The Shifting Focus of Casino Operators in 2019

The bubble has burst in regulated markets, that appears to be the general consensus around the online casino market at this point.

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October 3, 2019 14:50
The Shifting Focus of Casino Operators in 2019

. (photo credit: INGIMAGE)

The bubble has burst in regulated markets, that appears to be the general consensus around the online casino market at this point.


With markets like the UK and Sweden being more than ready and very willing to dish out fines to casino operators considered to have failed to comply with increasingly strict regulations, regulated markets are losing their shine in the eyes of many operators.

 

And so attention turns to grey markets, thus far unregulated areas where operators can offer their services to players without giving over any of their profits to the Government.

 

This isn’t a case of smaller brands looking to take advantages of loopholes either, some of the biggest names in iGaming are making moves away from the bigger, well-known markets and towards the grey areas.

 

This includes brands that are based out of Israel, such as 888 and more than a dozen brands powered PlayTech - a company that was founded by the Israeli entrepreneur Teddi Saggi.

 

PlayTech is notorious for dominating the grey markets and still derives a significant part of their revenue in countries where online gambling is neither legal or illegal.

 

What is a Grey Market?

So what is causing this move? What are these grey markets? And is this the next step for all major casino operators?

 

In simple terms, a grey market is a jurisdiction in which iGaming is not illegal, but is also not regulated.

 

The concept of grey markets is not a new one, operators have had an eye out for lesser regulated markets that allow greater profit margins for a fair while, but there has always been concern.

 

Speaking at ICE back in 2015, CEO of KMI Gaming, Keith McDonnell, warned of the risks of grey markets.

 

“…a lot of people think that Southeast Asia is an easy way of making money, but it certainly isn’t.

 

“Over the past couple of years, there have been a couple of companies going to Southeast Asia and coming back with to their domestic markets with their tails between their legs.

 

“You need to have a realistic plan and build a picture. It’s the only way to do it.

 

“If you decide you want to go ahead, you need to understand product requirements and whether your current infrastructure will support the move. Also, will it put your existing licensing structure at risk?

 

“There is no quick fix or off-the-shelf solution. It really depends on what you want from the market.”

 

There are not only the risks of regulation changes in these grey markets, but also the need for operators to alter to suit the market.

           

The Asian market, for example, has been slots focused for a long time, and many operators have struggled to adapt. However, sports betting is also gaining traction in these markets (it has always been fairly popular, and is growing as of late) and live dealer games are becoming big business.

 

While there have always been big name brands willing to take the risk on grey markets, the increased regulation in formerly safe markets has seen bigger names looking further afield.

 

With the likes of Casino Heroes, Leo Vegas, Unibet, and more high-profile operators testing the waters of grey markets, it’s clear that, given the current situation, many see the risk as worthwhile.

 

So, what are the grey markets that are creating the most interest?

The iGaming Market in India

 

While India has been a fairly big market for iGaming for a few years now, the popularity and availability of iGaming products in the country has shot up in the last couple of years, and moving into India is becoming one of the hottest topics in iGaming.

 

In 2018, India was one of the top five countries in the world for mobile gaming, with the market heading rapidly towards being worth $1 billion, and it has only grown from there.

 

The emerging (or perhaps increasing) popularity of iGaming in India owes a lot to the demographics of the country. With well over a billion people, half of which are under the age of 25, those who have grown up with the internet and mobile technology are moving towards being the majority.

 

Accessibility of smartphones and data has also grown over recent years, so the availability of iGaming products has never been greater, and the race to take advantage of that is very much on.

 

As in the rest of the world, one of the most exciting prospects for players in India comes in the shape of live dealer casino games. Faster internet speeds in India, combined with technological evolutions in the Live Dealer world, and substantial and exciting portfolios of games from the likes of Evolution Gaming and NetEnt have led to a huge spike in the popularity of these games.

 

India has probably the biggest potential of all grey markets, but this does hinge on legality, and if any changes are made that may make it tougher for international operators to offer services in the country.

 

The current situation in the market is very laid back. If you take a look at some of the online casino sites listed for the country, you’ll notice that most of them are the same companies that already dominate in Europe.

 

They are just coming to markets like India due to the high potential and relatively low competition. Whether they’ll stay or leave empty handed is a matter of how the government decides to regulate the market.

 

The iGaming Market in Japan

 

Casinos in Japan are an intriguing topic. At the moment, there are no land-based casinos in the country, but before the end of 2019, the results of a public consultation int the nations first casinos are expected to be released.

 

However, will their brick and mortar cousins may not have arrived yet, online casinos are starting to make an impact, thanks to the high popularity of mobile gaming in Japan.

It is no secret that technology has a huge place in Japanese culture, with the country looking to be at the forefront of evolutions in various aspects of technology.

 

Legality is confusing in Japan, as it is in many grey markets. Various types of sports betting, as well as lottery and pachinko (a pinball style game) are legal, but, in essence, all other forms of gambling are banned.

 

However, there was a law change in 2017 which allowed licenses to land-based casinos, which is why there is the aforementioned public consultation, with the country hoping to have its first casinos in time for the 2020 Tokyo Olympics.

 

Japan, at this point, does not have a centralised authority which oversees gambling, instead various sectors of the government cover different parts of the industry, which can lead to confusion about what can and can’t be done.

It is fair to say, however, that while Japan may have as much potential as India as a grey market, it does have more risk. Not least because there is still a great deal of anti-gambling sentiment amongst residents of Japan.

 

This is somewhat balanced out by the popularity of mobile gaming, but nobody can be sure where it goes next.

 

With the expected arrival of the nation’s first brick and mortar casinos, though, an online casino revolution is a likely next step.

 

Japan and India are two of the biggest grey markets, for as long as they stay grey, but there are many other countries around the world, including other jurisdictions in Asia, which are also creating some buzz when it comes to the potential of their gambling markets.

 

While embarking on a mission to attempt to succeed in a grey market still has substantial risks, and there is always the chance of law changes leading to increased regulation, operators are losing patience with heavily regulated markets.

 

As operators slowly move away from Sweden, the UK, and other similarly regulated parts of the world, they have to go somewhere, and at this point, India and Japan seem like two of the most likely destinations.

 

 


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