enables regulated operators to compete effectively by blending their invaluable physical assets—permission, place, and people—with a dynamic digital overlay. This approach aims to make the land-based casino experience more engaging and responsive, leveraging what online excels at without sacrificing the unique advantages of the physical environment.