Every December, executives and analysts from across the gambling sector may gaze up at the clouds, asking what the next 12 months have in store for them. In most cases, no one in this fast-paced industry is likely to be in exactly the same position as the prior December. Situations change rapidly and trends take shape with urgency in gambling. Just look back to 2019: could anyone have predicted a global pandemic would reshape the industry in its entirety in 2020?
At the same time, though, in our sector there are certain stalwarts – occurrences that are guaranteed to happen with greater certainty as each year passes. Examples are industry consolidation, new US states legalising sports betting and Bet365 reporting incredible revenue figures... To that end, let’s preview what lies ahead in 2022. In true Gambling Insider fashion, we won’t be afraid to make a few bold predictions – because we know there are a number of safe bets we can fall back on.
M&A: WHO MOVES WHERE?
The easiest prediction in the world of gambling: there will be industry M&A in 2022. More difficult is to say where it will take place, although there are some patterns that are, again, easy to identify. The most recent M&A trends to develop in gambling are those of operators buying suppliers and operators creating their own game studios (like LeoVegas and Penn National). This is more than likely to continue. You’ll also get really short (hypothetical) odds on Evolution buying another company in 2022. In 2020, Evolution took over NetEnt for a sizeable $2.1bn, before acquiring Big Time Gaming for €450m ($533m) in 2021. In light of the supplier’s dominance in several markets and growth trajectory, it looks set to purchase another games studio within the next 12 months.
Given the general growth gambling is enjoying – mainly on the digital side – more and more of our sector’s biggest firms are likely to go public in 2022, following this year’s rush of gambling companies taking their stock to market. As discussed in our September/October SPACs vs IPO cover feature, the growing number of SPAC (Special Purpose Acquisition Company) transactions is unlikely to dwindle any time soon. There are more of them than ever in gaming, and a wide range of firms with more value built into their future growth than their historic results. They’ll be sure to capitalise on this faster, arguably more efficient, method of going public.
KEEPING THINGS SIMPLE
In my most specific prediction here, I’m willing to publicly declare my belief that Simplebet will become a huge industry name in the years to come – and definitely enjoy further growth in 2022. No, I’m not on the company’s payroll. Simplebet is a US-facing sports betting provider that specialises in micro-betting technology; in the simplest terms – if you’ll pardon the pun – all this means is it maximises opportunities for in-play betting on: the next pitch, the next throw, the next three-pointer. It’s good and bad news for sports bettors; it gives them ample opportunity to wager but ample opportunity to lose, lose and lose some more.
Big-name operators will love this technology; and many already do, with DraftKings and FanDuel having partnered with the firm early on in its trajectory. There’s not just that, but the small matter of former MGM Resorts International CEO Jim Murren joining its board and even YouTuber-cum-boxer Jake Paul’s investment company contributing to its $30m Series B investment round. As the North American sports wagering market matures, operators will be on the lookout for quick, sharp technology that maximises efficiency in every way it can. So watch this space – and watch out for Simplebet.
AN EVENT-FULL YEAR
Considering how much this industry has missed physical trade shows and events over the past 18 months, we needn’t labour the point. The pandemic’s impact on the events sector has been huge. And, although the Global Gaming Expo (G2E) returned to Las Vegas in October, 2021 only saw land-based events return properly towards the end of the calendar year. Expect far, far more in 2022 – and not just because populations around the world have been vaccinated, but because events companies simply have to make things happen; and even more so when you factor in virtual event overload. ICE London will be the first major watermark for gambling events in 2022 and we at Gambling Insider hope to see you all there.
THE UNITED STATES OF IGAMING
While Asia’s return to full force – namely Macau’s – is yet unclear, the picture has long been painted in the US. Some analysts expect Macau to return to 2019 levels in 2022 but there is no guarantee these volumes will return sooner than 2023, especially as travel restrictions continue across Asia. In the US, not only is Las Vegas thriving, but casinos across the country; with sports betting and iGaming inevitably on a similarly upward trajectory.
Though technically not in the US, throw Canada into the mix and North America’s revenue growth will be off the charts in 2022. Land-based US gaming will continue to boom – this much is evident. But if I were asked specifically which sector will grow the most, it’s an easy guess, although one much of the US market is perhaps yet to fully understand. Online casino has already shown its value (to the industry, not necessarily to bettors!) in that it adds huge revenue and is a stable source of income in the face of adversity. It survives both land-based closures and sporting swings, such as heavy favourites winning and fixtures being cancelled. IGaming in 2022 will continue to thrive in the US and will become the industry’s big winner. For all the hype, sports betting’s margins are miniscule by comparison. As more and more states legalise the practice, the greater question is just how much regulatory input there will be to prevent huge player losses.
NO REAL CHANGE FOR THE UK?
As a final point, the UK market is shrouded in mystery – or perhaps more accurately a lack of clarity – heading into 2022. The Gambling Commission and UK Government have both been reviewing various aspects of the UK sector for some time, and heading into 2022 we’ll know more about exactly what is to happen to the makeup of the market. And yet my prediction for 2022, despite all the unavoidable furore and speculation the region will create, is that very little will actually change.
In Italy, gambling advertising was banned on 1 January 2019. Nearly three years later, that market is thriving. The advertising ban, as we explored in our July/August edition, had little to no impact on actual gambling levels. In the UK, we might just see the same happening in 2022. If the Department for Digital, Culture, Media and Sport introduces some vote-winning policies, like a gambling sponsorship ban in football, or even a total advertising ban, will players stop betting with Ladbrokes, Bet365, William Hill, Paddy Power and the like? Of course not.
Even the reduction of the maximum stake on fixed-odds betting terminals from £100 ($138.25) to £2 in 2019 has arguably done very little to actually change gambling habits – certainly compared to something as influential as the Covid-19 pandemic. While B2 machines (effectively the category for fixed-odds terminals) saw revenue plummet, shops simply started taking more revenue in via B3 machines. Gross gaming yield may dwindle somewhat, but that will probably happen anyway when accounting for the maturity of the market. In essence, it will be business as usual in the UK in 2022; and, as the world aims to put the coronavirus pandemic behind it, much closer to business as usual for the gambling industry as a whole.
