Last year saw the rapid expansion of sports betting across the US, but also a number of regulatory and advertising clampdowns in Europe.
As the new decade gets underway, industry experts share their thoughts on the opportunities and challenges that lie ahead.
In part three we hear from marketing specialists. Tomorrow we'll cover people, with technology and innovation, and regulation rolled out over the rest of the week.
Martin Calvert, marketing director, ICS digital
Nick Garner, founder, RIZE Digital
Sarah MacDonald, partner, Wiggin
Phil Blackwell, acquisition operations manager, Lindar Media
What were the defining developments or events of 2019?
Martin Calvert: The ups and downs of market regulation have been front of my mind – it hasn’t been an unambiguously fantastic year for most operators and affiliates. Sometimes it has felt like two steps forward, one step back, with more states opening up in the USA while other markets are becoming more restrictive or ambiguous. Though there are plenty of new opportunities, it’s clear that planning and hard work is more important than ever, but not every brand is prepared for this.
Nick Garner: The rising power of governmental gambling regulators and their aggressive stance with the gambling industry.
Sarah MacDonald: In the UK, the introduction of the ‘whistle to whistle’ ban on sports betting advertising during live sports coverage (pre-watershed) was a pivotal moment. The industry took a big self-regulatory step in response to increasing media and political pressure to lessen the strong ties between gambling and sport. To some this appeared to be a bold move, yet the direction of travel elsewhere helps to put it into context: at the start of the year in Italy, the extent of the advertising ban there was fully realised. AGCOM clarified the Dignity Decree’s application to sponsorship activity and that it prohibited even indirect forms of advertising. We then saw the regulator issue its first fine for a breach of the Decree as the year came to a close.
Phil Blackwell: For me, the most consequential development was the rise in remote gaming duty to 21%. The effects of this have been widespread and noticeable, particularly for the affiliate side of our business. We’ve seen brands pull out of the UK market completely, further acquisition and consolidation of white label operators and a significant reining in of more generous (and restrictive) welcome offers.
How do you see these continuing to shape the igaming space in 2020?
MC: I think we’ll see some surprising (comparative) losers and intriguing winners in 2020. We work across the entire gaming industry, in 71 languages, and I can report that a variety of brands are making intelligently aggressive plans. Those with a clear view of the regulatory opportunities and challenges will pick their battles and learn from the mistakes of larger operators. Some familiar names will continue to overspend and under-optimise – this will be evident during Euro 2020.
NG: Increasingly aggressive regulatory behaviour will be implicitly and/or explicitly supported by governments looking for greater tax take. Governments don’t lose votes by being tough on gambling. However, there comes a point where regulation will strangle the goose laying those golden eggs; then we will see regulation easing off. However, I don’t see that happening for at least three or four years.
SM: While the situation in Italy might be unique, many countries are undergoing periods of political change, as well as raising their awareness of gambling-related harms. This only moves gambling advertising into sharper focus – every country will face the pressure of government/regulatory intervention, it will just be on a sliding scale between an outright ban on marketing communications or some lesser limitation.
PB: I have no doubt that 2020 will see even more consolidation, with the white label networks running on the tightest margins most at risk of being priced out by the larger competition. Not only will the shockwave of the RGD increase continue to reverberate, but the crackdown – and subsequent panic – around compliance could lead to an even more risk-averse market.
What do you see as the biggest challenges ahead for the sector in 2020?
MC: The biggest challenges will be around controlling acquisition costs in consolidating markets, while also investing enough in new markets to take advantage of the opportunity. The most disciplined operators and affiliates will continue to invest in digital strategy, competitor analysis and benefit from practical growth plans.
NG: Finding a sustainable balance between maximum tax take and governments not losing votes. The ultimate winners will be a small group of mega brands. For everyone else, their challenge is to diversify and accept that the good times are over.
SM: The industry is going to have to be bigger and bolder in its attempts to self-regulate if it wants its advertising activity to stay on the right side of the line; for some countries, like Spain, it’s likely already too late. The biggest challenge for the sector, in terms of its advertising, will be whether its changes can be bold enough to stave off punitive official measures but not so bold as to strangle the business.
PB: Undoubtedly compliance, with a ban on credit card deposits, further conversations around online stake limits and the potential regulation of VIP programmes. However, it’s the industry’s response to these that is perhaps the most difficult hurdle to overcome. The media is out to get us and with good reason. The public’s perception of gambling – which is an increasingly lamented social taboo – will be shaped not only by the press, but the responsible (or irresponsible) actions of the industry’s stakeholders.