Lawrence Walton
Western Europe has been one of the key iGaming growth areas for much of the past decade.
Initiatives in the UK, Sweden, and Denmark, along with those in Spain and the Netherlands, played a crucial role in developing the regulatory frameworks, payment systems, and product standards that defined the modern era of online gambling.
While those markets continue to generate high revenues, the next step in the industry’s growth is more often found elsewhere.
The newest betting growth tale is developing in markets that are opening regulated online gambling segments for the first time or updating more traditional gambling structures.
As operators seek to broaden their customer base beyond the mature markets of Western Europe, where taxation, advertising restrictions and acquisition costs have all risen, parts of Africa, Latin America, Central & Eastern Europe, Canada and the Asia Pacific region are becoming increasingly significant.
Western Europe Is Becoming a Margin Story
Older markets can not always be defined as declining. The larger shift is that their commercial agenda is changing.
In a place where online gambling is already well known, the operators are battling one another to acquire customers who typically have multiple licensed online gambling options.
That can be a costly affair in terms of acquisition.
Some markets have experienced tax increases, and advertising and bonus policies have been tightened.
Compliance teams must manage more complex requirements relating to customer verification, responsible gambling, payments and financial risk.
Consequently, Western European betting companies are more concerned with retention, efficiency and margin protection than fast growth.
It’s a growth environment very different to when many customers are potentially entering the licensed digital marketplace for the first time.
New Regulation Creates New Markets
One of the largest factors driving iGaming investment is regulatory reform. A government that formalizes an online gambling market can almost overnight generate a new addressable market.
International operators are given the chance to apply for licenses, local operators are able to invest in technology and suppliers are suddenly confronted with new demand for games, payments and compliance services.
New Zealand is a case in point. It is a sign of the times that its new online casino structure reflects how governments once reliant on offshore access can transition to a model of licensing and regulating online casino gambling.
Regulations are being adopted in various regions, so the betting market is now going from one region to the next.
It is not necessary for a country to be one of the biggest gambling markets to get investment. All it requires is a regulatory climate that provides sufficient certainty for licensed businesses to venture in.
Africa Is Becoming Harder to Ignore
Consumer access to entertainment and financial services has been changed forever by the advent of mobile connectivity. In many markets, smartphones are the main digital device not an alternative to desktop computers.
This is especially good for online betting. Operators can access customers without investing in extensive physical networks, and mobile money systems offer consumers a payment platform already known to millions.
Gambling companies have thus begun paying attention to markets such as South Africa, Nigeria, Kenya, Tanzania, and Zambia. The option is not the same everywhere.
Licensing, taxes, and enforcement vary widely from country to country. Those operators that see Africa as one single market are likely to suffer.
Companies that will localize gambling payments, products, marketing and customer support are likely to be the ones that will do well and not just export a European platform.
Latin America Is Creating Its Own iGaming Center of Gravity
Another region altering the industry’s geographical equilibrium is Latin America.
The obvious example is Brazil. The regulated online gambling framework has established one of the biggest potential markets to open up in recent years, drawing significant investment from international operators and suppliers.
But the wider story goes beyond one country. In Colombia, a regulated model was implemented early, and other territories in the region are still considering how to license and tax online gambling.
For example, this leads to a more weighty betting landscape, with local operators, international brands, payment providers, affiliates and tech suppliers all playing a big part.
For example, this is crucial because expanding a website into Latin America is not just a translation of an existing European site into Spanish or Portuguese.
Football culture, payment behavior, device usage, and marketing channels can vary widely. The best operators are developing their technology and customer experience to accommodate those differences.
Canada Shows How Regulation Can Expand Province by Province
There is another model in Canada. Ontario proved that a regulated competitive iGaming market could attract a significant number of private operators and have a significant impact on digital gambling activity. Since then, Alberta has taken steps towards its own regulatory system.
That provincial approach could result in a gradual growth story for Canada, rather than a single national launch.
But the impact can still be significant for betting companies. The more competitive markets that are established, the more regulated opportunities that are available, and each province that establishes a competitive market potentially adds a regulated opportunity.
It also illustrates the extent to which effective regulatory approaches can impact neighboring jurisdictions.
Governments can look at the tax revenue, consumer behavior and enforcement results and make a decision accordingly. This trend may grow in significance globally.
Technology Makes Emerging Markets Easier to Enter
The economics of international expansion have also changed. Operators no longer have to develop all the components of an iGaming platform from scratch.
Game aggregators are also a good option for offering large casino libraries – the integration is relatively simple.
Cloud infrastructure enables platforms to scale without having to establish physical data centers in each country.
Payment orchestration makes it easier to connect local methods, and KYC and fraud providers can ensure compliance across multiple jurisdictions.
This has lowered some of the technical obstacles to international expansion of a betting brand.
It has not eliminated the need for local knowledge, but it has enabled technology to be applied across multiple markets, with some elements adapted country by country.
This is particularly useful for operators seeking opportunities in smaller jurisdictions that would not have been able to afford to enter on their own.
Localization Will Decide Who Actually Wins
Growth markets can appear tempting on a spreadsheet, but a license does not necessarily mean customers. That said, localization will become one of the most important capabilities in international iGaming.
Moreover, this includes using payment systems they are used to, knowing about local sports, and giving customer support in the language they speak, and making sure to support apps on the device and network customers actually use.
A platform built for fast broadband and credit card transactions might not work well in a mobile-first economy where consumers rely on other payment methods.
The best international operators thus will mix global infrastructure with local execution.
The Industry’s Center of Gravity Is Shifting
Western Europe will continue to be a big iGaming market. Its big regulated markets and mature operators and technology ecosystem are not going away.
The difference lies in the fact that the best opportunities in the industry may be changing. In mature markets, it becomes increasingly about optimization. Newer markets are about establishing positions before competitive markets emerge.
For betting firms, that alters how growth strategies are developed. Rather than competing for a share of an already crowded mature market, operators can turn their attention to emerging markets where regulated digital gambling is still in its infancy.
Ultimately, the next big iGaming winners could therefore be those that can operate more effectively in Johannesburg, São Paulo, Auckland, Toronto, and the next generation of regulated digital markets, rather than those that are dominant in London, Stockholm, or Amsterdam.
