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Research Market strategy
by Swissquote Analysts
Live Analysis

The online gambling industry is back in the game

1

In a similar manner as the global stock market, the gambling industry has been facing difficulties, as worries over economic growth and mounting trade tensions decreased the propensity to wager online. Still, investment fundamentals have not changed at all while expansion in further US states as well as technology advancement will support the market in 2019.

Indeed, a global wave of gambling legalization is accelerating such as in the US, where the lifting of the ban on sports betting by the Supreme Court allowed six states (beside Nevada whose law was already authorizing sports betting in decades) to legalize it in 2018. Clearly, the trend is not halting in 2019 since nine additional states are expecting to follow that path, including Arkansas, Washington D.C. and Michigan among others.

According to estimates, revenues in US sports betting should value $ 81 billion by 2030 while 30 states will have sports wagering legalized by then. In five years, the US will become the third largest sports betting market after China and Japan, a trend that says a lot why online gambling providers are rushing in the US market to capture market share. Similarly, Europe, which represents close to half of global gaming revenues, is moving towards elimination of restrictive gambling bills in 2019, thus facilitating access to market by international operators. The adoption by the Swedish government of a new legislation in online gambling in January 2019 requiring companies operating in Sweden to own an authorized license in order to operate in the country is a positive convergence towards market opening, fair competition and a safer environment for Swedish consumers. The first company benefitting from the trend is Betsson Group, a large player in the online gambling industry sphere that received approval from Swedish authorities to obtain a license in Sweden, making Sweden the twelfth jurisdiction where Betsson gaming activities are officially approved by local authorities, hence strengthening stability of existing revenue sources.

Furthermore, 2019 is expected to be a year with substantial M&A activities, as large European players and US casino operators are hunting down US online gambling targets in order to strengthen their leadership positions. Recently, two large European players have decided to join their efforts in that perspective, with London-based betting company William Hill acquiring Swedish entity Mr. Green & Co in order to increase international presence and expertise in the online betting industry. Additionally, the impact of technology will also play an important role in the online gambling industry, as early movers are leveraging the development of augmented and virtual reality in order to improve user experience and enlarge gaming offerings

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