At the end of every year, it makes sense to take stock with an annual review, perhaps even daring to predict what is to occur in the 12 months ahead. For annual budgets, these things are a must; although considering the year we've just had, it almost seems pointless.
In a year dominated by COVID-19, some gambling trends may have been foreseeable; yet full closures of gaming markets across the world certainly wasn't. Given the fact we are still in the midst of a pandemic, it may also seem foolish to try and look ahead to 2021.
And yet it's something companies and whole industries must at least attempt to do, even if many factors still remain at the mercy of the coronavirus pandemic. So hopefully, with the prospect of functioning vaccines, we can try and make a few projections for 2021 without being wildly incorrect...
My first prediction is one initially voiced by Peter Nolan of Digitain in last week's GI Friday. In his Guest Interview, Nolan argued M&A will take on even more significance in 2021. It's a projection I happen to fully agree with – and one that is near-inevitable during such difficult times.
With both increasing competition and regulatory demands in recent years, mega mergers have already become more and more common. In recent months alone, we have had various stages of confirmation on deals between Flutter Entertainment and The Stars Group, Caesars Entertainment and Eldorado Resorts (and William Hill), and Evolution and NetEnt.
Following a year of such strife for the land-based sector, but also the increasing market power of some of the larger online firms that have thrived, we can expect 2021 to be a year of even more consolidation than normal. I'm aware increasing M&A is an occurence every year these days – but given the effects of this pandemic, 2021 should accelerate this even further.
Even if it is hard to top the number of mergers we've had at the very top level in 2019-2020, consolidation at a lower level seems virtually guaranteed.
Retail: A view to 2022
As I've already touched on, 2020 has been a simply terrible year for land-based casinos (and betting shops). There is very little that can be concretely predicted for 2021, too, given a new wave of closures for US casinos and shops in Europe.
Seminole Gaming CEO and Hard Rock International chairman Jim Allen recently appeared on the GI Huddle, and was honest in his review of 2020 and analysis of 2021. There are certainly some causes for optimism, especially given the over-achievement of US casinos since reopening with curtailed capacities.
Overall, however, Allen urged caution, which is no surprise: in the US, it will be a bumpy ride to say the least. In Macau, too, progress will be slow for some time to come.
That's why the biggest prediction we can make at this point is that 2022 will be the year of recovery for land-based establishments globally, particularly when it comes to returning to pre-COVID levels. There will likely be bright spots in 2021, especially if genuinely effective vaccines become available to mass populations in the second half of 2020. But consistent success is not yet on the horizon.
Sports betting – Euro 2021
Sports betting in 2020 can best be described as tumultuous, as although a complete shutdown of the major sporting calendar hurt sports betting revenues deeply, there has been a considerable uplift since major leagues returned. In many ways, sports wagering is now in a very healthy place, with less entertainment alternatives available for players and major sport now a constant fixture.
EveryMatrix CEO Ebbe Groes last week spoke to the GI Huddle in detail about adapting during the coronavirus pandemic. And how sports betting suppliers, operators and affiliates were forced to adapt...
But now that professional sports organisations have strong testing procedures in place, 2021 should be a year of further growth for sports wagering companies – growth comparable to 2019 and not just against reduced 2020 figures.
Pre-pandemic, Kindred Group CEO Henrik Tjärnström and Betsson Group CEO Jesper Svensson both spoke to me of their ambitions for Euro 2020 (the European Football Championships). Tjärnström, in particular, said it would be the biggest sports betting event in history.
Naturally, the pandemic ultimately forced the event's abandonment in 2020. Crucially, though, this was not a total cancellation and instead a postponement until 2021. With pent-up demand for such a big footballing event carrying over from 2020, expect huge sports betting numbers should the tournament go ahead as planned. This I can say with some comfort, regardless of any other extenuating circtumstances.
Digitalisation – US and beyond
One area of the gaming industry that can't be stopped in its tracks, and certainly won't be in 2021, is digitalisation. In some markets, this will translate more to the convergence of online and retail, though in others it may well mean a fuller transition to digital gaming.
While there remain those who feel land-based will always trump online, a far greater percentage of gambling stakeholders will have softened their stance on digital than at this point 12 months go (if they weren't already advocates, that is). What 2020 has taught us from a business persective, across all industries, is that extraordinary events can stop retail altogether. That's not to mention the merry-go-round casinos and betting shops worldwide have undergone with subsequent shifts in policy at different stages of the pandemic.
Online betting, however, cannot be halted in this manner, especially online games that don't rely on the sporting calendar (casino, poker, bingo etc). This harsh truth when comparing online and retail has even resulted in talk of regulating online gaming in Macau this year, however realistic or unrealistic that prospect may be.
Yet where this is best demonstrated is the US, where online gaming has provided states with valuable revenue during property closures. When properties are open, meanwhile, online gaming has so far not proven to cannibalise land-based demand – rather working with it hand-in-hand in states such as New Jersey.
So, while the only thing we can be fully certain of during the pandemic in 2021 is uncertainty itself, the most confident prediction I can make is that online gaming will continue to rise. And its critics will have less and less of a case to present.