In an autobiography I read this year, 2020 was referred to as The Cursed Year. On that basis – thankfully – 2021 will very much be reflected upon as a year of recovery: economically, socially, physically and psychologically. While land-based casinos were shut for months and socially restricted for most of 2020, they were back to generate record revenues in 2021 (certainly in North America at least). Nowhere more so than in gambling’s spiritual, and historically most lucrative, home: Nevada. Like the t-shirt Joe Swanson enjoyed so much in Family Guy, we are literally talking about billions spent in Las Vegas aka Lost Wages. Gross gaming revenue was back with a bang in 2021.
A common pandemic-era misconception, meanwhile, was that somehow online gambling suffered in 2020 too. It did not. And, this year, that growth soared to new levels, as the online industry began to widen its influence in North America, continued to deliver results across Europe and even penetrated several emerging markets. But what will we look back on a few years down the line and truly remember 2021 for? There were mega mergers, regulatory fallouts and coronavirus complications. Just another year in gambling...
INDUSTRY CONSOLIDATION
Inevitably for the gambling and iGaming sectors, the most memorable aspect of 2021 – and recent years in general – was the industry-changing M&A that took place. This year, in particular, it was difficult to even keep track of who was acquiring whom (Monica: you know, sometimes it’s who!). The past 12 months additionally saw whole new M&A trends develop, such as operators starting to acquire suppliers more often, and equally creating their own game studios. As ever, there were numerous affiliate M&A transactions, while the big-name US operators conducted plenty of new business, too.
Notable M&A deals included:
- Penn National Gaming purchasing Score Media and Gaming – $2bn
- DraftKings purchasing Golden Nugget Online Gaming – $1.56bn
- Evolution Gaming acquiring Big Time Gaming – €450m ($533m)
- Kindred Group acquiring Relax Gaming – undisclosed fee
- Scientific Games buying Lightning Box Games – undisclosed fee
- Aristocrat purchasing Playtech for $2.9bn
And that’s without touching on 888 Holdings purchasing William Hill’s European assets, or failed bids to takeover Crown Resorts. Overall, the industry’s consolidation scene became even more frantic in 2021 – and in gaming, it shows no signs of slowing down.
THE CROWN IS FALLING
Speaking of Crown Resorts, 2021 was undeniably a year to forget for the Australian operator. While 2020 proved disastrous on a global scale, from a business perspective Crown Resorts arguably suffered a far worse 2021. The organisation’s revenue for the financial year 2020-2021 fell 31% year-on-year to AU$1.5bn (US$1.1bn), with EBITDA down 77% and overall losses up to AU$261.6m. But while these financial results can mainly be attributed to Covid-19-enforced closures and social distancing, Crown’s regulatory troubles were all self-inflicted.
As we covered in depth in the May/ June edition of Gambling Insider magazine, commission after commission, from Perth to Victoria, have looked into Crown Resorts’ malfunctioning safer gambling policies – with yet more action being taken since. There have been allegations of money laundering – with video proof – gamblers suing Crown for millions lost during problem gambling sprees, and licences stripped outright from the Australian operator. To top it all off, potential mergers have fallen through as a result of the aforementioned problems, with executive reshuffles becoming the norm. In August, Crown banned over 250 high rollers amid “due diligence” reviews – but it was too little too late from the gambling giant.
THE UK: A REGULATORY QUESTION MARK?
When discussing regulation in 2021, it’s impossible not to turn to the UK market. While Crown Resorts suffered 12 months to forget, UK-based Football Index simply ceased to exist altogether during the period. Things came to a head quickly for the operator, which had in the years prior only just embarked on national sponsorships and televised advertising campaigns. Allowing players to “invest” by purchasing shares in professional footballers, as opposed to the traditional sportsbook format, Football Index reached a stage where it was generating hundreds of millions in trades during the financial year.
But it all swiftly unravelled, with a March announcement that dividends were to cut by 80% being followed by player unrest. Not too long after, Football Index went into administration – before the Gambling Commission rather belatedly, and pointlessly by that stage, revoked its UK gambling licence. Here, the role of the Commission – considered one of the world’s leading regulators in many circles – came under serious scrutiny. It declared it had investigated Football Index for a whole year and decided there was no cause for concern, despite multiple written warnings from concerned parties.
Given the eventual outcome, and the Commission’s limp response once Football Index had gone into administration and left players potentially thousands out of pocket, it’s difficult to see how at any point the regulator could have warranted its lack of action. Indeed, ominously timed, Chief Executive Neil MacArthur promptly resigned, with the UK Government conducting a review into gambling regulation and the role of the Gambling Commission all the while. It remains to be seen in 2022 how any policy will affect the UK market – but there is plenty of uncertainty, given some slot restrictions have already been introduced in the region. That uncertainty further extends to the UK’s National Lottery, which may welcome a new host from 2024 onwards.
THE US: A SIMPLY BOOMING MARKET
Let no one fool you any longer: if anyone is pretending US gaming is not thriving, due to Covid-19 restrictions, they’ve either not been paying attention or have an ulterior motive. Gaming revenue in Nevada broke records in 2021, with five months in a row of billion-dollar gross gaming revenue and counting. Pent-up demand has seen people flock back to casinos en masse and, as I wrote in my Editor’s Letter in the September/ October edition, it’s now time to genuinely ask US gaming companies if they have already recouped their losses for 2020. While 2020 was catastrophic for land-based casinos, 2021 has been so good it’s not unreasonable to suggest it is evening the playing field for the past 24 months.
Online, too, saw further US breakthroughs – which is nothing new and something I’ve been writing since PASPA was overturned in 2018. New states regulated sports betting – and iGaming – and on top of the mergers we have already mentioned, huge media content deals were signed by affiliates, and leading operators like FanDuel and DraftKings. The focus on North America, too, has broadened from just the US to Canada, following the legalisation of single-event sports wagering in the country – and the expected regulation of iGaming in Ontario.
EUROPEAN PROMISE
In mainland Europe, meanwhile, 2021 brought more positivity for gaming. There was strong performance in Italy; the Dutch online gaming market was finally launched, while Germany saw progress too – despite a challenging set of regulations. Swedish firms thrived, Evolution in particular (as was covered in our July/August cover feature), while Euro 2020 brought a long-awaited and one-year-overdue gold rush for sports betting firms. Football almost came home for England fans, but the fact the English national team reached the final and promptly lost on penalties was probably the dream result for operators in the end.
Elsewhere, Asian markets such as Macau still lagged behind their European and American counterparts, but crypto betting saw a renewed surge of interest in 2021. Events were still more or less non-existent throughout the calendar year, until the Global Gaming Expo (G2E) returned to Las Vegas in October. As such, the Global Gaming Awards Las Vegas also returned to crown their winners, while there was a virtual show for the London Awards.
Overall, 2021 had its drawbacks: no year can be perfect but following 2020? It would have been difficult to avoid a year-on-year improvement. For gaming, this improvement came in spades, and this past 12 months was definitely an ace in the pack compared to last year’s fold.
