Haide Hong, managing director of investment firm Blackstone’s private equity group in London, has underlined the appeal of companies that operate in gaming markets that offer a “degree of regulatory certainty”.
Blackstone has been one of the most prominent investors in the sector in recent years, having announced the acquisition of Spanish gambling operator Cirsa in April after having teamed up with CVC Capital Partners to seal a takeover of Paysafe Group last year.
Blackstone also unveiled an agreement nearly a year ago to acquire Clarion Events, the parent company of iGaming Business.
Hong, speaking today (Wednesday) at iGB Live! in Amsterdam, acknowledged that a market’s regulatory outlook is a “critical component” of identifying potential M&A targets in the sector.
“We’re focused on opportunities in markets that are fully regulated and are wary of opportunities that are not. A regulated market provides a platform for stability,” he said.
“We also focus on markets where regulatory changes have not been too frequent and the direction of regulatory travel is not too negative.”
Hong was also asked about the implications of what would appear to be a tightening of the regulatory outlook in the UK, considering the reduction of the stake limit for fixed-odds betting terminals (FOBTs) this year and heightened scrutiny by the Advertising Standards Agency.
“These things are always going to be part and parcel of any investment opportunity,” he added. “You will sometimes find some headwinds even in very well-established markets like the UK.
“However, on the flipside, it is important to think about the messaging to the broader world outside the gaming community and how much a company’s actions might impinge on the social fabric.
“As an investor, do we care about that? Yes. We look to invest in companies that have a very clear social care policy and a corporate culture that says they want to be promote responsible gambling and have measures in place.
“We want the businesses we own to be in regulated markets and socially responsible. Having the right culture so they are a responsible operator is very important to us and for other investors as well.”
Hong also insisted that there remain opportunities in the land-based sector, in spite of iGaming arguably offering a steeper growth trajectory.
“Online and offline offer different demographics, but our view is that over time there will be more convergence between the customer segments,” he said.
“The online gaming space might have better growth, but that doesn’t mean the traditional offline gaming offers are in decline necessarily as, by definition, the offline industry has operated for longer so there is a longer track record of regulation.
“We’ve been an active investor in gaming and will continue to be as it is a great industry with real potential on a global scale.”
Hong added that there is “rightly a lot of excitement about the US”, but added: “The market will definitely grow, but in terms of how quickly, let’s see. The opportunity is definitely out there and if the US market continues to open up, it will benefit B2B suppliers that are active in the market.”