Published this week, the study looks at the economic impact of gambling in the UK, picking out a number of key findings to demonstrate the state of the sector including the potential impact of regulatory change.
These include that gambling’s GVA – the value of goods and services produced, minus the value of intermediate consumption – grew at a much faster rate than the UK economy. Gambling GVA climbed 45% since 2010, compared to 18% for the UK economy, with gambling accounting for 0.4% of UK economic output.
The SMF also said the gambling sector paid £4.3bn in taxes during 2019, which amounted to 0.6% of central government revenue in the UK.
Other findings include that growth in the gambling sector over the past decade coincided with a rise of online gambling, with this area now accounting for 12% of industry yield, compared to just 12% in 2010.
Some 85,000 people were employed in gambling in 2019, accounting for 0.3% of all employment in Great Britain, but this was down from 93,000 in 2010 due to the shift to online gambling, the SMF said.
The SMF also addressed the potential for a lower rate of gambling spend, giving the example that this could decline by 10% as a result of regulatory reforms to curb problem gambling, with consumers spending money in retail instead.
If this were to be the case, overall GVA would be £11m higher, while the number of jobs elsewhere in the economy could increase by 24,000 and a £171m rise in tax revenue for the government.
Concluding its findings, the SMF said while gambling supports tens of thousands of jobs across the UK and contributes £8.1bn to economic output directly each year, it is “very unlikely” this economic contribution is truly additional to what would have taken place if gambling did not exist.
“Indeed, with most other parts of the economy having more extensive supply chains, and thus higher economic multipliers, reductions in gambling expenditure through reduced rates of problem gambling would almost certainly be a net economic benefit as households instead spend money elsewhere,” the SMF said.
“The Exchequer would gain too, as higher GVA and jobs in turn drive up tax receipts.”
As such, the SMF said this has “strong implications” for regulatory reform, saying that if done correctly, there would be scope to both reduce the societal costs of problem gambling and realise economic gains.
The SMF said to ensure that future gambling regulation is based on accurate, timely and detailed evidence, the government should commission an urgent review of the social and economic costs of gambling. This would run alongside the already-confirmed Gambling Act Review.
“No final decisions on legislative review should be made until the Treasury has conducted an assessment of the economic and social costs of each policy change,” the SMF.
However, Betting and Gaming Council chief executive Michael Dugher criticised some of the suggestions in the report, saying any future decisions about rules and regulation should be based on hard data, and not “fantasy figures” in the report.
“It may be inconvenient to the anti-gambling lobby, but the fact is that 30m people – around half the adult population – enjoy a flutter in the UK, while the betting and gaming industry contributes £8.7bn to the economy in gross value added, pays £3.2bn a year in tax and employs more than 100,000 people,” Dugher said.
“If people were restricted from betting in the regulated industry, they would simply migrate to the growing unlicensed, unsafe black market that employs no one, pays no tax and contributes nothing to UK plc. To think otherwise is, at best, naive.
“It’s disappointing but unsurprising that anti-gambling prohibitionists seek to deliberately downplay the economic contribution the industry makes, just because they don’t like the industry. They should stop looking down their noses at the people who enjoy a bet or who work in the industry.”
The SMF previously published a report in August 2020 that called for, among other things, a £100 monthly “soft cap” on deposits, after which affordability checks must be carried out for further spending.
This proposal was then included in the Great Britain’s Gambling Commission’s consultation on remote customer interaction.
This document, signed by CJH president Magali Clavie and KSA chairman of the board René Jansen, guarantees an exchange of information between the two bodies as well as mutual support concerning supervisory tasks.
“Online gambling is offered across borders,” Clavie said.
“The result is an increased need for international cooperation between (online) gambling regulators. The exchange of information with foreign colleagues is always particularly instructive.”
Under the memorandum, the two regulators will work together toward objectives including the fight against crime, the protection of gamblers and the prevention of gambling addiction.
Winnerbet has over 300 retail outlets across Africa, making it one of Cameroon’s largest operators.
A Winnerbet spokesperson said: “We are confident in our belief that migrating to Pronet Gaming’s platform will prove to be a winning move as we aim to cement our status as a forward-thinking operator.
“The sports market in Cameroon has fantastic growth potential and we can’t wait for our players to engage with such a high-quality and wide range of products.”
Winnerbet added that it hoped Pronet Gaming’s existing connections with many leading developers will aid both companies moving forward.
“As a platform provider, it’s particularly pleasing when your work in pulling together a strong product portfolio is recognised by an operator looking to accelerate its commercial growth,” added Pronet Gaming’s chief sales officer Colin McDonagh.
