Where we are today
Socially distancing, self-isolating, vaccines, lockdowns and working from home dominated the headlines over the past twelve months. As a result of COVID-19, consumers have been constrained to spending a significant increased amount of time indoors – this has accelerated the trend the gaming industry has experienced for the past twenty years in terms of end customers opting for digital alternatives as opposed to land based casinos and betting shops.
Digitalisation of societies together with local market regulation predominantly across Europe and the USA, and to a lesser extent South America, is presenting players in the industry with new opportunities. This assumes stakeholders are agile enough to adapt and capitalise on such trends.
What are we learning from this crisis?
The crisis has continued to bring key topics of conversation such as AML and responsible gambling to the forefront. A number of regulators have upped their efforts when it comes to conducting regulatory visits and handing out fines where shortcomings are identified. It is now widely accepted by the industry that this momentum will only continue to build in the near future - political and social pressures have essentially set an expectation for tighter regulation and stricter enforcement. This was evidenced by a number of ‘COVID-19’ related measures taken by regulators across Europe such as deposit and stake limits not to mention a variety of marketing restrictions.
Another key learning point from the crisis is the importance of achieving scale and in offering a multi-product portfolio to cater for stability and a lower risk exposure. 2020 was the year where a number of mega mergers and acquisitions dominated the industry – examples include The Stars Group merging with Flutter Entertainment, Evolution’s acquisition of Netent, the merger of DraftKings and SBTech and Ceasar’s Entertainment’s recent offer to acquire WilliamHill. The crisis has tested the durability of companies - some industry players will clearly come out of this crisis in a stronger position compared to others and compared to their own position pre-COVID-19. As a result, another round of consolidation should be expected in the short term.
How do we respond?
Crises can be an opportunity to reach out and change the dynamics between buyers and sellers or customers and suppliers. In our view, the following are the top measures players in the industry should consider in using the COVID-19 crisis as a catalyst for change:
- Placing compliance and sustainability at the core of all strategic decisions;
- Exploring M&A opportunities;
- In absence of M&A opportunities, placing focus on operational efficiency to drive scale;
- Seeking new industry partnerships;
- Diversifying income streams.
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