Egaming industry predictions for 2019 - including Sweden and entertainment-driven betting

Sweden will be a game changer

The Swedish regulated market begins in 2019 and it is set to shake-up the gambling industry in a way not seen since the UK regulated market launch over a decade ago. While there isn’t expected to be a sudden surge in revenue growth with the market already considered mature, one of Europe’s largest grey markets turning white should have some other major impacts.

Sweden is the home market of many of the industry’s biggest names and has been the incubator of some of the biggest start-up success stories of recent years. Partly this has been because of the relatively unrestricted nature of the market with very low barriers to entry and no onerous tax demands. All three of these have now changed and this could lead to a real shift in how that market and the firms within it operate.

Moving to an 18% GGR tax rate, with limits on bonuses, tight regulatory oversight and facing the direct competition of the ex-monopoly operator will place a lot of strain on some operators in the market. I’d expect there to be a number of M&A deals taking place, if not in 2019 then certainly by the start of the next decade as the numbers start not to add up for some operators and scale becomes as important as it did in the UK over the past few years.

But perhaps the more interesting change will be in how the large and innovative Nordic online casino industry operates. In a new regulated environment will it be able to continue to push the boundaries and take risks or will it be forced into a more cautious and corporate operating model. One thing is for certain that player protection will need to be placed at the forefront for any operator in that market and those not taking the challenge there seriously will face problems in the future.

It’s hard to predict what the outcome of all this will be, but the emergence of some new mega-merger giants is certainly possible as is a shift in terms of innovation away from the Swedish market and towards other parts of Europe, Latin America or Asia. We also don’t know what impression on the wider egaming sector an unshackled Svenska Spel could make. Whatever happens it’s going to be a lot of fun watching to find out.

Things will get worse before they get better

This year will be dominated by regulation and continued action by both regulators and governments to curtail and contain the gambling industry. Italy is at the sharp end of this in Europe and all eyes will be on how that market performs as the ad ban begins to take effect this year, along with Belgium, with the hope perhaps that it isn’t a roaring success and inspires other nations to follow their lead. And the overall mood is not hugely optimistic as we head towards the end of the decade.

Other key markets such as Germany also remain precariously balanced with the possibility of sudden change at any point, while back in the UK there is also the sense that things are going to get worse before they get better. In a market where there has already been a major shift in operating culture, huge fines and a hike in tax rates you’d hope this was near the beginning of the end but there is a sense more that it’s the end of the beginning and we’re at most around half way through the process.

With the FOBT debate now over in the UK the world of advertising is now under the spotlight and there are already signs that the targets are also starting to move on to the world of online casino. That there are many potential problem areas should be the cause of some sleepless nights in the boardrooms of the industry’s major operators. Online casino is a bigger business than FOBTs, and while it lacks the issue of cash-driven anonymity it has bigger limits, 24-hour access and hundreds of brands with, shall we say, varying degrees of social responsibility.

It would be wrong to suggest there will be a sudden clampdown on the online casino sector in either the UK or other European markets, but it would be naive to think there will be no talk of staking limits or other restrictions to the product and its marketing. The British regulator is already considering banning the use of credit cards and introducing affordability checks, while in Sweden we’ve seen a move to block most of the bonus offers used to drive repeat play and Denmark has taken an equally dim view of bonuses as a marketing tool.

Some form of regulatory pushback feels inevitable in 2019 with slots seeming the most likely target, and all operators can do is look to try and spot issues before they arise. The online casino sector really needs to get ahead of any potential issues, although the sprawling nature of the possible lines of attack form bonuses, to advertising to product offerings to staking limits and responsible gambling tools that it may be impossible to completely protect themselves here.

The same can be said for advertising, and the UK industry’s move to self-police seems a very smart move in this context with the alternative as seen in Italy and Belgium a real incentive to change. Out of sight out of mind is a powerful driver for politicians and it could be that mainstream advertising also faces some pushback as the year goes on in a number of other markets with daytime advertising and marketing linked directly to sport teams seeming the most obvious targets.

Sports betting will become more entertainment driven

This last one is said more in hope than genuine expectation but the sports betting sector appears to be heading towards a fork in the road and if it doesn’t choose a direction then one may well be chosen for it. In both the UK and the US there is an increasingly vocal minority who are campaigning for a return to the “good old days”, where everyone could bet at whatever limits they liked on whatever they liked with no restrictions and they are being helped by an increasingly willing media.

As with some of the other motivators of the general public in the world today it’s mostly a wish to return to a time that never really existed, one where today’s benefits are layered onto a fond remembrance of a “better” time. The sports betting world is now targeted squarely at the 95%+ of recreational bettors. The product, the user experience, the offers and even the pricing is designed around these players, and this is often to the intentional exclusion of everyone else. And they are not happy.

In both the UK and US the toxic world of social media is full of complaints over restrictions and perceived malpractice from the bookmakers. The US in particular with its betting culture is not taking kindly to this mass-market proposition although it remains to be seen if the wider market cares as much as those embedded in the existing Vegas and offshore driven industry. But back in the UK there is also a growing centre of discontent and it would take a wilful disregard to not view the betting industry as one with an image problem in 2019.

Do things need to change? Not necessarily. But it’s fair to say the industry has perhaps been a little aggressive in pursuit of its recreational focus and with the rising need to act responsibly and openly it could be faced with two choices in the year to come. Either increasingly make its product more available and catered to serious punters through things like minimum bet liabilities or to move even more sharply towards the entertainment model.

The latter option appears to offer more tangible benefits for both the industry and the consumer. A more open approach to sports betting as an entertainment product, both in terms of the user experience and the marketing can position the industry for the next decade and place it on the front foot for the coming debates on responsible gambling. But it will also take a fundamental rethinking of what sports betting is and how its sold to the consumer, and is far from the easy route.

So in the macho world of sports betting it’s perhaps easier then to perhaps carry on rolling out limited MBL markets and hope the regulators don’t take it on as a cause. I guess I know where my money would go, but I’ve always liked backing an underdog…