After a bumper year in 2020, many wondered if the online gambling sector could maintain momentum into 2021.
2020 saw the number of new online gambling clients increase as lockdowns, combined with increased smartphone usage and new technological advancements drove new demographics of players. At the end of the year, the value of the global online gambling market was around $59.6 billion. Its compound annual growth rate was projected to reach around 11.5%.
Some of the big winners in 2020 were online poker, eSports betting, fantasy sports betting, and live dealer games. But six months into 2021, what’s the market saying now?
Revised figures suggest that the CAGR could even reach 12.3% over the next few years. This would see the online gambling sector surpassing $72 billion by the end of this year. Growth is driven by companies resuming normal service and the fact that not all land-based casinos will reopen. At this rate, the sector would well exceed $112 billion by 2025. This is great news for entrepreneurs looking to start out this year.
The big news of the year so far
One of the big stories of the year so far in the online gambling sector has been the march of eSports Entertainment Group. The company has completed several acquisitions recently including EUR 22 million for Swedish company Bethard. This boosted the number of betting licenses the Group has to include two key EU jurisdictions. Listed on NASDAQ, the Group also bought Lucky Dino Gambling LImited, Argyll Entertainment, Helix eSports, ggCircuit, and is set to buy New Jersey-based Esports Gaming League. Not only does this demonstrate the liquidity of the sector, but it shows that investors believe the eSport sector’s popularity to be long-term.
Various online gambling sector markets around the world showed increased growth, such as in France. In Q1 of 2021, it grew by 35% on the previous year. The number of active players skyrocketed and the most popular games were sports betting, horseracing, and poker. At the end of the quarter, revenue sat at EUR 587 million.
But it hasn’t all been good news. A trend of tighter regulation, particularly in terms of advertising and payments, started in 2020 and is continuing this year as well. Due to the surge in revenue from online gambling operators and increased stock values, regulators and policymakers grew concerned. The UK Gambling Commission noted higher risks for problem gambling.
As such, the government is currently conducting a review of the Gambling Act. They are likely to address advertising, regulation and licensing, self-exclusion, and responsible gambling, as well as how bettors can pay. Recall that in 2020, the government prohibited sites from accepting payment via credit card. Tighter regulation is most definitely on the cards in both the UK and Northern Ireland.
The online gambling sector: land vs online
As casinos, bingo halls, and sports venues closed their doors in 2020, punters clamoured to bet online. Casinos that had an online presence were able to channel their clients to sites and apps, thus avoiding significant drops in revenue. Land-based gambling accounts for the majority of global international gambling revenue, generally in excess of 50%.
But once casinos were allowed to open again, and not all did, not everyone switched back. While there will always be punters that prefer to gamble in person, many also enjoy the convenience of online gambling. It’s also something of a generational matter. Older gamblers prefer to bet in a betting shop and gamble in a casino, whereas younger people prefer to access live dealer games or mobile-friendly betting sites.
That said, the pandemic was something of a catalyst for change in the land vs online debate. It will take a while for online to surpass land-based, but some believe it could happen in the next 15 years. There will always be a place for land-based gambling, but the potential that digital gambling has is unmatched. The introduction of new technologies such as AR, VR, and AI means that digital gambling will continue to appeal to new audiences who want technologically smart options when it comes to betting.
What we’ve noticed
Fast Offshore has been in the online gambling sector for over 23 years. This means we have seen many changes, developments, and evolutions during that time. It also means we’ve helped plenty of entrepreneurs open and expand their online gambling sites. During the first half of 2021, we’ve observed an uptick in the number of customers wanting to apply for an online gambling license and open an online gambling company. This uptick has come both from first-time entrepreneurs and established companies looking to expand their operations.
In terms of verticals, there has been plenty of interest in eSports and Fantasy Sports gaming, as well as those looking to include blockchain and crypto into their platform. Region-wise, Latin America, Africa, and South East Asia are particularly hot right now in terms of target audience.
The majority of the customers we’ve worked with over the last six months have shown a preference for mobile-first gambling. This means apps and optimized browser sites as opposed to just a website. We expect most of these trends to continue over the rest of the year and into 2022.
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