|
INSIGHTS FROM G2E 2022
The attendance and energy at last week’s Global Gaming Expo (G2E) reflected the strong growth of the industry since pandemic lows. While the last vestiges of its commercial impacts continue to constrain gaming in Asia, much COVID-era thinking has been codified into new, progressive business practices and its cloud has lifted off the overall economic condition of the industry.
We are fortunate at The Innovation Group (TIG) to see the gaming industry from all sides. We find that G2E is a good opportunity to recalibrate our worldview with what we have learned, as it is capsulized here.
The Evolving Landscape – Gaming’s Next Chapter
The who, what, where, and how of gaming are changing and player destinations within the industry are growing.
-
Players developed a taste for online gaming during the pandemic and its growth has been sustained despite the recovery and stabilization of bricks and mortar options. The next frontier for online gaming appears to be virtual and augmented reality (VR and AR) integrations, and ultimately metaverse casinos where broader, non-gaming business drivers like entertainment and partnerships can be offered in a virtual casino experience.
-
As excitement over emerging markets inevitably slows, M&A activity is expected to play a meaningful role in the sports betting landscape over the short term. Given the sheer number of participants in this space, consolidation is expected to be at least partially driven by marketing synergies around player acquisition and loyalty costs. Consequentially, some of the less known and more niche products in this space may find a clearer path to success.
-
While it’s unclear whether today’s legacy opco’s will survive in their current form, it’s certain that media companies will play a significant role in future industry growth. Already we are seeing partnerships unfold in ways not previously imagined, and when we consider the possibility of casino operators being acquired by non-industry conglomerates, the calculation is decidedly not if, but when.
-
In tribal gaming, where growth has traditionally been defined by property expansions and diversification, ever-increasing competition is driving new creative land use ideas. Tribal cooperation is at an all-time high as more experienced operators begin to invest in smaller tribal developments in need of capital, training, and management support, while tribal investments in the broader hospitality industry continue to grow.
Market-by-Market Opportunity
Amid the recovery, there have been meaningful developments in North America and Latin America, with some hopeful signs in Europe. Asia continues to lag in what appears to be one of the most noticeable differences across global gaming markets in the wake of the pandemic. Please contact a TIG partner to discuss opportunities in any of the following markets.
-
In the U.S. commercial markets, Virginia and Chicago-area expansion casinos move forward; new commercial casino properties should open in New Hampshire, Nebraska, and potentially New York; and new markets are being assessed in Texas and Georgia among other states. Despite the seemingly impending failure of Props 26 and 27 in California, mobile sports betting and iGaming continue to present the most significant growth opportunities for the U.S. industry. Casinos and technology providers alike remain focused on understanding market opportunities.
-
Tribal gaming expansion continues with an emphasis on amenity-centric additions to successful properties, and new casinos in North Carolina, California, Oklahoma, and other mature tribal markets. Further, as tribal operators face increasing competition near home, diversification strategies are evolving to include operation of commercial casinos in a number of jurisdictions.
-
Canada is on the move in the online and sports betting arenas, while the largest casino players – in the brick and mortar industry in Ontario – are figuring out, with some difficulty, how to absorb “Modernization” in the post-pandemic gaming industry. To be sure, we see activity across the Canadian Provinces in gaming within commercial, First Nations, charitable, and provincial operations.
-
Further abroad, Singapore and the Philippines are active, each capitalizing on property and infrastructure improvements, while Macau remains a work in progress. Whether a meaningful portion of the underserved Asian market can be accommodated in other locations, like Korea and Vietnam (or, dare we say, Japan), remains to be seen. Meanwhile, the world is lining up for potential IR developments in Spain, UAE, and Thailand among other countries. Finally, Latin America and the Caribbean are experiencing steady online and sports betting growth and selected traditional casino license re-bids. Brazil remains elusive in many ways, despite renewed attention to online and sports betting platforms. Hear more from us on these latter opportunities next month at SBC Summit Latinoamerica.
Regulatory Priorities
Regulatory innovation and gaming technologies themselves are more fully accepted now as a tool for positive change in the industry.
-
Responsible gaming is making gains in research, and funding, that are mutually beneficial to private and public interests. Further, after making waves in marketing and operations, many are beginning to recognize the opportunity artificial intelligence presents for innovation around player protection and problem gambling. Contact TIG’s responsible gaming liaison Keli Elkins for additional information on the work of the International Center for Responsible Gaming (ICRG) and takeaways from their recent conference.
-
Blockchain’s association with massively volatile cryptocurrency creates a lot of unease about adoption, but it’s really just a ledger. Having every transaction immutably recorded for all of history could be an incredible development for regulators – think of the implications for AML and KYC alone – but a massive education effort will be necessary to get these tools in play.
-
Illegal gaming will remain as prevalent as technology and enforcement allow. While expanded legal online gaming has begun to make a dent in the online grey market, illegal online operators continue to push the boundaries, benefitting from growing interest and market confusion. All the while, and despite the industry’s best efforts to raise awareness, grey market electronic gaming machines continue to proliferate without enforcement. Watch for TIG’s forthcoming research, in partnership with the American Gaming Association, on this topic.
|
