regulation,32Red,Ed Ware,From Dot Com to egaming
UIGEA took everyone by surprise, says 32Red chief executive Ed Ware in the latest of our From Dot Com to eGaming series of blog posts looking back over the last decade, but the downturn offers opportunities for the industry...
THERE HAVE BEEN a number of significant milestones in the industry over the past 10 years, including the IPOs of online gaming firms and the introduction of UK licensing, but UIGEA and the worldwide recession are the two that really stand out.
For several years ahead of 2006, the larger US-facing operators in the sector “ Microgaming, 888, PartyGaming, et al “ had been investing significant funds in lobbying American opinion leaders, politicians and lawmakers to stave off any moves to ban online gaming in the States.
It was somewhat of a shock, therefore, when the House and Senate added online gaming to the SAFE Port Act at the very last moment and banned online gaming for American citizens.
The ramifications were of course widespread and tens of millions of pounds were wiped off the value of many businesses overnight.
Even those who hadn’t gotten involved in the US market were impacted as the publicly-listed, American-facing operators turned their attentions to hitherto secondary (for them) territories.
Some private enterprises were able to resist the threat and continue today to fish the largest gaming market in the world to incredibly successful levels. This is one serious imbalance that those who fought to introduce UIGEA did not foresee, but that presumably cannot continue unchecked.
The latest chapter in the online gaming world concerns the threats posed (or the opportunities presented) by the current worldwide recession. The online gaming industry didn’t exist during the last recession, but there is evidence to suggest that operators will continue to prosper even during these tough times.
Despite a tightening of consumers’ belts, broadband is becoming cheaper and more accessible around the globe, and advertising costs are at record lows, so many online operators believe the recession provides an opportunity to source new players at attractive cost-per-acquisition levels.
However, the current recession is slightly different to its predecessors “ not only is it regarded to be the worst in living memory, but most of the financial institutions have been shown to have acted irresponsibly. Banks have been forced to take drastic action to survive and to shore up their balance sheets, and a reduction in available loan finance suppresses consolidation activity.
The limitation of consumer credit lines also reduces the disposable income of players.
Many online operators have reported reduced player yields and a fall away in high roller activity, but should these trends be temporary, the online gaming industry looks set to come out of the recession in relatively good shape.
Click here to read other posts in the From Dot Com to eGaming series from figures including Manfred Bodner, Jim Ryan and Mark Blandford.
Thoughts? EGR welcomes pitches for blog posts of 300-400 words on topical issues in egaming. Email online editor Jon Parker for details.