Even the enigmatic advertising director Don Draper would agree the writing’s been on the wall for a while in regard to the latest attempts to reduce problem gambling. Unless you’ve not been outside since Mad Men ended in 2015, you’ll know I’m referring to the wave of gambling advertising bans that has swept over the industry this year.
Italy led the way in January with a complete ban, leaving only sports sponsorships continuing for a further 6 months. August saw Spain push forward with a blanket gambling advertising ban after the PSOE minority government accepted recommendations from the ombudsman to do so. The trend continued into Georgia as the Georgian national broadcaster announced it would ban gambling ads on the First channel from Jan 1st 2020. However, whilst other countries were having bans enforced upon them, UK operators took action into their own hands and agreed on a whistle to whistle ban from the 1st August 2019.
Not all cases were as clear cut though. In May, Kenya banned advertising outdoors and on social media only to revert that decision and propose a gambling advertising tax of 35% of the total cost instead, amongst other changes. They weren’t the only ones to rethink their strategy as Tanzania started the year with a blanket ban only for the government to grant the gaming board the power to allow certain operators to advertise. The effects of these bans will be felt long into 2020, especially for smaller operators and will certainly shape growth plans when looking to break into new territories.
Whilst Europe’s largest markets have been clamping down on advertising in 2019, the Dutch went in the opposite direction and stated they will not impose any ban when the market commences in July 2021. However, just like the charismatic ad man once said, “I keep going to a lot of places and ending up somewhere I’ve already been.” Will the same be said for the Dutch regulators?
Advertising bans were not the only common theme across the year, many countries including the UK, Czech Republic, Ireland, Kenya, New Zealand and Denmark announced tax increases. UK facing operators were hit with a double blow as the FOBT max stake limit reduction took effect in April, forcing thousands of shops to close across the country.
April saw the ever-changing German market announce their licencing requirements for the new regulation whilst Schleswig-Holstein extended their licences until June 2021. PayPal also left German facing operators with food for thought when they updated their policy regarding providing payment services to casino operators, which meant they couldn’t offer PayPal and had to seek alternative payment options. However, PayPal has since switched a handful of operators back on for sports betting only.
A round-up of the year wouldn’t be complete without giving a shout-out to SCA. If you don’t know what SCA is where have you been all year!? 2019 started off with people asking how they were going to meet the requirements and what the impact was going to be on acceptance rates? As the deadline loomed closer and no definitive answer had been reached, the EBA granted an extension until 31st December 2020 or the 14th March 2021 in the UK. This is not something that is going to go away and everyone needs to stay on top of this in the new year or it will come back to haunt them.
Just as Draper seamlessly moved from one campaign to the next, so must we reflect on our learnings from the year just passed in order to optimistically plan for the next.
Operators will increasingly look to markets that don’t require a local licence, as taxes and advertising restrictions make it harder to break into and grow market share in the larger established ones. The US will continue to grow but at a slower rate, at least until one of the larger states regulates, however, there will be more variety in betting options as the year progresses. There will also be big shifts in card acceptance as more issuers and schemes open up to accepting gambling transactions.
The majority of Europe and its operators need to prepare themselves for 3DS2.1/2 because of its inevitability under SCA. Operators who actively seek to educate their customers as well as manage the user journey will prosper the most. Also, as issuers prepare for the change in regulation you will receive more and more transaction declines with the reason “Additional SCA required”.
Hot on the heels of the Stars Flutter, GVC Ladbrokes Coral and William Hill Mr Green mergers I believe there will be more M&A activity to come. As attracting new customers becomes more difficult in markets with advertising restrictions, taxes keep on increasing and more markets regulate, mergers will offer operators a way of gaining a foothold in new territories.
Looking further into the future, the new decade brings a very interesting challenge for gambling companies as they need to find the right balance of appealing to different age groups, all of which have distinctly different social habits, especially in the UK.
Generation X were brought up on betting shops, race tracks and the National Lottery, whilst times have changed significantly since they started betting, their preference is still towards a personal experience.
Millennials are the group most likely to gamble, if you remove generation X’s National Lottery players from their statistics. They are just reaching the prime target age for gambling companies and the majority are used to a mixture of laptops and mobile betting.
Generation Z are accustomed to a fully mobile experience and are also more likely to place an in-play bet, as well as on the go, compared to the other groups.
Whilst a lot of attention may be focused on Generation X and the Millennials, firms will need to ensure they do not lag behind in attracting the next generation. Therefore, we will see e-sports become more prominent in the coming years whilst payment methods such as mobile wallets will continue their rise in popularity. I think we will also see a large operator go mainstream with accepting crypto, which will lead the rest of the industry to watch what happens with great interest.
Personalisation will continue to be key as operators try to tailor an individual’s experience to suit their needs. With more people to appeal to than ever before you can’t afford to only offer a one size fits all solution.
Although numbers are significantly down and the reduction in the FOBT transaction limit has hit betting shops hard they still have a key part to play for operators. I believe we will see a modernisation of these all over Europe as they’re freshened up to attract the next generation whilst trying to keep hold of their current charm to maintain the existing clientele. My wild card prediction is the use of virtual reality within betting shops giving punters the gambling experience of rolling the dice on the tables of Las Vegas, cheering on the winner at the Melbourne Cup or getting the Victory Royale on Fortnite.
2020 is going to be another interesting year for everybody in the industry and we all must channel our inner Don Draper to embrace change in order to prosper.