No other name is as associated with making predictions about the world like Nostradamus and I for one wish I could channel some of his powers. Making predictions about the casino industry can be just as hard as the actual gambling itself. With everything that’s been going in the world in the way of politics and pandemics, it doesn’t make it any easier.
I stumbled upon an article covering the current direction of the gambling industry so I wanted to take a closer look at some of the global markets in terms of the challenges they are facing.
Regardless whether you agree with it or not, it does open up a healthy debate.
Asia – Current and Future Challenges
The pandemic has had a massive impact on the Asian market and the short term goal for the year is to try and get back to 2019 levels or at least closer to it. However, some regions are in for a tougher challenge than others.
According to Alidad Tash, Managing Director at 2NT8, most regions should be able to pull it off although Tash believes Macau will be in for the biggest challenge.
Las Vegas of Asia
However, the Las Vegas of Asia is off to a great start in 2023. All COVID-19 testing requirements were dropped in January, resulting in a massive flow of travelers from mainland China, Hong Kong as well as Taiwan. As a matter of fact, half a million visitors arrived over the week-long Lunar New Year holiday.
The crowds were the biggest in more than three years, but January’s revenue was still less than half of the Lunar New Year period in 2019 prior to the pandemic.
It doesn’t come as a surprise that 2022 was the worst revenue performance on record.
A New Era of Non-gaming Revenues
To make Macau even more attractive, casinos have committed to investing a total of $15 billion in the coming decade. 90% of the investments must be spent on developing non-gaming plans that include an indoor waterpark, health and wellness centers, art exhibitions and a large garden attraction. by Sands, similar to Singapore’s Gardens by the Bay.
Why? Because the latest government mandate requires them to increase non-gaming revenues to more than 30% . This number was at a much lower 5% pre-COVID.
In comparison, Las Vegas has around 50% of revenues that are non-gaming related.
Traveling – Yay or Nay
As expected, a travel ban will have huge effects on any market and how 2023 will look depends a lot on what the Chinese government’s stance will be. A lot of hardcore gamblers enjoy traveling to Manila and Singapore but if China says no, these gambling hot spots will continue to suffer greatly.
There’s a lot of uncertainty still but it must kill them to see how Las Vegas continues to break all-time records.
North America – Current and Future Challenges
The industry is hoping that states without legal sports betting will get their s**t together and work out the legislation and a regulatory framework for a competitive market.
Until that happens, two of the biggest markets (Texas and California) continue to be closed for casino business.
It’s a Snooze Fest
The online casino legislation will get some attention during 2023 but the problem in the US is that it takes years and years for lawmakers to make something happen. Part of the reason is the 2-year election cycle in the state houses.
Let’s say a state starts discussing online poker and online casino in 2023. In most circumstances, it will take about 5 years for these sites to go live. If a state were to pass an online gambling bill in early 2023, the sites should be live sometime in 2024.
In other words, don’t hold your breath because no matter how logical it seems to us, it’s going to take a while.
Focus on Responsible Gaming
One of the biggest focus areas for 2023 is Responsible Gaming, which is not a unique issue for the North American market. Both regulators and the industry itself are currently questioning if the existing tools and processes are insufficient to protect consumers.
When asked about something that could transform the industry, Eric Frank who is the CEO of Odds On Compliance, said the following:
“Silicon Valley. A major tech giant like Google, Amazon or Facebook entering the market could be a game changer for innovation in the marketplace. Additionally, another key state adding iGaming in 2023 could open the door for a few other states to follow suit.”
UK – Current and Future Challenges
At the end of 2020, the government announced that it would publish a paper regarding “proposals for reform” but things continue being delayed, leaving the industry in a state of limbo. This makes it difficult to draw up long term plans.
The publication would allow market players to properly assess potential opportunities any new proposal might bring while also introducing a tighter regulation framework.
The Gambling Commission
Rawa Kaftan, an Associate at Wiggin had the following opinion on the matter:
“Over the last few years, the Gambling Commission has introduced concepts such as special measure processes and affordability, and enforced against operators on these concepts without giving the industry direction or guidance as to its expectations.
This only serves to create tension between operator and regulator and results in a sense that the Commission might regulate as an authoritarian body rather than engaging with the businesses it licenses”.
It remains to be seen when the new proposal will be published.
Latin America – Current and Future Challenges
If you know anything about South and Latin America, you know that politics has a major impact on all areas. This of course also includes gambling.
Several important markets went through political changes towards the end of 2022. There’s a big chance that this will slow down the progress of any regulatory development towards certainty and stability and for key markets.
Even on a global scale the gambling industry was looking forward to this but hopefully all markets can get their ducks in order and sort things out sooner than later.
Two of the markets that could flourish from it are Peru and Brazil.
Help Prevent Match-Fixing
Another problem that is often associated with Latin America is match-fixing within sports. This one is definitely an obstacle and along with this comes the challenge of fraud prevention which is something that needs to be a focus going forward.
Not only will a better system protect the industry as a whole and establish a fair game policy but also directly help protect sports leagues and prevent match-fixing.
Africa – Current and Future Challenges
I believe Africa is a very interesting market that has grown a lot over the last 5-7 years. However, not only does it have a lot of potential, it also has a ton of work to do.
As the market grows, so do the companies involved and in order to show and solidify their business professionalism, many want the indigenous operators to become a part of the local stock exchange. Rubbing shoulders with known companies should help move gambling into the mainstream and help attract much needed investors.
High Adoption Rate of Cryptocurrency
Fintech and grassroot adoption of crypto are some of the reasons behind the exploding African market.
Did you know that Africa had the highest adoption rate of all during 2020-2021? The reason for it was primarily for people to be able to save money against unstable local currencies. With the crypto market having a tough year, it will have a big impact on gambling in Africa.
Lack of Internet
Something that is needed in order to take the industry to the next level is affordable broadband. African countries ranked 8 out of the 10 most expensive countries in the world for 1GB of mobile data. The Central African Republic was the most expensive, with 1GB of data costing the equivalent of 24.44% of average income.
I can’t imagine having to pay that much for Wi-Fi and cheap or even free internet is something us people in the western world take for granted. If they can find a way to sort out this problem, it will be very interesting to see how fast and how big the industry can become in the untapped African market.
There’s no doubt there are challenges up ahead but that’s also what forces progress and innovative thinking. This is something you can find in abundance in the casino industry and I think we should continue to be excited about the future, regardless of the market.