Looking ahead in gaming
1. What are your top 3 highlights of the year?
As ever, there was a lot going on in the gaming sector in the last year. Those that stood out for me include:
- Growing uptake of Mobile Wallets – ApplePay usage by gaming merchants and consumers continued to grow significantly during 2018. Googlepay is now available to online gaming merchants in certain regulated markets and we saw the beta launch of this with one of leading merchants in the second half of the year. Some shrewd merchants have revised their user journeys to incorporate the one-click ability within the betslip which is great to see and we believe will benefit conversion, particularly within time sensitive in-play sporting events. Both these wallet offerings may become even more of a draw as they satisfy SCA requirements that come into play as part of PSD2 in September this year.
- Launch of Fast Funds – Worldpay partnered with VISA for the launch of FastAccess Funding – enabled by Visa Direct late 2018. This is a real game changer for merchants and consumers with the ability to pay funds back to credit and debit cards in less than 30mins. This is obviously great for consumers who are no longer waiting days for their winnings. For merchants, this create some benefits and challenges that need to be considered and managed.
- Further M&A Activity – 2018 was another busy year for M&A the gambling vertical with a number of including William Hill’s purchase of Mr Green, GVC’s of Ladbrokes Coral and the Stars Group acquisition of Skybet. This consolidation certainly followed the trend of previous years, but the size of these deals dwarfed even those in 2016 and 2017.
- PASPA Repeal – May 14th 2018 saw the repeal of the Professional and Amateur Sports Protection Act (PASPA) and could prove to be one of the pivotal moments in the history of online gaming since it’s inception.
2. 2018 saw some big (and exciting) changes to Sports Betting in the US. Could you give us more info – and what opportunities this presents?
As I mentioned earlier, the PASPA repeal in May 2018 was a historic event with 7 states quickly joining Nevada in offering sports-betting in the second half of 2018. A further 19 states had sports-betting legislation under consideration in 2018 and 6 partnerships were struck with major sporting leagues (NBA, NHL and MLB) which has added further validity to the notion of legal sports-betting in US. On that basis, it’s fair to say a lot happened in comparison to previous years. We should consider that the legislative process in the US on a state-by-state basis which will likely mean that the emergence of this market in comparison so some of the more mature European markets will take time. However, the sheer geographical and economic scale of the US means that this market is top of the agenda for many of the leading pan-European gambling operators who have been setting up JV deals with many of the leading US land based gaming groups. As and when the larger states such as California (5th largest global economy), New York, Texas and Florida pass legislation to enable sports-betting, the US will be one of the largest regions for gambling globally.
"We’re predicting that, by 2023, mobile commerce will overtake desktop for the first time."
"The gaming vertical is fairly mobile already, with the UK Gaming commission reporting in 2018 that mobile usage among customers had risen to 51% in 2017."
3. There have been changes in jurisdictions for the acceptance of gambling – what impact has that had on the industry?
Regulatory change continues to be an evolving theme within the sector and gaming operators face growing scrutiny:
- Russia has clamped down on cross-border card processing in line with their own domestic regulation and this has had a significant impact on acceptance rates towards the end of 2018 following issuer blocks.
- Sweden, a key gaming market announced its long awaited licencing structure in 2018 for launch at the beginning of 2019. Merchants with licences are now going through the early teething problems of registering themselves with specific issuers to ensure their payments are accepted as a licence holder.
- Italy – Whilst the impact will be mainly seen in 2019, the advertisement ban in Italy will likely have a significant impact. The ban will apply to all gambling-related products and services across all media platforms including television, websites and radio. Additionally, sports clubs will also be prohibited from carrying sponsors from the gaming industry, however, the state-run national lottery is exempt.
Despite the maturity of the UK market, it is not alien to change and a number of issuing banks have created the option for customers to block gambling transactions so that they automatically decline. Starling Bank was the first to do so in June and Barclays were the high street bank to announce this action in December. It is expected that most other UK issuers will follow suit and the debate surrounding credit cards being used for gambling transactions in the UK continues.
4. We’re predicting that, by 2023, mobile commerce will overtake desktop for the first time. What opportunities does this present in gambling – and how should companies prepare?
The gaming vertical is fairly mobile already, with the UK Gaming commission reporting in 2018 that mobile usage among customers had risen to 51% in 2017. In that sense, you could argue that this has already happened within the industry.
Understanding the nuances of a mobile user journey versus its desktop counterpart is crucial, particularly during the registration process. Emerging markets such as Africa are extremely mobile driven in both how gaming sites are accessed and how consumers pay/get paid. mPesa and other mobile payment providers continue to dominate this growth market. Mobile wallets remain an excellent option for conversion within the mobile payments journey and are continuing to be adopted.
"Are there any particular global markets offering high growth potential for gambling businesses?"
"The US is an obvious example as mentioned previously, however, regions such as LATAM and Africa offer high growth potential."
5. Which companies do you think are doing interesting things in the gambling space?
Good question, innovation is a key theme within the industry with gambling merchants typically being early adopter of new payment methods and technology compared to other verticals. Merchants within this space typically work on a diverse geographical basis and use a variety of payments methods depending on the local market preference.
PSD2 regulatory impact
- Challenge for gambling merchants who typically process in an unsecure manner
- This is because the CPA cost is high for gambling merchants and removing any possible barrier to conversion within the customer journey.
- PSD2 regulations mean they will be forced to
6. Are there any particular global markets offering high growth potential for gambling businesses? Which are they – and why?
The US is an obvious example as mentioned previously, however, regions such as LATAM and Africa offer high growth potential. At a country level, Brazil (8th largest global economy) has indicated that they will be regulating online gaming in 2019 after the president signed a bill authorising fixed odds betting as an approved lottery game
Another BRIC nation, India which currently heavily restricts gambling are potentially looking at regulation in order to curb the rise of online sports betting.
7. What are you excited about in 2019?
The gaming industry is certainly fast-paced and 2019 is set to be another big year of change in the world of both gambling and payments. The key themes for the year ahead will include:
- Further M&A activity is very likely
- Maturing of the US online gambling market
- Potential of further regulation of key European markets such as the Netherlands and Germany
- Further emergence of new regions and markets