Last year saw the rapid expansion of sports betting across the US, but also a number of regulatory and advertising clampdowns in Europe. As the new decade gets underway, industry experts share their thoughts on the opportunities and challenges that lie ahead.
In part one we hear from operators and suppliers. Tomorrow we’ll cover finance, with marketing, people, technology and innovation, and regulation rolled out over the rest of the week.
Interviewees
Joe Saumarez Smith, chairman at Bede Gaming
Martin Lycka, director of regulatory affairs, GVC
Kristian Nylen, CEO, Kambi
Quentin Martin, COO, Luckbox
What were the defining developments or events of 2019?
Joe Saumarez Smith: The opening up of the US sports market will be what 2019 is remembered for. But the regulatory pain for operators in the UK and Sweden is just as important as I suspect that many other countries will follow their lead.
Martin Lycka: In my view, 2019 was marked by three key regulatory developments: the industry’s victory in the US Wire Act-related litigation, the entry into force of the new FOBT rules in the UK and finally the relaunch of the regulatory process in Germany.
Kristian Nylen: One of the year’s biggest stories has, of course, been the growth of the US sports betting market, with a now substantial number of states either live with regulated sports betting or nearing the finishing line.
Quentin Martin: Other than the Conservative landslide in the UK election, either the UK requiring full age verification before a bet can be placed or Sweden not allowing betting markets where you can’t prove that 51% of participants are 18-plus. Either way, significant regulatory changes were the defining moments of 2019. Also, the 2019 League of Legends Championship peaked at 44 million concurrent viewers, with 21.8 million viewers on average per minute; these figures put it between four and 10 times bigger than the 2019 Super Bowl.
How do you see these continuing to shape the igaming space in 2020?
JSS: States have legislated on US sports betting far faster than I thought they would and I think we will see the US sports market grow impressively in 2020, especially as consumer awareness spreads. On regulation, I think operators will continue to find the regulatory environment extremely challenging. The shift away from VIP-led operators to a mass-market operation is not an easy one to make and those who chase short-term profits are likely to find themselves at risk of losing their licence.
ML: Without doubt, more and more US states will regulate their igaming space this year. The UK’s Gambling Commission will continue its RG-related and other regulatory efforts, and the German states are expected to issue a final version of the post July 2021 regulation.
KN: We will continue to see more US states opening up as more legislators see what is being achieved in markets such as Philadelphia and New Jersey. What’s imperative is that this continued spread of sports betting is achieved under a framework of sensible regulation. The significance of provisions for mobile alongside land-based regulation cannot be overstated if operators are to maximise channelisation away from the illegal market into the regulated environment.
QM: I believe regulatory changes will continue to be rolled out across all licences, placing even more importance on compliance teams. One huge negative side effect is that these create even larger barriers to entry for new market entrants, as to acquire a licence and build a fully compliant tech stack becomes prohibitive. This may cause an increase in illegal operators if the regulators are not careful, which harms everyone. Esports will start to become the largest user acquisition channel for Generations X, Y and Z.
What do you see as the biggest challenges ahead for the sector in 2020?
JSS: I think I have probably given the same answer for the last three years and I probably will for the next three: regulation and public perception. The industry is either under the cosh in regulated markets (especially the UK and Sweden) or is about to be hit by tough regulation (Germany and Netherlands are the most obvious, but plenty of other regulators are looking to turn the screw). The industry is partly paying the price for previous misdemeanours but also has lost control of the messaging, meaning that the anti-gambling campaigners are getting a greater share of voice than ever before.
ML: As has been the case in the last number of years, absorption of all the regulatory changes. I, however, firmly believe that the industry is ready to do it.
KN: Responsible gambling quite rightly continues to be a focus and we must all recognise that only by protecting players can we ensure a sustainable industry. Also, as regulation continues to spread, some operators utilising legacy or unproven tech stacks will likely struggle to scale into new markets. Flexible technology capable of rapidly adapting to regulatory requirements will be needed if they are to make the most of these forthcoming opportunities.
QM: I think the US will regulate more slowly and not as easily as many people are hoping for, particularly the key states. More regulators will follow the UK’s example, which will result in more industry consolidation. For esports betting, finding the right product/market fit and profitable user acquisition channels for esports bettors will be key. This will be far easier for endemic esportsbooks than traditional sportsbooks.
