Is sports betting the industry’s future?

port has always acted as the gateway into gaming. Usually when people take our sports offering, they take the casino as well, given the platform, the omni-channel approach and the opportunity of converting people from sports to gaming, where most of the profits are generated for bookmakers. Therefore, we believe that going forward, casino will continue to perform strongly, assisted and followed by sports becoming bigger by far and more significant for us.”

When speaking to Playtech CEO Mor Weizer about Playtech’s H1 financial results on Thursday, it was interesting to hear about Playtech’s plans to focus on growing its sportsbook offering. This is despite the fact that casino is clearly the vertical that has been driving success at Playtech up to this point, with casino revenue of €177m (+19%), accounting for 52% of overall revenue of €337.7m (+18%). Sport accounted for 10% of overall revenue with €17.7m (+10%).

There can be little surprise that Playtech is targeting sports betting, particularly if the reports of its interest in acquiring OpenBet, which was sold to NYX Gaming Group for £270m in May, is anything to go by, as well as the acquisition of a 90% stake in Best Gaming Technology for €138m in July. Both Playtech and NYX have realised that sports betting is an important weapon in a battle for supremacy, and with the direction the industry is moving in, it is not difficult to see why sports betting for the providers is becoming increasingly lucrative.

It is not as though sports betting itself is acting as an inspirational new trend that has hit the industry out of nowhere, as it’s been around in a competitive market-space for centuries. What makes it stand out from the crowd in 2016, however, is its ability to embrace new trends before other verticals, with particular regards to i-gaming. Have the other verticals seen innovations such as in-play, cash-out or partial cash-out come along to shake markets up, or developments of games like daily fantasy sports (DFS)?

Poker fans may argue that the likes of rush poker and Spin & Go have done their very best to drive that vertical, but then poker operators have not been able to exploit areas such as TV advertising in the middle of Premier League football matches, a luxury sports-betting operators can enjoy.

Even in a market like New Jersey, in a country where there are so few opportunities for sports betting, it is that mode of betting that is seen by some as a potential saviour to a casino market that has reported revenue declines for each of the last nine calendar years. Online gaming has provided some kind of impetus in the three US states where it is regulated, but as Weizer said, they present “small opportunities” for Playtech. There is only one form of betting that can really be seen as a key driver of growth for the US, at least in the regulated sense, with the American Gaming Association predicting that $149bn was wagered illegally on US sports in 2015.

Just ask yourself why fantasy sports are becoming regulated across the US at a rapid pace in comparison with online casino and poker, with the total states regulating the games now being at nine overall and eight this year alone. Yes, there are the age-old arguments about chance vs skill, but let us not kid ourselves into assuming that the dollar symbols have not been rolling in the eyes of state authorities after looking into tax opportunities presented particularly by DFS, a market that has been predicted by Eilers & Krejcik Gaming to be worth around $8bn in entry fees in a best case scenario for 2020.

If sports betting as a whole is on an upward curve, then this would be in line with predictions. The European Betting and Gaming Association forecast that regulated betting gross gambling yield (GGY) would be $70bn for 2016, which would be a 21% increase from $58bn in 2012 (14% of the entire gambling market).

Great Britain’s figures also showcase the strength of sports betting, with the land-based GGY total for the period from October 2014 to September 2015 being £3.2bn, 61% of the market, while online sports betting GGY for the 11 months ended 30 September 2015 was £1.46bn, 35% of the market, but behind casino with £2.4bn.

While the operator space, particularly in the UK, has seen a trend of consolidation to combat tax regulations , we may now be seeing a sprint race for providers to get their hands on sports betting software as the M & A activity continues.