“It was clear from the outset that Winnerbet was keen to utilise our market-leading product offering across both retail and online and we are delighted to be working with an operator and brand that resonates so strongly for players in Cameroon.”
The operator said it plans to roll out the sports wagering app from tomorrow (March 11), while the Barstool Sportsbook desktop website will also go live in Illinois.
Penn National will support the launch by offering consumers promotional bets, including a $1,000 risk-free bet after an initial deposit.
The Barstool Sportsbook brand is also live online in Pennsylvania and Michigan, with Penn National planning to expand this reach to 10 states by the end of 2021.
“Alongside our risk management and platform providers, Kambi and White Hat Gaming, we have developed an online sports betting app which is attracting new and existing Penn National customers,” Penn National chief executive and president Jay Snowden said.
Christian Machmeier will take on the role of chief technology officer as part of the new setup, while Patrick Lebenbauer will become director of global marketing.
Bader has worked in the payments industry for a number of years, helping to co-found MuchBetter/MIR and serving as chief commercial officer at both Secure Trading and paysafecard.
Machmeier previously served in senior roles at both Gameforge and Audi, while Lebenbauer worked for the likes of Tipico and KaFe Rocks.
“CashtoCode offers a second life to cash, which remains hugely popular despite the growth of card, open banking and online payments,” Bader said. “We enable merchants to target a market sector that they couldn’t reach without an instant cash deposit partner.
“During the pandemic, many venues and activities that would typically take cash payments were not open, but their customer-base never left. These are people who still prefer to pay by cash wherever possible, for privacy, self-control and security reasons.
“Many have not switched to online banking, but have instead utilised services like ours to pay with cash for their online activities.”
The triple appointment comes after a record 12 months for CashtoCode, which saw revenue grow by 500% during 2020.
CashtoCode also added more than 100 new merchants to its platform and can now be used by customers across 150,000 retail locations in Europe.
Harel Falk is a seasoned leader with over 10 years of experience in business development, sales, marketing and sales process creation and implementation. He has over 7 years of experience in SaaS, the Internet and the online advertising and technology fields.
In the hyper-competitive world of online gambling, operators are increasingly aware of the need for personalisation.
However, any attempts to gain a competitive edge through such a strategy are likely to falter without a smart, holistic approach supported by real-time data, according to Harel Falk, VP of sales & business development at Solitics.
This often requires a change in “mindset” to focus on every layer of the customer experience, he explains.
Retention
“For many years, the focus of personalisation has been on acquisition, but in recent years the importance of personalisation to retention has become centre-stage for a number of reasons, including regulation, the competitive landscape and rising acquisition costs,” Falk says.
“Personalisation has become crucial for an operator to stand out in the crowd. However, the majority of techniques that are being used – including basic segmentation, pre-set timeframes and bonuses that have not been tailored – don’t cut it any more as they don’t provide any differentiation.”
Falk says that operators face common technological challenges in relation to real-time data, especially when they have insufficient legacy systems in place.
Using real -time data requires direct connectivity to the distributed data sources. Until now, this meant engaging in a long, expensive data integration project. Operators won’t necessarily be able to respond to all of these behaviours and the data in real-time, and it’s a never-ending project, as additional changes would be required for any change in data.
“Operators should start implementing smart technology that enables them to utilise data, customer engagement and analytics,” he adds, highlighting Solitics’ approach as one such example.
Falk argues that, for many operators, there remain untapped opportunities via numerous touch-points on the customer journey.
“Working with real-time data opens up additional communication channels, including on-screen messaging that is relevant to what the customers are doing, and offering the right incentive for the individual,” he says.
“It is not just a simple trigger response – it is much more complex – but when you have flexibility to work with data, then you can implement a sophisticated strategy.”
As an example, for a sports betting operator, instead of delivering daily communication campaigns, notifications can be set up for when odds change on a particular match or when an important event occurs in the build-up to the game.
Real-time impact
Real-time messaging can also be used effectively when a customer has lost money on a game, with Falk highlighting how instantaneous messaging has a significantly greater impact than contacting them the following day.
“If you could send a customer an immediate reaction to an event that took place during a game itself, live – The impact can be tens of percentage points more in terms of retention and the player making another deposit in comparison with contacting them the next day,” he says.
“It also shows that you are there for them when they need you, which can also be very important for responsible gambling interventions.
“There is a debate about whether too much personalisation can lead to problem gambling and whether there should be limitations in place, but I see responsible gaming as part of personalisation. The same strategies that can deliver real-time engagement through data can also be used to help protect the players and perhaps limit their game-playing.”
