Big Debate: Is minimal growth in Europe the new normal for the leading operators?

YES

Valentina Franch, senior manager, gaming, KPMG

The online gambling market has been one of the world’s fastest-growing sectors over recent years, estimated to be worth over $60bn in 2021.

Over recent years, however, such growth has seen a partial trend reversal due to new challenges and considerations. Increased regulatory pressure, added licensing requirements coupled with an overarching lack of harmonisation, enhanced anti-money laundering requirements, growing demands for safer gambling, advertising restrictions, stricter affordability checks, stake and deposit limitations, are all factors that take significant resources and squeeze remote gambling operators’ margins.

Couple these with the significant fines imposed by gambling regulators for compliance failings in major jurisdictions, the unfair competition brought forward by unlicensed operators and the rise of the black market, and it becomes clear how the factors boosting industry growth over the past years are increasingly mitigated by the heightened compliance and operational costs.

This is a trend that is thought will continue in the years to come, however, as the online gambling industry continues to evolve, new opportunities come into play. A key aspect operators are capitalising on at the moment, particularly in the US, is the convergence of gambling with the sports, media and video gaming industries. Technological innovation, such as 5G networks, metaverse, NFTs, VR/AR and immersive tech, as well as blockchain technologies, are all expected to generate growth opportunities.

As games change and we witness a convergence of spheres, innovation can fall within grey areas, and this is where margins can often exist. Whether margins can be retained in the future will largely depend on the operational sustainability and the industry’s ability to self-regulate. Certainly, operators must act responsibly to ensure the sector has a sustainable future.

NO

Brandon Walker, business development manager, Amelco UK

While the forecast is often doom and gloom, we need to remember betting is entertainment and there’s still plenty of opportunity to be had. Europe is the world’s largest bloc of regulated markets and, with the World Cup fast approaching, we should remember why we’re so popular as an industry. Look at the Euros. We saw operators net a 50% uptake in the number of bets placed, with post-tournament numbers staying strong for months after. This year with the World Cup, that’ll be Christmas time.

The elephant in the room is regulation, and aside from macro forecasts for wider consumer habits, this is the industry’s harbinger of doom.

But I don’t agree with this consensus. In my view, the opportunity is going to be there for the taking for those who approach this challenge head on. Suppliers and operators that can navigate the onset of spin times and the lowering of stakes will provide the entertainment-rich experience to keep players engaged. Yes, we’re seeing certain big name betting brands taking a hit right now on the stock market, but that was inevitable, as earnings in the last two years had greatly inflated the price.

To quote Einstein: “In the midst of every crisis, lies great opportunity.” Operators that make sure they’re the very best will shake up a market that needs to get rid of its deadwood.

This is especially the case for the new generation that we’ll be entertaining for years to come. These emerging demographics are very different to the VIP-dependent era we saw back in the 2010s. To achieve that, you need the very best in tech and start thinking like Silicon Valley. Top UX, top UI, zero lag-time, AI-based personalisation, these are just some of the components you’re going to need to be on top. Yes, leading operators that offer out-of-date products are facing plenty of risk, but, if you’re at the top of your game, the ever-increasing demand for mobile-based entertainment will always be there.