Yolo Investments: there’s local hero opportunities in every market

A shifting landscape is being witnessed on a global scale across the gaming ecosystem. Regulation is tightening across legacy jurisdictions, the black market is increasingly being placed under the microscope and an increasing number of geographies are opening up to the prospect of legislation in ushering in a legalised space.

Following a focus on investment strategies, Mark Robinson, Commercial Director at Yolo Investments, concludes a two-part special by shifting focus to adopt a geographical outlook.

With many big players entering transformations and reorganisations, he began by looking at what such developments tell us about market conditions at the current time.

“Market conditions are tough,” he began. “You need to be able to consistently move forward and keep ahead of the competition, particularly for these big conglomerates. 

“It’s getting harder and harder to make money like these big businesses did in the past. I think that money probably came a little bit easier in the past.

“That’s a challenge now, and I think a lot of them have actually become a little bit lazy. Having a great brand, historical business is great, but you cannot rest on previous successes.”

However, in addition to such reorganisation, numerous entities are visibly putting concerted plans in place to spread their wings beyond their traditional strongholds.

With DraftKings, Flutter Entertainment, MGM and Hard Rock all cited by Robinson, he also issued a warning of the smaller players that are coming up and are perhaps managing to more effectively appeal to the new audience that is emerging. 

“Product innovation has historically been challenging in regulated markets”

“The likes of Stake, Roobet, Shuffle, our own @Whale crypto casino built in Telegram, (which has access to 950 million monthly active users) are examples of fast growing casinos as the next generation operators that are targeting this new age player with a crypto and fiat first approach, and these guys just hit the nail on the head with it,” he explained

“They have original games that build trust, and when they use influencers or A-listers such as (hip hop artist) Drake you instantly build trust across that whole Gen Z community. 

“It’s building a massive community following that has trust with their audience and all these guys have it, whether it be through tokenization or free drops of tokens, which Shuffle did earlier this year and has created an immense community and investment for those players back into the casino.

“The world is becoming more digitised and market conditions are changing. Big conglomerates cannot move as fast as the up and coming players, and this makes it exciting to watch and be a part of. We’re always on the lookout for the next generation of operators. Despite the fact that currently, innovation thrives mainly in pre-reg markets, we think it is coming to regulated markets in time and this is a trend we’re investing into with Fund II.

“Product innovation has historically been challenging in regulated markets. A notable good example would be Dabble, which has rapidly gained market share in Australia by leveraging on their unique social features.”

Focusing on the European continent, Robinson continued by assessing just what opportunities exist for start-ups as the region witnesses increasing saturation, and operators prioritising cost controls.

“Good market or bad market, there’s always investment opportunities for great start-ups,” he stated.

“In our early days we did a lot of start-up investments with the aim of helping our B2C brands become more efficient. It just doesn’t make sense for big companies to build everything themselves. We’ve found that out, at a cost. 

“To basically hire hundreds of people when the same solution could be delivered by a lean and mean start-up, in addition to solving your problem it can also inspire our own nine to five traditional team on what is possible if people move together towards a single goal.

“From our point of view, we like to bring companies into our ecosystem that can help speed up a process or speed up a problem or fix a problem rather than us trying to do it ourselves, spending multiple time, multiple expenses. We’ll bring them in, invest in them and then let them do what they do best.”

“We think there’s still plenty of opportunity in the US, and it is because of the duopoly and the big players and their domination of that market”

Heading across the Atlantic Ocean, and the US has witnessed a duopoly somewhat take control amid a rush to the exit by a number of operators. This has led to Kindred Group’s removal from the US, Super Group pulling its online sportsbook and WynnBET wound down its operations, to name a few.

Despite this, Robinson remains bullish that the country remains plentiful when it comes to the potential to grow, citing Facebook overtaking the one-time dominant Myspace as an example that dominance doesn’t cancel out opportunities for others. 

“We think there’s still plenty of opportunity in the US, and it is because of the duopoly and the big players and their domination of that market,” he said “For us, this dynamic creates interesting pockets that big players can’t reach or it doesn’t make sense to reach.

“You’ve got these other companies coming through which have innovation in their product and innovation in their approach, and the way they do business in the realms of the legality of the US states as well.

“These alternative plays, although playing in a different market to the traditional regulated operations, are something which are growing massively in the US, with the likes of Dabble, Prize Picks and Underdog that are capturing an audience that is more about the community, than just being a transaction.

“Funnily enough, it was the market leaders, FanDuel and DraftKings, that grew out of the niche of DFS. Among restrictions, innovation always comes through.”

As the conversation grew to a close, future projections were placed in the spotlight. Regarding the markets that the industry should be keeping an eye on, Robinson stipulated Brazil, the US and the UAE.

Regarding the former, Yolo Investments’ Commercial Director noted that this would represent “a huge sports market that every big operator in the world is eyeing for,” however this depends on how that transition from pre-regulated to fully regulated eventually plays out.

“It will create a lot of opportunities for the supported services within traditional affiliates, media, alternative plays, suppliers, payment providers, the unlicensed, and also potential big acquisitions for the local current heroes as well,” he noted 

“UAE is a big bet to become one of the biggest regions in igaming. Maybe even more so than the US”

“I’m sure there’s some local operators and even game suppliers that are excited about what that looks like.”

Furthermore, placing the focus back onto the US, Robinson shared that there’s no doubt it’s on its way to potentially become the biggest market in the world, despite legalisation efforts across states still very much in its infancy.

“There’s just a lot of uncertainty and the painful transition from illegal to legal, and I think with the restrictions in the US, and the slowness of regulating those states, is creating a bigger black market in the US,” Robinson commented

“The sooner they can regulate, the more money can be driven to the local states, to the casino, to the tribes, to the land-based, because the land-based basically control the online side of each state in terms of a licensing perspective.”

Finally, attention was swung to what was billed as “a huge untapped market that is slowly opening its arms to the igaming industry,” following the UAE welcoming the development of a Wynn Resorts branded integrated resort and the UAE announcing the launch of the first authorised lottery regulatory framework.

“History has shown that whenever Saudis do something, they do it big and it’s over the top,” he said “We believe the announcement of the first casino/hotel with Wynn, and the launch of the UAE Lottery is a pivotal event that opens commercial gaming in the UAE and s just the beginning of a beautiful gaming journey in the region.

“UAE is a big bet to become one of the biggest regions in igaming. Maybe even more so than the US.”

He concluded: “I’d also like to mention there’s  local hero opportunities in every market, and we have always found these stories appealing.”