Falk recognises that it is a “true pain” for some operators to embrace personalisation without the right kind of third-party assistance.
“The data can be inaccessible and will need to be cleaned in order to be analysed, but this can be very time-consuming,” he says. “This is one of the major issues we can solve as we can enable operators to utilise the data in real time so they can focus on their core business, stay firmly in control, and engage with customers without it being a huge data project for them.”
Personalised experience
Given that an effective strategy to personalise the experience relies on data, it is inevitable that a deeper level of understanding will be possible with existing customers in comparison with new punters.
However, with numerous bricks-and-mortar establishments having pivoted to an online offering over the past year due to the Covid-19 pandemic, many operators have a wealth of data at their disposal that can provide the basis for a tailored approach as their customers switch from the casino floor to online.
“Personalisation is the correct approach for new customers as well, even though operators will obviously have less data about them at the outset,” Falk says.
“You can still use newly acquired data about a player’s actions and respond very quickly to that. It is a different goal as you are trying to win them over, rather than trying to engage an existing customer, but the approach is basically the same and just as important.
“A lot of casinos have gone online over the past year, and they are discovering this. They have an existing customer base already, and with the data they have on file, they can make the players feel at home on their website by, for example, showing them their favourite game, but online.
“Therefore, thanks to data, they can provide a seamless transition.”
In September 2020, Caesars lodged a bid worth £2.9bn (€3.39bn/$4.03bn) to acquire the entire issued and to-be issued share capital of William Hill that it does not already own.
The agreement, which was approved by William Hill shareholders in November, will see Caesars purchase William Hill’s 1.08bn shares for £2.72 each. Caesars said it plans to retain William Hill’s US betting arm, with the rest of the business set to be sold.
Caesars had previously said it had hoped to complete the acquisition during the second quarter of 2021, and an update published today (10 March) by William Hill suggests this timetable is on track.
William Hill said Caesars expects any remaining approvals to be obtained from the relevant US gaming authorities and other gambling regulators on or about 23 March.
In anticipation, Caesars and William Hill have scheduled a Scheme Court Hearing, at which the court will be asked to sanction the acquisition. The hearing will take place on 30 March.
Should the court approve the deal, and Caesars and William Hill satisfy all other required conditions, then the acquisition is expected to complete on 1 April. William Hill’s shares would then be cancelled on 6 April, in line with the terms of the deal.
Apollo Global had also put forward an offer to acquire William Hill, but the bookmaker’s board unanimously agreed to approve the Caesars deal in September.
As two of the greatest areas of interest in disruptive technology from 2020, we added more emphasis to questions surrounding AI/ML and blockchain in our 2021 survey.
Much like last year’s results, respondents felt that personalisation will have the most immediate and significant impact (32.94% in 2021 versus 35.85% in 2020), followed by data/analytics (22.35% in 2021 versus 33.95% in 2020).
While following a similar trend, worth noting is the wider margin between the two leading examples, seemingly spurred by an increase in the applicability for other use cases.
Compliance, for example, seems to be of much greater interest this year, increasing from 9.43% in 2020 to 15.29% in 2021. Chatbots also seem to have gained more traction, jumping from 3.77% to 9.41% – perhaps on account of the more distributed workforce in light of Covid-19.
One startup highlighted by a respondent as intriguing for its capabilities was Luka, an AI-driven companion chatbot which could offer exciting opportunities for a more personal approach.
Automation, however, has remained much the same, with 17.65% of respondents noting an interest in 2021 versus 15.09% in 2020.
One highlight from last year’s survey we expanded upon this year were ethical concerns around the use of AI in online gambling.
We asked respondents to outline the challenges they feel it may face here, and while 36.53% of respondents cited no ethical concerns, a variety of points were raised.
The greatest apprehension, understandably, surrounded its relationship with responsible gambling, with 21.15% of respondents registering their unease.
Of the various concerns raised, one respondent said: “[My disquiet is] around responsible gambling and how AI could be used to drive lifetime value the wrong way – this is the human element, however, not the tech.” This was a sentiment echoed by a number of respondents.
As part of the panel on our inaugural Futures Survey webinar in February, Four Wood Capital’s Lauren Seiler commented: “I think that at this point, you’d like to see the rosy side of things, but this isn’t an industry that has the greatest rep out there. If we start to use this technology and take things a little too far, it’s going to make things significantly worse.”
She added that players newer to the online space raise even greater ethical concerns: do they know that they are speaking to a bot, not a person? Do they understand their behaviour is being tracked to personalise their experience?
“Then you’re going to have the regulatory environment clamp down even harder than it might need to, so I do think that there is a certain level on not only the operators but also the regulators and everyone to not take that too far.”
