The convergence of multiple trends in the online gaming industry (acceleration of games as social networks and content platforms, and push towards cross-media integration, cloud gaming and subscription services) under- tends to be a dynamic period for investments and mergers and acquisitions in the sector. Indeed, recent years have seen a huge acceleration in growth and an increase in transactions, both from existing players in the video game industry and from new investors.
The growth of the sector has already led to scrutiny in terms of player protection, especially around the risks of financial harm. Controversies over monetization methods continue to provoke negative sentiment leading to calls for increased regulation.
Israel has long been one of the world’s leading exporters of gaming companies and online casinos. Yet the recent news that Israel-managed and London-listed 888 Holdings has agreed to buy William Hill’s European operations from its US owner in a deal worth $ 2.2 billion. British pounds is further proof that opportunities abound for Israeli casino and gambling companies looking to expand internationally.
Online gambling continues to grow around the world. Specifically, during the Covid-19 pandemic, consumer demand is increasing and driving operators to new heights of revenue. While some offerings such as sports betting (due to a lack of events) and poker (due to a general trend) have seen less growth, online casino slots games, the bingo and casino games are gaining ground in markets that had relatively large land-based offers.
In the US market, the pace of mergers and acquisitions in the sports betting and online gaming world has accelerated significantly in recent months, with Penn National Gaming buying Score Media and Gaming in a deal to $ 2 billion and DraftKings buying Golden Nugget online casino for $ 1.5 billion in stock.
The global online gaming market is expected to grow from $ 64.13 billion in 2020 to $ 72.02 billion in 2021 at a compound annual growth rate (CAGR) of 12.3%. The growth is mainly driven by the resumption of the impact of Covid-19, which had previously led to challenges related to lockdowns and social distancing measures which resulted in operational challenges. The market is expected to reach $ 112.09 billion in 2025 at a CAGR of 12%.
Gaming companies, many of which are owned, operated or financially supported by Israelis, are looking for new opportunities for expansion and investment. Regulatory changes in a number of European countries are also opening up these markets to risk-averse operators such as publicly traded gaming operators, those owned by institutional investors, or investors who may be new entrants to the space. online game.
In Germany, on July 1, 2021, a new state gambling treaty entered into force, which offers new licensing opportunities for sports betting, online slots and online poker for operators. private throughout Germany. The new treaty replaces an old ban on online gambling that only allowed sports betting. While the strict license conditions and high tax burden have drawn criticism from industry lobbyists, the size of the market and the liquidity of the population make the new licenses highly desirable for operators.
In addition, other opportunities are on the horizon. For example, the German federal state of North Rhine-Westphalia has published a bill, which would allow operators to obtain a license for online casinos. Under the proposed legislation, a maximum of five licenses can be issued for a period of ten years.
In Denmark, the licensing system has already proved its worth. Operators can apply for a license to provide legal online casino and / or betting. Remote gaming companies may offer licensed online casino games, online poker, and online betting, while online lotteries, bingo, scratch cards, and keno (a fast-spinning lottery ) remain under the state monopoly of Danske Spil.
Sweden has had a gambling law since early 2019 and continues to issue licenses. Private operators may offer online casinos, poker, slots, betting (including betting on virtual events), races, fantasy sports and lotteries under these licenses. While some of the very strict decisions of the gambling authority (especially regarding advertising and bonuses) have been criticized, the strong attraction of Swedish players to gambling offers keeps operators interested. . There is no limit to the number of licenses that can be issued.
Ukraine’s recently reformed gambling law provides for separate licenses for online games (casinos) and online poker. Online betting is covered by a unified license for land and online operations.
In the Netherlands, remote gambling licenses became available in April 2021 for casino games as well as sports and horse betting. The number of potential licenses is not limited. However, for operators already operating in the unlicensed market, a cooling off period may apply.
These new opportunities lead to a need for operators to raise capital. We are currently seeing three market trends. First, the large operators are consolidating. Second, the new market players are using the new gateways to try to enter this competitive but lucrative market. Third, institutional investors, especially private equity and venture capital firms, continue to invest in the market.
When it comes to the big players expanding their influence, the recent market activity of 888 Holdings plc online gambling group cannot be ignored. The online gaming group will buy out William Hill’s international business from Caesars Entertainment in a £ 2.2bn deal that will see 888 take over the UK bookmaker’s 1,400 physical betting shops outside the UK. United. This is a first for the web giant only. The company is confident in the sustainability of the retail betting shops, but also plans to encourage retail customers to register with the online casino by supporting them. The move is the latest in a wave of consolidation in the global gaming industry as companies seek economies of scale to protect against increased regulation and enter new markets.
Nonetheless, great established gambling players are not alone. We also hear about opportunities in the online gambling industry in other circles. German media giant ProSiebenSat.1 plans to enter the regulated betting market. This involves cooperation with Betsson, which provides its B2B solutions. A new subsidiary called Masterpiece Gaming has been created for this purpose. Betsson obtained online sports betting licenses for various brands in Germany in March of this year. In order to implement this cooperation, ProSiebenSat.1 will try to use its media reach to acquire readers.
Private equity and venture capital funds and the like have also invested in online gaming in the past and are now expanding their portfolios. For example, CVC Capital Partners, as the owner of Tipico, invests directly in the online gaming industry. The Tipico Company is an international provider of sports betting, casino games and a range of other games based in Malta. He holds a German gaming license and various Maltese gaming licenses.
Opportunities abound for Israeli online game companies to grow and expand internationally. In addition to gaining market share, the advantages of research abroad include exit opportunities, either through acquisitions by strategic players or private funds, as well as opportunities to raise funds on UK, European or US capital markets.
Jan Feuerhake is Salary Partner in Hamburg, Taylor Wessing and Nathan Krapivensky is Senior Counsel in Tel-Aviv, Taylor Wessing