Industry predictions: SPACs the new black as Caribbean islands rush to replace Curaçao

Julian Buhagiar, co-founder, RB Capital

Julian Buhagiar, RB Capital

US-led acquisition will continue to dominate the M&A landscape

This is already happening but will accelerate even more next year. What we’ve witnessed in 2020 has been the palate cleanser compared with what’s waiting around the corner. The main reason is that the deeper pockets of capital, mainly private equity-led, haven’t yet made their moves on some large pieces of action; waiting to see how the first (and lower capital) movers respond to the market.

SPACs are the new black

There is currently (in equity markets) a narrow window of opportunity (just like fixed income’s dark pools of capital) beyond which SPACs will need much more thorough auditing before any proposed M&A. In the meantime, these SPACs will make proverbial hay, and in that – read many bold moves, sometimes even incorporating two or more mergers or reverse takeovers in one fell swoop. At some stage, likely in 2022 or 2023, there will be industry pressure to reduce the unchecked power that SPACs currently have.

European gaming will consolidate on itself due to Covid and overregulation

Sadly, we’re going to see the beginning – scratch that, the middle – of the end of mainstream European (regulated) gambling. Together with the ongoing waves of (mutated) Covid-19, assuming most regulators have their (unchecked) say on licences, spending caps, and spinning times, together with any other populist nonsense, we will witness the start of a bifurcated approach for some of the bolder operators; launching less-than-white brands to supplant rapidly diminishing (and cannibalised) income from regulated revenue streams.

New Curacao

Tying in nicely with the demise of white European gaming, expect to see a handful of similarly colourful Caribbean islands rushing to claim the crown of the incumbent Curaçao-an king. It’s surely only a matter of time before new jurisdictional licences start to be offered to game providers and B2B platforms to supplant the outgoing Curaçao licence.

BTC will continue to increase

Not an ideal scenario (and best explained in more depth in a future article) but now that the $20k ceiling has been smashed, and PayPal will embrace the crypto world in 2021, there really isn’t any more dominant downward pressure, at least in the short-term. The obvious winners are crypto-backed gaming operators and (obviously) crypto-exchanges, as the expected transactional volume will increase by an order of magnitude in the next 18 months.

Pang Goh, business development director, Ezugi

Pang Goh, Ezugi

Land-based operators will continue to transition online

This transition has been happening slowly in the past. The pandemic has definitely accelerated this.

There are land-based gambling giants in countries around the world, and as more markets embrace and regulate online gambling, we will see more of these retail brands transition to online. Some of these operators have already put their massive databases to good use by launching online, but those that haven’t already will do in 2021 and beyond.

This year land-based operators have realised how vulnerable they are without an online offering. This has seen an uptick in operators migrating online in the final quarter of the year and this momentum will undoubtedly continue into the New Year. We’re already seeing the Philippines, for example, granting land-based casinos online licences, which will mainly cater to the local VIPs.

It’s not only the transition from land-based to online, even on their land-based operations itself, the land-based casinos will start adopting online technology as well, like online payment and in-premise betting on tablet/mobile.

Latam to regulate online gambling

Legal and regulated online gambling has been rolling out across Europe for a number of years now, and while we are starting to see a similar pattern emerge in Latin America, I believe this will really gather pace in 2021. Colombia was the first to flick the switch on legal online gambling and more will follow suit over the next 12 months.

Retention tools will be key

With the cost of player acquisition rising at what seems to be an unstoppable rate, operators are going to have to improve retention levels in order to counteract this and to hit the ROI they are seeking. What’s more, restrictions on bonuses in heavily regulated markets are forcing operators to think creatively inside the box – within the constraints of regulation.

Providers can also play a key role here, as nowadays we’re already seeing providers launching their own retention tools to encourage players coming back to their games. But larger operators can work closely with provider(s) to come up with exclusive tools that can be the USP for the operators – a move that can benefit both the operators and providers.