Egaming industry predictions for 2017 – part 1
In the first of a series of articles leading up to the New Year, EGR Intel asks industry experts to predict the big themes for 2017
Warwick Bartlett, CEO, GBGC
Consolidation – I think we have one or possibly two more deals to go, and one just might happen in 2017. But with who? William Hill’s problems have been well documented, but this is fundamentally still a good business, and if the share price is oversold we just might see either private equity or an operator take advantage of a lower market cap. William Hill and 888 have been in talks twice: William Hill tried and failed to take over 888, and 888 came back with Rank to buy William Hill. A combination of the two makes sense. Playtech has in the past made good acquisitions by buying private companies. 888 has its own proprietary software and if William Hill acquired 888, Playtech would lose a big customer. My consolidation picks for 2017 is 888, William Hill, and Playtech.
Expansion – Low economic growth creates opportunities in the gambling industry. Brazil, India and Germany are all considering a relaxation of their archaic gambling laws. The three have varying degrees of prosperity but all three have substantial populations that would make egaming work. The industry just needs one of those countries to adopt reasonable legislation, and tax rates to become a significant market. My prediction is that at least one of the three will open up to egaming.
Technology – I am a huge fan of Microsoft HoloLens – it goes much further than Google Glass, which was not a success. HoloLens will revolutionise the sports trading desk. Risk managers can trade multiple screens in minimal space, poker and slots players can play several screens. Still at the prototype stage, I have read rave reviews from developers. It is the future.
Joe Saumarez Smith, chairman, Bede Gaming
More M&A – It doesn’t feel like the merger frenzy is cooling down and there are still lots of companies out there looking to do a deal that will give them the necessary scale. British companies look particularly vulnerable as sterling is weak and there are quite a few targets that look like possibilities.
Regulators showing their teeth – The Gambling Commission has warned operators that the regime is going to get tougher, with potential losses of licences mooted. Other regulators around Europe are maturing and starting to really understand which operators might be problematic. Anyone whose compliance department isn’t top notch should be worried.
Grey markets – It may not happen in 2017 but operators seem to have become quite relaxed about taking bets in really quite grey markets. And investors also seem pretty relaxed, rating earnings in those markets at some quite chunky multiples. These things go in waves but I find it hard to believe that people should be getting x6 multiples on Norwegian or Finnish revenues. I can’t see it lasting.