Industry predictions for 2024: A shift in lottery products and M&A opportunities abound

Dominic Mansour, Buzz Bingo CEO

Regulatory environment and reaction to white paper consultations 

As an industry, we all take disparate reactive actions on customers driven primarily by enforcement activity. The consultations and eventual requirements will finally provide transparency and a level playing field. The key will be that the proposed affordability checks fulfil the stated Department for Culture, Media and Sport’s (DCMS) objective of being frictionless and proportionate. 

Rather than pick out a specific consultation, the broader aim is to implement the white paper initiatives that may not be game-changing but will put more power in customers’ hands to control their gambling with increased player tools, more explicit offers and promotions.   

Protecting the market and customers from the increasing risk of black-market operators will become more critical as the margin squeeze on the responsible, regulated operators makes the black market ever more appealing.

A thriving market in 2024, will depend on the various regulators finding the right balance to protect the vulnerable using the proper methods and tools rather than shrinking the market through overly intrusive and complex processes that limit customer choice and freedom to gamble in a democratic society. 

AI to further drive technologic advancement 

AI dominated the technology landscape in 2023, and we expect it to further cascade into gaming in 2024. As the market becomes ever more competitive, with tighter regulatory restrictions and higher business costs, from levies to taxes, the industry will look for ways to stand out through innovation. Personalisation will go to new levels, with tailored gaming based purely on customer preference.  

As the cost-of-living crisis persists and budgets become tighter, customers will expect value for money. Taking the omnichannel experience to the next level and providing multichannel consistent entertainment will be more critical than ever. 

M&A consolidation

With the market continuing to suffer with high inflation, we will, as an industry, need to hunt out efficiencies and focus on M&A opportunities to consolidate revenues and realise economies of scale. Lifetime values will naturally decline as regulatory triggers kick in, reducing the amounts customers can spend and the time they can play.  

Given the single customer view requirement under the new regulations, any consolidation will likely be cross-product or across online to retail and vice versa. Allowing operators to benefit from the synergies while not suffering from customer duplication, which will inevitably increase as the regulatory pressures and the resulting play restrictions send customers to multiple operators more than ever. 

Helmut Becker, ZEAL Network CEO

Annuity lotteries to move towards sustainable prizes

Although lotteries with classic big prizes naturally continue to enjoy great popularity, we see a trend towards smaller, more sustainable annuity lotteries. Modern annuity lotteries do not usually draw a classic one-off jackpot, but offer the prospect of a large sum in an installment model, so that winners benefit in the long term. 

The reason is obvious: many customers are put off by the small chance of winning millions of euros, which could suddenly change their lives forever. Smaller lotteries with an annuity character offer an alternative and the prospect of ‘carefree dreaming’ of financial security without worrying about life-changing jackpots: players have higher chances of winning and win smaller sums in total, which are paid out monthly or annually over a certain period of time. 

From the operator’s perspective, annuities create a long-term engagement with customers. With freiheit+, we have our own lottery with an annuity principle in our portfolio since 2020. Our customers have the chance to receive a one-off payment of €250,000 and a monthly payment of €5,000 over 15 years. 

AI to continue to innovate

AI has become an established technology in recent years and has found numerous applications in the online gambling industry. AI is used, among other things, for player protection, fair play, customer service and protection of minors.  

Another important operational factor is combating fraud: AI-based fraud detection systems are able to evaluate gaming patterns and transactions and locate suspicious activities. In the event of suspected fraud, warnings can be issued immediately to protect both players and providers. At ZEAL, we are already using the advantages of AI to optimise our customer service and to protect players and minors. 

One trend that has been discussed in the online gambling industry for a long time and offers exciting opportunities in the future is personalisation through AI.

AI algorithms are able to evaluate player data, gaming preferences, gaming patterns and even playing times and, based on this, make individual gaming recommendations so that players feel valued and well looked after.

Modern prize draw games to become more popular

Classic lotteries are an evergreen in the gambling industry and have always made people dream. However, we have been observing for some time that classic lotteries struggle to appeal to younger target groups. The trend among young users, especially millennials and Gen Z, is more towards modern prize draw games where players can win non-cash prizes. 

As a result, numerous new providers are currently appearing on the market. The spectrum ranges from house raffles, cars and holidays to tech, fashion and other lifestyle products. These prize draw games often offer players even better chances of winning than traditional lotteries and provide a new entertainment factor compared to simple cash prizes. 

A very popular and prominent example is the British subscription-based prize platform Daymade. In addition to dream holidays, tech and lifestyle prizes, players can also win small prizes from local, sustainable companies. Daymade reinforces the sustainable business concept by planting a tree for every participation.