Gaming Companies: Unlock the Power of ESG Strategy and Investment

Environmental, social, and governance (ESG) strategy has become a key factor in successful business planning across industries due to the potential gains it offers for both companies and their stakeholders. In the gaming industry, ESG strategies may vary somewhat depending on organization type (e.g., land-based casino-resort, tribal casino, iGaming, etc.), but all gaming companies can realize a range of possible advantages by including ESG considerations in strategic decision-making. 

Integrating ESG initiatives into a company’s core business strategy can have several long-term benefits, including:  

  • Mitigating risk and building resilience.
  • Driving higher profitability. 
  • Delivering greater shareholder returns. 
  • Increasing customer loyalty and safeguarding brand integrity. 
  • Attracting talent and improving employee loyalty. 

By assessing and addressing material ESG risks and seeking ways to streamline resource usage and reduce waste, while also focusing on sustainable value creation for the long term, casinos can bolster resilience, brand reputation, recruitment and retention, and profitability. In particular, casinos looking to develop or advance their ESG strategy should review, assess, and identify gaps in several important areas, including compliance, data protection, and community support.

Strengthening Compliance and Reporting

Gaming is a highly regulated industry, and casinos are already familiar with stringent reporting and compliance needs. Now, amid constantly evolving ESG regulations and guidance, it is imperative that casinos also understand their ESG reporting and compliance obligations under these regulations. Accordingly, they should set ESG-related targets that are specific, measurable, and realistic.

A well-funded and efficient compliance program can help casinos mitigate risk and avoid costly regulatory issues. Legislation like the Bank Secrecy Act (BSA) and related anti-money laundering (AML) practices require most U.S. casinos to have effective controls and processes in place to meet AML requirements. 

For example, under the BSA, casinos must file a Currency Transaction Report (CTR) for each transaction involving more than $10,000 cash-in or cash-out in a single gaming day. An unsophisticated compliance program may not be able to properly and promptly report these transactions, which could create the risk of fines or other enforcement actions. By building and maintaining a strong compliance program, companies can enhance transparency and better adhere to ESG reporting requirements.

In addition to potential penalties and reputational harm, non-compliance with ESG reporting requirements can also have other financial consequences, such as a higher cost of capital, which can ultimately limit growth and negatively impact profitability. 

Enhancing Data Protection

Casinos also need to prioritize the security of their enterprise and customer data as cyber threats grow in number and sophistication. Several high-profile cyber incidents in the gaming industry have emphasized the importance of robust cybersecurity and data governance. 

Because casinos collect and process highly sensitive personal and financial data, they should regularly update, test, and review their cybersecurity controls for effectiveness. Continuous monitoring and detection are critical to safeguarding that high-value data from bad actors across the ever-evolving threat landscape. Following these and other best practices for cybersecurity and data protection can significantly help to prevent breaches or other cyber incidents while also protecting a company’s reputation.

Serving and Supporting Communities

The tourism that casinos generate can provide many jobs and make a positive economic impact on communities, but there are additional opportunities to benefit those key stakeholders, such as making targeted investments in community resource programs and partnering with local businesses. Doing so can serve the public good while also attracting clients and employees to the casino. This tactic can be a valuable means of engaging with the community and broadening the company’s reach — especially as casino customers tend to skew older and the industry faces an ongoing talent shortage.

Additionally, casinos have a social responsibility to customers to deter problem gambling through awareness and support programs. Emerging technologies like AI models can help casinos detect issues in real time and provide potentially at-risk customers with resources to support gambling addiction. Many casinos also invest in public awareness campaigns highlighting the difference between typical gambling and addictive behavior, which empower customers to play responsibly and access help when needed. In these ways, casinos can support community stakeholders while helping avoid negative outcomes. 

Cashing In on the Gaming Industry’s ESG Potential

An effective ESG strategy can provide significant value to casinos by enhancing compliance and reporting, bolstering data protection, and strengthening community support. Addressing these areas can help build resilience and bring reputational benefits, as well as enhance customer loyalty, boost recruitment and retention, and even lower the cost of capital to fund growth initiatives. Though every company’s ESG investment will look different depending on its specific circumstances, the impact of a comprehensive strategy can be wide-ranging by enabling growth and continued success. 

Want to know more about how ESG investment can benefit your business? Contact us today.