ESG Integration in Gaming: Navigating Environmental, Social and Governance Challenges and Opportunities

As corporate responsibility continues to evolve, the integration of ESG principles into business operations has become a critical priority across many industries. The gaming industry is no exception, it faces a unique set of challenges and opportunities as it strives to balance profitability with sustainability and ethical considerations.

Environmental Challenges and Opportunities 
Greenhouse Gas Emissions 

The environmental impact of the gaming industry varies significantly between online and physical casinos. Online casinos generally have a lower carbon footprint because they require less energy to operate, as they do not need to power large facilities or employ as many staff members. They still face significant environmental challenges, particularly owing to the energy demands of powerful data centres that store information and run applications, which contribute to greenhouse gas emissions. To tackle these issues, online casinos are actively enhancing their data centre efficiency by implementing energy-conserving technologies and powering their operations through sustainable energy sources like solar and wind. Companies without their own data centres are collaborating with service providers that utilise renewable energy resources. In addition, online casinos are heavily investing in carbon offset programs, funding afforestation, landfill management and renewable energy projects. Betsson AB sets an example of an online casino committed to sustainability through its investment in carbon offset programs. Betsson AB maintains climate-neutral operations by purchasing reduction units from verified climate-positive projects (1).

Physical casinos encounter different and unique challenges, particularly in regions with high energy demands, such as Las Vegas. In fact, physical casinos operating in this region have taken significant steps to reduce their carbon footprint. Through the U.S. Department of Energy’s Better Buildings Challenge, when comparing 2019 to 2022, MGM Resorts International achieved a 41% reduction in Scope 1 and Scope 2 emissions by implementing a large-scale renewable energy project, which exemplifies how the industry can leverage solar power to meet its energy needs while reducing its environmental impact (2).

Water Conservation and Waste Management  

Water conservation is another critical environmental issue for land-based casinos, especially in water-scarce regions. For example, properties across Melco Resorts & Entertainment have been equipped with water-efficient systems and greywater irrigation systems (3).

In addition to water conservation, the gaming industry faces the challenge of managing electronic waste due to the frequent updates of gaming equipment and electronic devices. To mitigate this, some casinos have contributed to the circular economy by refurbishing or recycling outdated equipment. This not only reduces waste but also aligns with broader environmental goals of sustainability and resource efficiency. To address on-site waste challenges, Melco Resorts & Entertainment implemented a recycling program for batteries used in their uninterrupted power supply system in Manila (4).

Social Challenges and Opportunities  
Responsible Gaming  

An increasing number of gaming companies are implementing safer gambling strategies that include self-exclusion tools, deposit limits, and customer interaction programs designed to identify and support individuals at risk of gambling harm. Operators are also adopting limit-setting tools that allow players to establish preset time and money limits on their gambling activities. These tools may be voluntary or mandatory, depending on the jurisdiction. However, for voluntary tools to be effective, players must possess a certain level of self-awareness, underscoring the need to introduce responsible gaming practices during the registration process. For instance, Betsson AB provides customers with a wide range of responsible gaming tools, including deposit limits, self-exclusion, personal time limits for gaming, self-evaluation tests and round-the-clock access to well-trained and professional customer service staff.5

Diversity and Inclusion 

Fostering a diverse and inclusive workplace is another important social responsibility for gaming companies. Many companies have committed to increasing the representation of women and underrepresented groups in leadership roles through their diversity and inclusion practices. These practices not only aim to create a more equitable workplace but also to enhance the company’s ability to innovate and respond to the diverse needs of its customers.

Community Engagement  

Gaming companies are increasingly acknowledging the significance of engaging with their local communities. Many of them are participating in community engagement efforts through charitable contributions and employee volunteering programs. These initiatives not only reflect their corporate values but also cultivate positive relationships with the communities in which they operate.

Governance Challenges and Opportunities  
Corporate Governance and Regulatory Compliance  

Strong governance practices are essential for effectively integrating ESG principles. Companies are establishing robust governance structures to oversee their ESG initiatives, with a particular emphasis on regulatory compliance and risk management. Dedicated working groups often manage decarbonisation efforts, ensuring that energy savings and carbon reductions are consistently achieved across operations. Compliance with Anti-Money Laundering (AML) and anti-bribery regulations is also a critical governance issue in the gaming industry. Companies are implementing comprehensive AML and anti-bribery policies, supported by regular employee training and stringent internal controls. These measures are vital for maintaining operational integrity and building trust with regulators and stakeholders.

Stakeholder Engagement and Transparency 

Transparency is key for building trust with stakeholders, and many companies have committed to transparent ESG reporting. By aligning their disclosures with ESG-related reporting, these companies not only meet regulatory requirements but also enhance their capacity to manage a broad spectrum of ESG risks. Engaging with a diverse range of stakeholders, including customers, employees, regulators and investors, is crucial for understanding and addressing their expectations. By maintaining open dialogue and incorporating stakeholder feedback into their ESG strategies, gaming companies can strengthen relationships with key stakeholders and ensure long-term success.

AML and the Risks of Online Gambling  

Online gambling presents unique risks for money laundering due to the anonymity it offers users. Criminals can exploit online platforms using stolen credit cards, fake identities, or cryptocurrencies to launder illegally obtained money. The global nature of online gambling, with cross-border transactions, further complicates efforts to trace illicit funds. In response, jurisdictions such as Malta have implemented stringent regulations such as the Prevention of Money Laundering Act, which mandates robust Know Your Customer (KYC) procedures to verify customers’ identities, ages, and sources of funds. Online gambling operators must adhere to these regulations to mitigate the risks of money laundering and ensure compliance with international standards.

Leveraging ESG for a Sustainable Future  

The integration of ESG practices in the gaming industry presents both challenges and opportunities. Industry leaders are paving the way by addressing ESG issues through innovative strategies and robust corporate governance. By overcoming these challenges and leveraging ESG as a competitive advantage, gaming companies can create a sustainable and ethical future. As the industry evolves, successfully incorporating ESG practices will be essential for long-term success and resilience. Companies that prioritise sustainability, responsible gaming and strong governance will be better positioned to navigate the complex landscape of corporate responsibility and meet the expectations of stakeholders in an increasingly scrutinised industry.

How We Can Help 

At Zampa Partners, we assist gaming companies in developing and implementing comprehensive strategies to enhance their ESG impact, from improving employee well-being and fostering diversity and inclusion to implementing sustainable practices that minimise environmental impact. We conduct materiality assessments to identify key ESG issues relevant to your company and assist with ESG reporting to ensure transparency and accountability. By aligning your business practices with ESG principles, we can assist you build a more sustainable, responsible and ethically driven future for your company.