The online betting and gaming industry has always had an element of regulatory uncertainty attached to its activities. The best way to address this is by being decisive and moving forward, says Pedram Padidar, COO at Enteractive.
If one word could sum up the key themes that have had an impact on online gaming and betting operators across the key regions of Europe, Latin America and the US this past year, it would be regulation (Europe), potential (Latin America) and (hyper-)growth (US).
It is always dangerous to oversimplify matters when they are related to the numerous issues that impact the industry and its operators, but there is no doubt those key issues of regulation, potential and (hyper-)growth are relevant to those regions.
The introduction of tougher regulations around advertising and promotions in Spain and Italy has meant key markets in which operators’ ability to advertise on national media channels and across different platforms have been severely curtailed.
Meanwhile the new regulations that have come into force in Germany and Holland, two major markets that were unregulated until recently, have led some operators to completely pull out of Germany while other brands may have to wait for months before they are granted a licence to operate in Holland.
In Latin America the regulatory momentum is strong, with many of the continent’s major economies such as Brazil, Mexico, Colombia, Argentina or Chile either providing regulated environments or going through their respective regulatory processes.
However, in common with European markets before many of them became regulated, there is a thriving online betting and gaming industry that has been operating in many of those markets for many years. How they respond to forthcoming regulations will be closely watched.
In the US, the ongoing regulation of sports betting since 2018 means around 40% of the US population now has access to regulated sports wagering apps and retail outlets.
Of the four biggest states in the country, New York state is the first that will go live in the coming months and while there is no definite timeline for the others in Texas, Florida and California, moves are afoot to get sports betting bills on the ballot for the midterm elections next year.
In the US, sports betting has been the most high profile vertical. This is not surprising as sports, betting and all related content and advertising can be scheduled around regular events that happen every week.
But if we look at the actual numbers, it’s interesting to see that while sports betting, online and retail, is regulated across more than 20 states, it has generated gross gaming revenues of $388m from January to September this year, while online casino, which is regulated across just five states, generated $346m in GGR during the same period.
The figures clearly demonstrate the low margins sports betting operators have to work with and how competitive the sector is; and while online casino is clearly more profitable and generates much stronger margins than sports betting, for those very reasons there is no guarantee that there will be more regulation of the vertical in the near future.
This is because incumbent operators such as the Indian Tribes and regional operators will be highly reluctant to open up their casino markets to the likes of DraftKings or FanDuel.
Focus on retention
In the meantime, US sportsbooks will continue to focus on customer acquisition as they continue their market share ‘land grab’. But increasingly stakeholders are pointing out the need to focus on retention and lifetime values and going into 2022 we can expect that focus to become more prominent.
Moving back across the Atlantic to Europe, it is clear that the tougher regulations that now apply across many of the continent’s leading markets have made operators more reluctant to initiate new or innovative marketing and customer retention programmes. But this sense of ambiguity should not hold them back and sometimes taking the initiative is the best way to move forward.
And finally as Latin American countries prepare to regulate their iGaming sectors, we would urge them to seize the opportunities that Enteractive offers to maximise customers’ lifetime values with highly localised consumer communication strategies. The industry we work in has always had some regulatory uncertainty, but the best way to counter it is by being decisive.