Beyond 2020 – The Future for iGaming Across the Globe

Posted by Harry Kane on Sunday, June 14, 2020

There’s no doubt that the iGaming market in the UK remains fascinatingly and precariously poised at present, as it continues to deal with a range of socio-economic, regulatory and legislative challenges.

Of course, this trend is also prevalent in other markets throughout the world, from North America (which continues to deal with contradictory regulatory shifts) to Europe (which is facing the UK’s permanent exit from the European Union and a potentially significant economic fall-out depending on the precise terms of the departure).

In this post, we’ll explore these issues in further detail, while asking moving beyond 2020 and asking what the future has in store for the global iGaming market.

1. The Potential for Variable Market Growth

While economists all agree that the global iGaming market is poised for growth between now and 2030, the scope and rate of expansion varies wildly from one forecast to another.

Although some variance to be expected when considering such economic reports, experts continue to predict an annual growth rate of anywhere between 3.1% and 10% year-on-year during the next decade or so.

In the best case scenario, this would see the global iGaming market achieve a total value of $127.3 billion by the year 2027. The market is currently estimated to be worth $53.7 billion, creating a scenario where the industry could more than double in size in just seven years overall.

The question that remains, of course, is why are these industry projections so variable? The answer lies in the vulnerability of certain markets, with the UK and the US offering relevant cases in point.

Although the US market has seen huge growth during the last decade (particularly following the decision of the Supreme Court to strike down the Professional and Amateur Sports Protection Act ((PAPSA)) that previously prohibited sports betting at a federal level), an ongoing dispute over the interpretation of the Wire Act continues to threaten the legality of interstate betting online.

January 2019 saw the Department of Justice (DoJ) revise its 2011 opinion that the Wire Act (which prohibited telephone gambling across state lines in 1961) should not be applied to iGaming. This posed a huge challenge to local authorities in New Jersey, Delaware and Pennsylvania, which had previously legalised online gambling and forged lucrative liquidity pacts that fundamentally crossed state lines.

At present, this issue is being challenged in the District Courts of New Hampshire and New Jersey (amongst others), with the Justices in the former state having disagreed with the DoJ’s opinion and suspended its implementation.

The final outcome has yet to be determined, however, and this will definitely impact on the scope of future growth in North America and the revenues generated throughout the global marketplace.

2. The Rise of iGaming Throughout Europe

When it comes to the vulnerability of the UK market, this is being underpinned by a variety of regulatory and geopolitical factors.

The imposition of the controversial FOBT cap and a 6% hike in the Remote Gaming Duty (RGD) payable by operators has squeezed operator margins markedly in the UK.

At the same time, the spectre of Brexit continues to threaten the viability of Gibraltar as a popular and low-tax gambling hub, with some operators reportedly considering relocating to similar entities in Malta and Ceuta in order to retain core operational advantages and single market access.

This vulnerability is being underlined by the relative growth of iGaming in various European markets, including Sweden, Bulgaria, Poland and the Czech Republic.

Bulgaria is fast becoming a hotspot for international brands and investment as its market benefits from sustained deregulation, for example, while iGaming revenues in Sweden peaked at $1.3 billion in 2019.

Overall, the EU member states alone generated a total online GGY of €22.2 billion (£18.7 billion) in 2018, with this expected to breach the €30 billion mark by 2022. This figure could be swelled further if more brands exit the UK market and relocate to Europe, although this represents mere speculation at this time.

We do know that leading iGaming brands such as ComeOn (who are owned by Cherry AB) and Get Lucky have already exited the UK market at the time of writing, citing the impact of regulatory challenges and a desire to target more lucrative and less mature spaces in Sweden and Germany.

3. The Rise and Rise of Bingo

In many ways, online bingo has become the forgotten vertical of the iGaming industry, having once been the darling of this space during the mid-noughties.

At its zenith, online bingo hubs drew a total audience of more than three million in the UK alone, but this has dwindled somewhat as slots and virtual casino gameplay has evolved to take centre stage. Remember, slots alone account for around two-thirds of the total iGaming GGY in the UK, with bingo responsible for a paltry 3.5%.

However, the market appears to be in the grips of a resurgence on these shores, after a series of high profile acquisitions and moves to create a more compliant regulatory response industry-wide.

The results of this have been borne out in the most recent figures, with the UK Gambling Commission (UKGC) revealing that the total GGY for remote bingo peaked at £198 million in the year ending September 2019.

This represented an astonishing 12.5% increase on the corresponding figures reported in March 2019, as leading software houses such as Playtech continue to lead this charge by creating a diverse array of immersive and graphically impressive games.

From a UK perspective, it should come as no surprise that the online bingo market is expected to reach its highest compound annual growth rate (CAGR) by 2025, with the margins provided by bingo games becoming increasingly appealing to operators.

The reason for this is simple; as while the bingo vertical typically delivers far smaller margins than slot games, there remains the potential for the UK government (in conjunction with the UKGC) to impose a £2 betting cap across all online slot games and similar verticals.

Ths would make online bingo’s margin of between 25% and 35% increasingly appealing, paving the way for this vertical to become more popular in the UK and eventually across the globe.