Additionally, 13.46% of respondents expressed concerns around data privacy: how AI will process personal data, who is responsible for the data collected and how the technology “may connect dots that are not relevant”.
In addition to these areas, concerns were raised about consumer education, the security of the technology and its sustainability in the face of ever-changing regulatory regimes.
Another webinar panellist, Julian Buhagiar, co-founder of RB Capital, Buhagiar told the audience that he sees two sides to the conversation around AI/ML: “The first is the positive benefits – where can AI/ML help. There’s certainly KYC, which is a specific problem that can easily be solved by throwing more computing power at it. Data privacy and the extent to which it is used from a legislative perspective is quite important. AI, if misused, is a serious threat that we need to understand.”
As one respondent quite rightly highlighted, and as addressed in our 2020 report, we are still a long way from the kind of AI that is being discussed by some respondents.
Indeed, many conversations around the technology failed to distinguish between artificial narrow intelligence (ANI) – technology that is currently available in the form of machine learning – and yet-to-be-achieved more conceptual developments such as artificial general intelligence (defined as human-level) or artificial super intelligence (surpassing human capabilities).
Adopting disruptive tech When it comes to the nuts and bolts of adopting these technologies, another question we raised this year was who bears the burden of responsibility for driving the industry forward? Indeed, all of the technologies mentioned are not “future technologies” in so far as they don’t yet exist, only that they have the potential to reshape the industry – and perhaps the world – as a whole.
When we asked our respondents for their perspective on regulatory intervention to drive new technology uptake, 40% strongly agreed that regulators have a responsibility to both monitor and encourage development, with a further 38.82% somewhat agreeing. About 7% either somewhat disagreed or strongly disagreed, and 14.12% neither agreed nor disagreed.
This topic in particular was discussed at length during the webinar, with varying degrees of support from our panel. Buhagiar bemoaned the “draconian” nature of this type of intervention. “Regulation is bad – simple. The way it’s done is bad,” he said. “Now, players have no choice but to be driven underground to look for their fix, and that’s a big issue.
“Part of it is the operator’s fault because nobody lobbied up as well as they could have, and we’ll only see the effects of this in 3-4 years.”
He sees the current interaction between tech and regulation as limited at best: “Technology hasn’t helped, [for example] what regulation has done with IP blocking, making sure that only specific things are done in a specific event. AI could have given insight. For all the things it doesn’t do, the thing it does right is predictions.”
Seiler had a slightly more sympathetic perspective based on her experience in the US: “Legislators and regulators have the best of intentions in mind, but it’s almost monopolistic. It can starve innovation to a certain degree, and there’s not an understanding of technology and the good it can do.
“There’s always a focus on the harm it can do. If you want to drive tax revenues, attract players from the grey or black market, you’re dealing with already very thin margins, particularly in sports betting. Why would a good player transition from the grey market into the white market if you can’t give them a competitive project because you’ve regulated the bejesus out of it.”
From his experience in Europe, Marcel Tobler, chief strategy officer at Grand Casino Baden, added: “Regulation is very often not based on a logical level, it’s based on politics – what politicians have an opinion on at that moment. Specifically with the pandemic, people became more aware that there are risks in online gambling, and some people when they worked from home or did not work at all got into trouble as they didn’t have a way to control their online gambling behaviour.
“We felt that this had an impact on how regulation is viewed by the regulator and the pressure increased.”
And while he did see hope in fostering innovation through relationship-building with regulators, “the big challenge is how to explain to a regulator how the new technology can help. We have to be able to explain what this kind of technology honestly will bring as an added value to regulation, player protection and tax revenue.”
This reflects a slightly stronger sentiment when compared to last year when only 70.06% overall agreed and 15.10% overall disagreed.
One respondent added: “Operators are always limited by regulatory constraints and to use new disruptive technologies these should be embraced by the regulators in parallel.”
Indeed, recent newsflow suggests that regulators in markets such as Great Britain and France are looking to become more attuned to new tech and solutions to future-proof their operations.
While some technologies have been integrated to an extent into igaming operations, such as AI for sports betting and minimal VR/AR experiences, the jury was still out for our respondents as to whether the industry is good at adopting and fully utilising disruptive technologies, with the majority (35.29%) neither agreeing nor disagreeing with this statement.
The scales tilted slightly towards agreeing, with 17.65% strongly agreeing and 25.88% somewhat agreeing versus 18.82% somewhat disagreeing and a small percentage of 2.35% strongly disagreeing.
