Where in the world: Does the online gambling industry need a new spiritual home?

The news of bet365’s move to Malta had some commentators, perhaps prematurely, ringing the bell for the Gibraltar’s future in egaming. That a number of firms came out to shout their commitment to the traditional home of online gambling in the Med speaks as much to its current fragility as it does to its strength. With Brexit looming and the world’s largest online sports betting operator (mostly) upping sticks to its big rival, there are clear threats and questions over where the heart of the egaming industry really lies in future.

Malta’s claim as the centre of the European online gambling world is a fair one at the moment, with many of the new generation of egaming leaders based there; its EU status providing a level of protection and comfort and a large existing talent pool in place. For operators looking at a broad European market for future growth it is likely to remain the first choice. Although you wonder if it can cope with the growing pains that could come with more major operators moving to the island, both in terms of infrastructure and talent.

There has always been a relatively shallow talent pool for key positions in the online gambling world and while it has always been a relatively mobile one, there is always ceiling on how many people will happily relocate. The battle for the best people is a key one within this and any other industry and it’s not unreasonable to expect firms to invest more to compete in what will undoubtedly become a more competitive talent acquisition environment. But this is an issue that goes way beyond Malta and Gibraltar.

Where is the centre of gravity?

One of the biggest questions is more about where the centre of gravity in the online gambling world will lie in the future. Gibraltar has long been home to some of the largest UK-focused operators and for the past decade or more there has been no doubt that the UK was at the heart of the global business until now. The UK has revenues multiple times larger than any other European nation and is the home of the industry’s largest public operators, but times are starting to change.

While the UK’s position as the largest European market is under no immediate threat its position as the natural centre of gravity, as the place where everyone wants to be a major player, is certainly questionable. With the rise in tax, regulation and a decline in revenue growth in Britain’s egaming sector there are much more attractive looking markets to investors and operators as we head into the next decade. Germany, Spain, the regulated Nordics, Eastern Europe and the Baltics all have varying appeal to an industry still hunting for top-line growth.

Italy was a bit of a false dawn and has significant issues post-advertising ban for operators looking to scale-up so everyone is now looking to Spain. Could Spain position itself as the new centre of the European gambling world? It’s not impossible, not least with the number of firms and owners based around the Costa del Sol. Sweden could also be a base for an expanding Nordics market, although tax costs likely make it prohibitive for most. Malta does seem the natural home to attack those markets, but there are other potentially much bigger opportunities out there.

A big wide world

Latin America, Asia and North America are all big targets for an industry looking for the next big thing and all operate on time zones not hugely friendly to a CET workforce. The burgeoning US market in particular then begins to look somewhat attractive, and the claim that New Jersey could one day become the new home for egaming starts to look a little less fanciful. Could it be a new global hub attracting talent? Stranger things have happened.

The US, however, feels like its own market, bigger bolder and separate from the rest. And certainly, the way the big egaming operators have attacked it so far seems to suggest they believe this with GVC, PPB and William Hill all running very standalone businesses in the US market. And this perhaps is a bigger indicator of what is to come, with the future looking like a more fractured and decentralised industry with no real “hub” to speak of and the UK starting to look more like an island on its own than ever before.

It’s a challenging picture for firms that have frequently tried to offer the same or very similar model to all the markets they operate in from central hubs in offshore locations. As regulations become more distinct and operators recognise the need to be very local in their approach then companies will increasingly need to be more fractured and decentralised themselves. And this presents significant challenges and a major need for continued M&A to remain on top of the pace of change.