Industry predictions for 2021: lotteries to benefit from lockdown and a focus on Wire Act frailties

Richard Wagstaff, managing director, Degree 53

Covid aftermath 2021 will still have to deal with the consequences of Covid-19 and various lockdowns that have affected the sports and gambling industries globally. Although gambling activity has been rising with the return of sporting events, it might still be a while until retail bookmakers, bingo halls and land-based casinos can operate at full capacity. Operators should look for promoting their digital services or launching them to continue to engage with their customers remotely. This also concerns making continuous improvements to existing online products to enhance the user journey, design and functionality to meet demand and offer a seamless experience for all customers. However, responsible gambling and player protection to promote a safe gambling experience needs to remain at the forefront of operators’ product roadmaps. There needs to be more consideration for how customers can limit their activity or play responsibly to mitigate risk. There are many tools that can be integrated into the onboarding and overall customer journey, so the entire gaming experience is still enjoyable and safe.

More mergers and acquisitions in the North American arms race

We will see more competition between operators in North America in terms of expanding their reach and services. More acquisitions and mergers will take place between various companies that can provide complementary services and offer crossover into areas, such as sports betting, ilottery, media and affiliates.

Growing lottery sales

Lotteries will likely see an increase in their profits and ticket sales, particularly where customers can purchase tickets and play instant win games remotely. Lottery is aspirational and the ongoing pandemic has increased online lottery sales, as customers want to try their luck more. Lotteries have largely benefitted from providing digital services and we see this growing as more customers become used to online services across a variety of other industries. So, it’s likely we’ll see more lotteries follow suit and expand their digital portfolio where possible.

Justin Cosnett, chief product officer, Continent 8

US upside with risk?

Need for additional state revenues will probably see accelerated regulatory approval of online gambling, sports and other. This could see an explosion in growth of the predominant brands, and behind them the supporting or next tier of market players and providers. However, this growth, and the resulting increase in advertising, revenues, and media interest, may create pressure for the federal authorities to show they are “watching”? It would follow the pattern with poker and then, to a lesser degree, fantasy sports – the bigger and louder you get – the more pressure to “get involved”. While I expect no federal regulation, questions may be asked or attention piqued. More focus on the Wire Act’s obvious frailties in dealing with the inherent internet connectivity complexity – and will operators be asked to show more about how technology maintains in-state activity and transaction?

Return of the unregulated UK and EU?

I think we will continue to see increasing regulatory pressure (due to continued negative perception among mainstream media), combined with similar focus on further exploiting the sector for taxable revenue, within a market where scale has become more necessary to maintain margin. With only a handful of operators in the UK dominating the sector, would any future M&A, or controversy, draw the CMA or other regulatory bodies in, or affect any ongoing review? Can online gaming demonstrate a significant enough distinction to retail FOBT, to prevent harmonisation of bet stake requirements? While sportsbooks and retail were Covid affected, casino and slots “haven’t had it too bad” perhaps; making them even more attractive a target to the treasury. Following through longer term, will there be a higher targeting of UK and EU consumers by unlicensed and unregulated providers? If so, what can the local or remote regulator do and would they do it – through blocking or other enforcement?

Cloud, cloud, (edge) cloud!

Many regulators require betting transactions or details to be provably performed or held physically in the jurisdiction, traditionally preventing gaming operators from being “fully cloud”. With the US PASPA conditions changing, the hyperscale US providers have more comfort in targeting this online vertical and have grown their expertise and are targeting expansion. Will regulators stand firm on technical requirements in order to demonstrate and maintain a level of control and visibility necessary for consumers and other regulators confidence? If they do, then the hyperscale cloud providers will need to stretch into the regulated location – and Continent 8 and others will be enabling igaming operators to take advantage of their chosen cloud ecosystem, but at the jurisdiction’s edge.  Probably my most confident prediction.