Industry predictions: Consolidation among super affiliates and stock exchange investigations

Fintan Costello, CEO, BonusFinder.com

Ontario most significant market in North America

If you thought the States were tearing it up, think again. Our Bonus Index research is predicting that the post-regulated province of Ontario, Canada, will become the most attractive igaming market in North America for both players and brands, surpassing all its US online counterparts when it goes live in Q1 2022.

Once regulated in early 2022, Ontario will become North America’s most important online casino and sports betting market. The Bonus Index predicts that a combination of its 15 million population, with a large volume of sportsbook and casino players, and an estimated 70+ brands looking to acquire a licence when the market goes live means that brands will be entering a highly competitive market and battling for players by offering the continent’s most appealing casino bonus of $866 and an estimated sportsbook bonus of $395.

Ontario has a Bonus Index score of 23377, nearly twice as high as New Jersey, its nearest US state rival and second in the Bonusfinder.com list.

Spin-offs and consolidation among super affiliates

M&A has been a consistent prediction within these pages for several years but 2022 will see the heat cranked up another notch with even more aggressive investment, especially among what I call European ‘super affiliates’. These include the likes of Catena, Better Collective and XL who, among others, have been rapidly scaling through acquisition in the US with multiple rapid-fire purchases.

I expect increasingly strict regulation, driven by tighter responsible gambling measures across Europe, will see them turn their backs on their former home and instead turn their attentions towards, almost solely, the Land of the Free. Tax rates, cost of hiring local talent and licensing red tape will still be more favourable to these businesses than it is in the likes of the UK and some regulated parts of Scandinavia for example, plus so many more US states are looking to open and grow complementary products including slots so they will continue to make hay while the sun shines.

Affiliates play a vital role in the sports betting ecosystem generating 10% to as high as 50% of an operator’s player base, however these super affiliates are also growing into far more than simple traffic generators and instead developing into fully fledged media and product brands. There will be more of this evolution to come.

UK gambling act review spells doom and gloom for market

The industry may have received a slight reprieve with the UK government delaying overhauling the Gambling Act 2005 until the spring of 2022, or later depending on the unfolding health crisis, not to mention the Prime Minister’s tenuous position, but I fully expect its outcome to have long lasting, damaging consequences.

Previous Gambling Minister and ‘friend of the industry’ John Whittingdale has been replaced by Chris Philp who has strongly hinted the new act will involve a tough crackdown on an industry perceived to have reaped vast profits and harmed vulnerable players for too long.

I expect his findings and recommendations to be far worse for the industry than expected. Some of this will be justified with certain ‘bad actors’ giving everyone a bad name and being either heavily fined or stripped of their licences altogether. His backing of a Single Customer View solution, where operators would be able to share data across multiple sites to monitor and immediately spot players showing signs of addiction, would also be a worthy world first, but its implementation will take years to put in place and I foresee a ton of teething problems.

Expect strict measures around VIPs, direct marketing, offers, bonuses and rewards, licence stripping, unprecedented fines, some level of highly unpopular and potentially intrusive affordability checks for big spenders and a bigger shake up than anyone could have ever imagined with many brands and companies departing these shores (providing they have a negative PCR test!) quicker than you can say ‘Tory Christmas Party’.

Christian Tirabassi, senior partner, Ficom Leisure – gaming advisory and investments

Acceleration of industry consolidation

As a young industry the normal dynamics of consolidation have been the trend in the last few years and accelerated by the Covid-19 pandemic. I expect in 2022 an increase in M&A deals in two main segments:

• B2C – transnational acquisitions or mergers to create multi-channel and multi-product betting and gaming operators present in different regulated jurisdictions, also to dilute the regulatory risks
• B2B – acquisitions or mergers to create multichannel and multiproduct betting and gaming suppliers present in different regulated jurisdictions, also to dilute the regulatory risks.

Stock exchange investigations

Stock exchange commissions and relevant regulatory bodies will start investigating publicly listed companies in relation to compliance and their carrying out business in different jurisdictions.

India’s potential

Development of a regulatory framework in relation to betting could create one of the largest global betting markets.