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The future outlook for iGaming

The iGaming industry is rapidly evolving from all angles, with changes such as new laws, EU directives, emerging jurisdictions, technological developments and consolidation shaking up the industry as a whole and, as a result, changing the rules of the game.

For starters, barriers to entry are growing higher as margins are being squeezed – so much so that if you are planning on entering or perhaps even remaining competitive within the industry, it is imperative to remain ahead of the game, knowing your market inside-out, thinking innovatively and using new trends to your advantage, in order to stand out and differentiate yourself.

With more jurisdictions jumping on the bandwagon and determined to regulate and raise revenue, compliant operators inevitably will feel the pinch to their bottom lines, which is likely to be reflected in lower odds, less attractive bonuses and higher rakes – all of which non-compliant operators pick up on and, in theory, offer a more profitable return to players.

It is fundamental that new rules are policed and that authorities remain vigilant.

The new regime in the UK – where the existing remote gaming, betting and pool betting duty rates of 15 per cent are now applied on a point-of-consumption basis – begs the question as to whether an underground market will expand, where unlicensed entities will be in a better position to offer a more appealing opportunity to players.

Concurrently, speculation is rife as to whether ‘sign-up bonuses’ may be reeled in as a means of cutting marketing costs, which is a further instance illustrating how the industry has been and will continue shifting focus from player acquisition to player retention.

Free bets will begin to change from big hand-outs to cleverly-capped sure bets in order to draw in customers. As a result, affiliates will also feel the pinch, unless they too roll with the times and adapt to suit their partners’ market strategies.

Yet, the trouble with generalising lies in ‘game theory sign-up bonuses are one of the major differentiators between land-based and online operators, and between competing remote gaming entities which are becoming ever more homogeneous in a market that lacks loyalty. Should all operators reduce their sign-up bonuses, it would be a matter of time until an operator digs into its pockets and attempts to capture the market with a more attractive offering.

With increasing consolidation in the industry, one cannot help but wonder what the playing field will look like in the coming years.

If you are planning on entering or perhaps even remaining competitive within the industry, it is imperative to remain ahead of the game

Competition has been cut-throat across the globe, with the big fish taking advantage of their liquidity to acquire competitors to further secure their position and strengthen barriers to entry. Similarly, many B2B game suppliers may well expand into the B2C market through major acquisitions.

As more fragmented companies conglomerate and merge, are we to expect less focus on innovation? While the industry is synonymous with innovation, I would like to see the manner in which games are going to evolve. Doubtlessly the human mind is hard-coded to feel drawn to playing classic games such as roulette and blackjack. But will such games entice the millennial generation?

Such highly-optimistic individuals who have grown up playing games and expect more of an immersive, rewarding experience in return for their time are easily distracted.

To my mind skill games coupled with social gaming and elements of gamification, such as loyalty programmes, and intricate game designs combined with behavioural economics through the use of Big Data will prove to be the predominant force in gaming for the future generation and, dare I say, for all industries in the years to come.

Naturally, the new “gamified” generation will not only constitute your client base, but also form part of your workforce. Management will need to adapt their skill set to attract millennials in order to maximise their extraordinary ability at problem-solving, organising matters out of chaos, multitasking and being self-directed leaders thriving on a diet of continuous positive reinforcement. Corporations that meet the needs of the highly-fluid generation will be able to crush their competition, as the effect will be reaped from both an inside-out and an outside-in perspective.

Last, but not least, due to increasing regulation in television marketing, social platforms have become one of TV media’s go-to marketing channels.

On that note, though, the industry has come to realise that social gaming is not synonymous with hard-core money gambling despite the initial appeal back in 2012. When a bet is placed, a return on investment is anticipated, but when a deposit is made on a game that is not perceived to be gambling-oriented, players tend to be satisfied with sheer entertainment.

The trick will be for the industry to combine the gold-rush with the fun-seeking aspects. This will prove to be another key to customer retention. It will not be a matter of simply marrying the two, but customising them to amalgamate the offering and tap into the right target market.

As the rules of the game transform into nuances of every colour, one thing is clear. Successful industry operators are tying up their shoe laces to go with their best suits. May the best man win.

Russell Mifsud is a manager specialising in i-Gaming at KPMG.

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