eGaming Sector Outlook

In May, Strategic Partner Lead at Digital Isle of Man, Abby Kimber spoke with Intergamingi magazine to discuss the global outlook of the eGaming industry, the impact of COVID-19, and the current focus of the agency.

What is the current global outlook for the online gambling sector?

Regulation will continue to be a prevalent factor globally across the eGaming industry, with LATAM, Africa and Asia continuing to open up regulated markets. Given the further upturn in online gambling due to country-wide lockdowns, Governments will also be looking to regulate activity to generate tax revenues and to protect players from black-market operations.

The USA also presents a special challenge as we see European sportsbook partnering with US operators and facilitating knowledge sharing between continents to build the proposition there. It will be a number of years before companies recoup their costs of set up in the USA but it is too valuable a market to ignore as it regulates state by state.

Growth has become increasingly expensive in recent years, and with regulatory and advertising restrictions compressing margins, as well the more long term impacts of COVID-19, we’ll see further M&A activity to sustain growth and maximise product verticals.

COVID-19 has also altered the trajectory of the sector. Impacts of this global pandemic have seen sports-books diversifying their offerings following losses of GGR – some reporting up to 95%. Poker has seen a great benefit with figures showing of an uptake of 60% (reminiscent of the 2005 boom) and online casino content is in higher demand than ever. Whether or not the results of the current climate have forged a new path or just a brief side-step remains to be seen.

What is Digital Isle of Man’s focus in the current climate?

Supporting the growth of our eGaming and digital businesses in the Isle of Man remains a key priority for us, the sector makes up 21% of our GDP and when added with our other digital industries which work closely together, that figure rises to 30%. 

At the beginning of 2020 we introduced a new strategic partnership and engagement model designed to provide businesses with true value, increased access to government and the support they need to prosper. We are also partnering with the industry on the Island to feed in to an updated value proposition suited to our maturing market.

The Isle of Man Gambling Supervision Commission is known for its gold standard regulation and, as part of its responsible gambling strategy, is working with the Island’s gambling sector to proactively create the first globally facing point of supply and evidence based, safer gambling code of conduct.

We’ve also seen continued success with our B2B software and token-based supplier licences which were launched at ICE London 2019 and a renewed interest in our network licence offering.

Betting on esports is no stranger to the Isle of Man, 2015 saw the first betting on esports business licensing here, however, looking beyond to the core of the esports industry, we are working on an initiative to help build stability and credibility within the sector which, in turn, we expect will drive growth within the Isle of Man eGaming industry as well.

What do you see as the short and long-term impacts of Covid-19 for the industry?

In a time where (most) people have more time to play, this has brought both opportunities and challenges.

Undoubtedly, in the short-term the lack of sporting events globally has to be one of the biggest impacts; it has seen new player streams entering markets, an explosion in poker and higher demand for casino and games content as well as an increase in virtual sports and esports gambling. However for the majority of traditional sports betting customers, they are passionate about their choice of bets and while these alternative sports provide entertainment, they may not have the same emotional return as a bet on their favourite football team, therefore GGR levels are not likely to meet the levels seen in traditional sports betting.

There is also likely to be an increased risk of problem gambling. We’ve seen country bans on advertising as well as deposit and stake limits put in place, and the UK’s largest betting and gaming operators voluntarily removing all TV and radio gaming advertising during the lockdown period to try and reduce harm. 

Looking more long-term, M&A will have a part to play as we see the acquisition of smaller companies who have perhaps had harder struggles to deal with throughout the pandemic. 

In terms of retail and land-based operations, we will have seen a big move to online to protect revenues and future-proof business; it is perhaps too soon to understand if customer behaviours have altered past the point of no return to a permanent move to online, or if, as lockdowns ease and life returns to a sense of normality, customers will go back to their preferred way to play.

What do you see as the opportunities emerging from Covid-19?

Innovation and diversification is key, and operators and software providers have been agile in adapting their offerings to provide alternative products to customers. Having a loyal customer base that has the confidence in operators to try something new is also an advantage.

The addition of new sports markets has also opened up new revenue streams.  Due to the lack of sports in Europe and the USA, operators have been turning to events in Korea, Australia, Russia  and have also seen the additions of new sports such as table tennis in the Russian Liga Pro.

Covid-19 has forced us to find new ways of working. With the majority of employees working from home for a sustained period of time, it has allowed us to see the both the advantages and disadvantages of this approach and review work-force requirements. Some people thrive working from home; others struggle and prefer an office environment.  There is greater flexibility for remote teams across jurisdictions and the time and money saved commuting improves both work/life, and bank balances.  Cost reductions are substantial for employers too and office space requirement is a future consideration – how much space do we really need? As Zoom and Teams calls become the norm, will we have the same need for business travel in the future or will video conferencing replace lengthy expensive trips across continents? Only time will tell.

This article was first published in the May edition of Intergamingi Magazine.

Visit our eGaming page for more information on obtaining an online gambling licence from the Isle of Man Gambling Supervision Commission.