The gambling market has been one of the most controversial sectors to invest in across the world. Many countries to date have strict regulations on gambling while others prohibit certain forms of gambling. For instance, the US, which is the world’s largest economy has maintained strict regulations on online gambling with only a few states legalizing it.
On the other hand, in the UK, online gambling is pretty much a norm and has been gaining popularity through the rest of Europe and Asia. In fact, according to recent statistics released by UK’s Gambling Commission, revenues from online gaming are on course to outstrip the amount of revenue collected from physical gambling shops and slot machines.
Gambling companies are diversifying their investments to online gaming platforms including opening new localized sports betting platforms for specific countries, as well as, new bingo sites to leverage revenues collected from slot machines.
Now, gambling companies have clearly illustrated their interest in intensifying investment in online gaming platforms, but what’s driving the current shift in focus?
The mobility effect
Since the introduction of mobile phones, gaming has shifted a level higher. If you played Game Boy in the 1990s, then you would know how addictive playing games on a portable device can be. Smartphones have made it possible to access several gaming platforms using a single device.
Therefore, whether you are looking to visit a sports betting platform, an online slots platform, or simply a social gaming app, they can all be accessed from a single smartphone. This means that many gamers including gamblers are now finding it easy to place their wagers online rather than visit sports betting shops a couple of miles away.
This has taken a significant chunk of revenue from slot machines and wagering shops and into online platforms. As such, betting companies like William Hill, Paddy Power Betfair, and 888 Holdings, among others have ensured that they are not left behind by this change and therefore, have launched online gambling platforms to augment other segments of their businesses.
Increased regulation
As gambling continues to spread across the world, more countries are realizing the risks associated with it and are thus trying as much as possible to advocate responsible gambling. In addition to that, some are changing policies including taxation, which have affected performances over the last couple of years.
For instance, the UK changed its taxation policy on gambling companies in 2014 such that all revenues received by offshore gambling companies from the country are taxed at 15%. Initially, companies were only required to pay that level of tax if their operations are based in the country. This is also the reason why many gambling stocks had their headquarters located in tax friendly countries such as the Republic of Ireland, Isle of Man and Gibraltar, among others.
Following this change in taxation policy, many companies sought ways to reduce costs and one of the most effective ways of doing so was to close some physical shops and replace them with online gaming platforms. William Hill, whose omnichannel gambling business model includes mobile, PC, telephone, and land-based shops, has been a good example of companies reducing the number of slot machines while replacing them with online versions. In April 2014, the company closed 109 shops blaming the 5% hike in betting terminal duty for its decision.
Consolidations
The gambling industry has been undergoing a makeover over the last few years. While online gaming has provided companies with opportunities to create new revenue streams, it has also, opened the door for increased competition.
It’s obvious that startups will find it simpler to introduce their services to the world via online platforms as compared to a couple of decades ago when they would have had to open physical shops for slot machines and wagering.
As such, many online gaming platforms have cropped up. However, starting up is one thing while having the ability continue operations on an ongoing basis is a different affair. Most of them have struggled to keep up, thereby leading to increased mergers and acquisitions in the industry.
Leading players have also moved to consolidate their operations in a bid to maintaining leadership. A good example is, of course, Paddy Power and Betfair merger, which made the resulting company the largest in the industry.
Conclusion
In summary, many gambling companies are finding it hard to keep a large portfolio of physical shops as online gaming continues to compel investors. And given the advances in marketing technologies, online platforms are also proving to be ideal for low-budget players in the industry.
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