However, one question around which respondents demonstrated slight more consensus was the role of Covid-19 in demonstrating the need for disruptive technology. While once again the majority (40%) neither agreed nor disagreed with this sentiment, 22.35% strongly agreed and 30.59% somewhat agreed, with only 7.06% somewhat disagreeing and not one respondent strongly disagreeing.
Throughout the webinar session, the panellists expressed similar sentiments to the audience. Tobler said: “For me, this pandemic has shown that in many cases, we don’t need this highly advanced technology. Many companies are just missing easy-to-use tools to help them to work remotely, and in a more automated way.”
While we’ve seen some progress a year on, it is apparent that there is still much to be done to educate and facilitate development across the sector. As one respondent said: “Gaming is years behind the curve here and the existing tech stacks are not exactly compliant with new technology. It is going to be new and independent tech that drives the industry forwards, not the incumbents.”
Indeed, the responses from our survey highlight hugely varied perceptions of how far along the adoption curve igaming is compared to other sectors, some positing that these technologies remain underdeveloped and that we are light years from their use, others expressing impatience at their limited usage thus far.
One thing is clear: there is much to be done to educate both the industry and its consumers ahead of mass rollouts. It’s yet to be seen how disruptive technology will shape the industry, but we can be certain that the next phase of igaming will be bright.
The operator did not provide a date at which it expected to reach this level of earnings. Instead it said this was based on 65% of the US having access to legal online betting in their home state, 30% having access to legal igaming and 64% of Canada having legal betting and igaming.
The operator expects to hit this target after five years of maturity at these levels of legalisation.
The operator then assumed at least a 20% market share for US online sports betting for $2.9bn in betting revenue, based on a market that it said would be worth $22bn if sports betting was legal nationwide.
What is the ICE 365 content series? In-depth analysis, insight and exclusive content
The series is a collection of multimedia content broken into themes that combine elements of iGB’s analysis, data and webinars with Clarion Gaming’s industry connections, events and virtual Ampersand speakeasies.
Running throughout 2021, each series will take a key vertical, topic or subset of the global gaming sector and provide insights across a variety of formats, including:
· Reports · White papers · Interviews · Exclusive data dashboards · Videos & webinars · Live discussions · Curated networking sessions · Pitch ICE
On(line) today: Tech Futures
The ICE 365 content series launches today with Tech Futures, a unique collection of content featuring some of gaming’s biggest names in tech.
It features video, insight pieces, features and webinars, all nicely rounded off with our Tech Futures survey & report.
Technological excellence and the industry’s demand for the new will be bought together at the intersection of product and process…
· Entain’s newly appointed board member and COO, Sandeep Tiku, takes us through the key to tech innovation, featuring his top 3 tech disruptor predictions for 2021!
· William HillCEO Ulrik Bengtsson explains how technology was central to the bookmaker’s expansion
· Cristina Turbatu from Playtechtalks us through the inner sanctum of its innovation lab and discusses the important mission of Girls in Tech
· Industry talent finders Pentasiaexplain the global trends in tech talent, where to find the brightest young stars and how to attract them to the gaming industry
· HollandCasino CEO Erwin Van Laambert is joined by Richard Brown, his counterpart from Gaming Innovation Group (GiG), as they discuss digital excellence for the casino industry
READ
· The Tech Futures survey & report uncovers 2021’s biggest tech investments. Created in association with the industry, it also examines the difference between a true tech disruptor and a passing phase
· Vision 2020 webinar: Will technology improvement and enhancement be a key focus in 2021, or will we see industry investment in new products and solutions slowing? This will be presented as a live discussion, with a host of contributors including representatives from LeoVegas and Clairvest
· Down in the Lab:With special guest Ron Martin, VP, Panasonic Hollywood Labs looking at innovation straight out of the Disney and Panasonic studios
· Tomorrow’s Tech webinar: Tech Futures survey & report under the spotlight, brought to you by investment specialists Bettor Capital, Four Wood Capital, RB Capital and Grand Casino Baden
· Pitch ICE: Get access to this year’s shortlisted startups and listen in on the newest tech set to shake up the industry. Whether you’re an operator or an investor, don’t miss out on these ones to watch
· The power of esports data: Learn from specialist Oskar Fröberg, CEO, Abios on key insights from the biggest esports titles: League of Legends, Dota 2, CS:GO and Overwatch
Upcoming releases
US Sports Betting series, 15 March
Sports betting is now live in 21 US states, and a further five have passed legislation in 2021. Operators are now focused on generating sustainable returns from the expanding market.
EU Sports Betting series, 29 March
Meanwhile in Europe, a tricky regulatory situation is forcing the industry to innovate to engage and retain customers, while keeping players safe from harm.
