A MONTH IS A SHORT TIME IN THE GAMBLING SECTOR
Future Anthem chief executive Leigh Nissim believes the pace of change in the sector has just shot up a level.
What a month, what a year! The online gambling sector never stands still and has constantly evolved from download software through to mobile, live and beyond. Even by its own rapidly changing standards, surely these last few months and weeks have brought changes no-one could have imagined, and at lightning speed, too.
For an industry that is often criticised for poor operating practices (often justifiably) and saddled with a negative public perception, it is rarely applauded for its ability to adjust to market dynamics, consumer consumption, regulatory influences and technological advancements.
UK Plc seeks success stories while the government chases unicorns, yet the gambling industry is full of them. High-growth businesses like GVC and Flutter continue to outperform the FTSE index and lead the way in regulated US markets. William Hill has accepted an offer from a US leader, clearly keen on its technology and sports betting knowhow. Gamesys continues to delight with strong trading performance, while smaller public companies like Gaming Realms are also making great progress.
This is only part of the story. UK gambling is leading the way in terms of player safety. The Betting and Gaming Council recently published its Game Design Code, a guide to how casino products should be built responsibly – a significant step forward. The Gambling Commission and Facebook announced new guidelines for gambling advertising, alongside changes earlier in the year for UK sports and TV advertising. There are new rules for VIP schemes, credit cards are no longer accepted, and other consultations are still in progress.
The international terrain is also changing – Evolution finally made its move for NetEnt, who had only recently made its own move acquiring Red Tiger. After 17 years, Scientific Games also has a new significant shareholder – Caledonia – which also holds 10 per cent of Flutter. Rush Street and Golden Nugget have become public companies on the NYSE, and Penn National has raised $982m.
The sector is not immune to Covid-19 either, with every business experiencing challenges. Like its leisure brethren, retail gambling was shut for many months globally, and is still constrained. Online businesses accelerated their shift to remote working. Rightly so, responsible gambling processes are under greater scrutiny than ever before.
The seismic shifts that are changing our industry for the better would probably kill other sectors with the ferocity and pace of change. The technologies behind these entertainment businesses are colossal, processing international currencies and risk management in microseconds, with huge compliance infrastructure as you would expect in a regulated global industry. Yet its ability to adjust, innovate and compete continues.
So exactly what might the sector look like in a year’s time? The US will clearly be a focus, both for European companies seeking to gain a foothold, and also for incumbents facing the shift from retail to digital. Regulations will continue to influence, with stake limits popping up in mainland Europe, a review of gambling laws in the UK and additional advertising restrictions. Operating practices will come under greater scrutiny, with games studios being required to take more responsibility for safer product design. Operators will seek ways to differentiate and studios will need to combine to achieve scale, with those producing high performing content attractive to acquirers.
How long will it be before mainstream media and digital companies move in, attracted by the robust earnings of global gambling companies built in the UK and mainland Europe?
At Future Anthem, we are expecting data to play an ever-increasing role, from personalisation through to product design and player safety. While the sector grapples with the sea of changes, the Spotify generation will expect a better entertainment experience from gambling companies.
While it is hard to predict the next 12 months, one thing is for sure – the sector will continue to change at pace. And that is one of my favourite aspects of the industry – it never stands still. And with change comes opportunity.
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