Opening Markets in 2021
20210225
Overview
2021 will no doubt be one of the most active years in the history of our industry as countries across the globe persevere to regulate online gambling in their respective territories. Ending an era in which the illegal online gambling activities of operators in the Black Market were ignored, markets are shifting with the times to regulate and govern this rewarding entertainment outlet.
Change does not come easy, with many advocates for legal gambling hitting roadblocks around taxation, restrictions, governance and so on. It can take years for final “bills” or legislation to be passed through government or country councils. Even then, operators looking to offer their services in a country must undergo extensive evaluation before receiving a licence to operate.
However, in recent months, some countries have announced successful moves to regulate and legalise online gambling. This is a fantastic opportunity for operators to reach a new demographic of players.
America
Dubbed the Land of the Free, online betting and gambling in the US is one of the most disparate in the Western world, with many states understandably slow to implement regulations after federal sports betting ban PASPA was overturned in 2018. That being said, some states have made waves in introducing online gambling across all verticals, including lottery, casino and sports betting.
2021 looks to be the most active year yet when it comes to legalising online gambling, as in recent months several states have begun proceedings to either expand or legalise online betting in their territories. Online gambling can be actioned through multiple avenues including brick-and-mortar casinos, sports betting operators and/or the State Lottery.
Looking at sports betting in particular, many states have had tremendous revenue success, especially as local lockdowns and a reduction in in-person attendance at live events has meant that more bettors have moved to a digital service offering for their source of entertainment. A prime example of this is the recent Super Bowl LV match. According to new American Gaming Association (AGA) research, they estimated that a record 7.6 million Americans would bet with online sportsbooks, a 63 percent increase from 2020.
In general, the AGA reports that “$21 billion was wagered on sports in 2020, up from $13 billion in 2019, generating more than $210 million in state and local taxes”. It is no wonder that 15 states currently have active or pre-filed legislation to legalise sports betting alone.
Although the road ahead is long, with many bills or legislation not expected to pass through quite as easily as others, the USA is a region with great potential. When neighbouring states have more freedoms than others, it is only natural that lobbyists look to push the boundaries and legalise local online gambling.
Germany
First announced in January 2020, a new Interstate Treaty on gambling (IST) was agreed on by Germany’s 16 federal states and ratified by their respective Prime Ministers two months later. Operators will now be allowed to offer online slots and poker across the entire country from July 2021. These verticals were previously prohibited in all states apart from Schleswig-Holstein, but will now be accessible throughout the country, although subject to in-play and advertising restrictions.
Germany agreed to a transitional period, between 15th October 2020 to 1st July 2021, which allows operators to continue their presence in the market according to the third IST without facing penalties. This means that German-facing operators will not be required to remove their offering in the country or face a cooling-off period before applying for an official licence, which is not the case in neighbouring Netherlands.
Moving forward, the authorities of Saxony-Anhalt will licence these verticals in Germany until the beginning of January 2023. The authorities of the State of Hesse will also remain in charge of licencing sports betting operators in the country until the same date. After this date, the newly created Common Gaming Authority of the German States will be in charge of licencing for both verticals mentioned.
Since the German iGaming market is the second biggest in the EU, behind UK, it is no surprise that it is set to be worth €24bn by 2024, according to a new report published by Goldmedia. Moreover, the report suggests that this new legislation could increase total iGaming market share by at least 6% over the next five years, especially as land-based activity decreases. It comes as no surprise that, according to this report, smartphones were the most popular method of playing online slots in the country, with 65% of those surveyed opting for this device, over laptop or a classic desktop computer.
Netherlands
With a total turnover of the legal gambling sector valued at over €2bn, with almost €500mn transferred to charities, the Dutch gaming market is not one to ignore. Big changes are on the horizon, with this value set to change thanks to the Senate’s approval of the Remote Gambling Act, known locally as “Koa”. This Act is expected to enter into force on 1st April 2021, allowing operators to apply for a licence, with the online gambling market fully opening six months later. Regulating this legislative change is the Kansspelautoriteit, or Dutch Gambling Authority (KSA). Established in 2012, the KSA is the country’s independent governing body that supervises and regulates games of chance. Their goal is to ensure that at least 80% of players play with a legal online provider.
Not only will October mark a new wave for the online gaming market in The Netherlands, but this date will also celebrate KSA chairman Rene Jansen’s three-year anniversary at the helm of the authority. In a recent blog post added to the KSA website, Jansen scripted that he is keen to “keep an eye on the ball” in these “intense months” as the authority works with operators to bring a level playing field to online gambling in the country. This comes as the KSA continues to propose new restrictions, including restrictions on sports betting operators offering certain types of betting markets.
Unlike in neighbouring Germany, the KSA introduced a two-year “cooling-off” period as part of this legislative change, to ensure that licences for online gambling would only be issued to those parties that have not actively or specifically targeted the Dutch market illegally, or without a licence, for an uninterrupted period of at least two years. This will obviously give certain operators a head-start in the country before sanctioned operators can even apply for a licence.
The future looks bright, according to a white paper authored by OnlineCasinoGround.nl, which states that almost 50% of Dutch players are looking to gamble with soon-to-be licenced international operators. This report also detailed how in 2018, the market contributed €1.4bn to total Dutch GDP, up 9% from 2015, with provisional estimates stating that as much as 9% (£124m) of that contribution potentially coming from the black market. Moreover, a recent report published by the KSA suggests that the legal online gambling market in the country alone could be worth €800mn in 2024.
Ukraine
With a lot of chatter around the opening up of Eastern Europe and its potential to bolster online gambling market revenues, Ukraine has come out on top in the last 12 months. Following a landmark law which was passed through the Verkhovna Rada, or Supreme Council of Ukraine, and subsequently signed off by the country’s president Volodymyr Zelensky in August 2020, online gambling is now legal in the country. This long road to regulation approval comes after a year of perseverance from the country’s gambling advocates and operators.
Ukraine’s end to its decade-long ban paves the way for huge potential in the country. With neighbouring country Poland experiencing a gambling revenue worth of almost €5bn, according to KasynoHEX Poland, there is nothing to suggest that Ukraine cannot match this in years to come, especially with a 15% bigger population. Poland protects its consumers heavily with a strong regulatory framework, so Ukraine is heading in the right direction by seeking advice from international stakeholders to achieve the same Moreover, a Commission - the Commission for Regulation of Gambling and Lotteries (UGLC) – is now setup to regulate and control the new industry, and both B2C and B2B operators are required to apply for a licence to operate in the country and must also create a legal entity incorporated under Ukrainian law.
Before the Ukrainian legislation can be marked as complete, the UGLC and Ukrainian authorities must implement more elements of the Gambling Law, including the creation of an online monitoring system.
Taking a Piece of the Pie
The fight for a piece of the online gambling pie will be interesting, as operators look to attain and retain a new pool of players. It will be important for operators to ensure their service offering is consumer friendly whilst engaging with a new generation of players with high expectations of best-in-breed apps and digital products already on the market.
Mobile platforms are also moving in the right direction to help operators achieve an omni-channel service offering. For example, Google recently changed their Real-Money Gambling, Games, and Contests policy, to include 15 more countries that can advertise their Real-Money Gambling (RMG) apps on the Google Play store. From March 1st, Lotteries, Casino and Sports Betting operators in certain American states and in Germany can take advantage of this change, allowing them to create RMG apps on both iOS and Android, paving the way for a wider player-demographic reach.
With such a variety of markets opening up and regulating online gambling in its different forms, operators will need to act fast and ensure they have a strong digital service offering to attain and retain players amongst the competition.
