A Look at the iGaming Industry’s Latest Report
Posted by Harry Kane on Friday, June 22, 2018
Given that the UK’s online gambling market is now worth a staggering £4.7 billion, it’s fair to describe this as a key growth market. As a result, it’s increasingly important from the perspective of the government revenues that it produces and job creation, particularly as Britain prepares to leave the EU on March 29th, 2019.
With this in mind, it stands to reason that the markets’ core trends and prevailing climate should be of genuine interest to commentators and economists alike. This is why MECN’s recently published spring edition of its online gambling quarterly report has garnered such interest, as it offers a clear insight into the current market and its prospects in the near-term. In the article below, we’ll provide a summary of this report and its key takeaways for operators based in the UK.
The Current Climate
To start with, the level of sentiment among iGaming operators in the UK remains generally positive, 96% of participating respondents describing the sector’s current business climate as being either “good” or “satisfactory”. In contrast, just 4% described the prevailing climate as being poor, and this seemed to reflect the inflated turnover and industry growth recorded at the end of 2017.
However, there remain clear concerns about future industry development, thanks primarily to the likelihood of more stringent regulatory measures being introduced in the near-term (we’ll have a little more on this later in the piece). So, while an estimated 46% of industry experts believed the market’s development prospects to be positive in the final quarter of 2017, the corresponding figures for March 2018 revealed that this number had dropped to just 39%. When it comes to recent market growth, respondents appeared to be in no doubt about the core factors behind this. More specifically, mobile betting was revealed to be the indisputable leader of the industry’s expansion during the previous 12-month period, with this channel enabling remote gambling to claim 34% of all activity in the marketplace.
According to analysts, this trend will be continued over the course of the next 12 months (and probably beyond), with a 5% increase in growth projected during this period. As a result, we should expect mobile gambling to become an increasingly commonplace practice over time, as virtual activity continues to claim a larger and more influential market share.
Interestingly, the current estimates do not reflect similar expectations for Bitcoin and Blockchain technology. These innovations, which many outside of the industry believe will dominate the future of financial transactions and online casino models, are not growing at the anticipated rate, with a 5% depreciation projected in comparison with the results from the previous quarter.
The reasons for this are hard to fathom, although relatively immature legislation and regulatory measures (as well as the lack of widespread integration) may well have something to do with the perception of this technology.
The Future Climate
Despite concerns abound over the development of the market, operators and industry experts remains extremely positive over the long-term future. When quizzed on this subject, a combined 93% of respondents believed that the future industry climate will be either “good” or “satisfactory”, with just 7% maintaining a negative outlook.
Interestingly, the total number of respondents who described the future outlook of the industry as good increased by 9% in comparison with those who currently feel this way, so there remains genuine optimism that the marketplace will experience sustained growth over the course of the next 12 months.
If there is a cause for concern in the future marketplace, it revolves around the risk of over-regulation and compliance issues. While many believe that the current regulatory measures in the UK and Europe are satisfactory, the industry may well be approaching a tipping point where over-regulation begins to impact on the structure of operators and their ability to meet consumers’ expectations.
After all, the online UK Gambling Commission has already announced that great transparency and responsible gaming are two of its core strategies through 2021, while it is also playing a key role in the crackdown on fixed-odds betting terminals (FOBTs). This regulatory drive, which could decimate the offline gambling industry and force the closure of up to 9,000 high-street bookmaker outlets in the worst case scenario, is indicative of a more aggressive stance and one that may soon impact directly on the online sector.
In fact, the UKGC has already strived to introduce more stringent regulations for online promotions and advertising practices, and there’s no doubt that this type of measure may ultimately impact on profitability and way in which operators interact with customers. The same principle can be applied in Europe, where growth markets such as Belgium have already approved widespread gambling advertising and sponsorship curbs despite the impact that this may have on the industry.
Why Responsible Gambling Holds the Key
While there’s no question that the introduction of more stringent regulations increases the risk of compliance issues in the UK and Europe, this may also deliver long-term benefits to the industry.
At the very least, however, it will create a challenging transitional period in the global market, and this is probably why the future development of the sector remains a cause for concern and confusion among participants.
Much will depend on how operators react, of course, as embracing the notion of responsible gambling and adapting existing models to ensure compliance, profitability and the integrity of the customer experience will ultimately determine the future of the marketplace. This is also reflected in MECN’s quarterly report, with many experts suggesting that the willingness of operators to make larger investments in responsible gambling measures will be crucial to their own success and that of the industry as a whole.
In the short-term, this means adopting a proactive approach towards complying with the EU’s new General Data Protection Regulation (GDPR) when it is unveiled later this month. This measure, which represents an upgrade on the Data Protection Directive from 1995, will have a huge impact on how operators collate, store and utilise consumer data, so businesses must remain agile and leverage modern technology in order to drive compliance while maintaining profitability.