In his latest column for Yogonet, iGaming industry consultant Ron Mendelson shares insights on the impacts that inflation has had on the gambling sector. The expert provides an analysis of how the industry has boomed in the past years despite the global economical slowdown.
The world is facing a global inflation crisis following the fallout from the COVID-19 pandemic, which was further exacerbated by the Russian invasion of Ukraine. The war has resulted in stunted supply chains, talks of food shortages, and fuel and energy price increases. As a result, global inflation is set to reach more than 6.7% by the end of the year, with many countries already hitting that landmark by June. This is more than double the average global inflation rate between 2010 and 2020, but what does this mean for the gambling sector?
As the world tightens its purse strings and buckles down to deal with the across-the-board cost of living increases, you might think the iGaming sector would be one of the first to suffer. Wrong.
iGaming in 2021
2021 was a bumper year for online gambling across all verticals and jurisdictions. Slots, casinos, eSports, sports betting, live dealer- you name it, they boomed. By the end of the year, the global sector was valued at around $61 billion, set to almost double to $114 billion by 2028. This was driven by a combination of factors, including the pandemic, increased internet accessibility, smartphone usage, and a demand for online entertainment.
This was great news for established businesses and those looking to start out.
The state of play in 2022
Despite the global economic slowdown, the US has powered ahead, even amid uncertainty. Throughout the first five months of 2022, the gambling sector’s revenue was at an all-time high. In March, for example, the US-based industry brought in more than $5.3 billion in just one month- the highest figure in the history of American gambling.
The total amount for Q1, some $14.3 billion, is almost on par with the historical record from Q4 2021 of $14.35 billion. Another positive indicator of growth in the industry is that many land-based casinos are moving into iGaming with much enthusiasm. Stakeholders say that industries such as this are particularly resilient in times of crisis, and they believe growth will continue to be steady.
In the US, the sector shows no sign of slowing down, ad Q by Q growth should encourage operators all around the world, as the American economy is known for setting the tone.
However, across the pond in the UK, consumers are a little more cautious. Online slot revenue fell by 5% between January and March 2022, and time spent playing fell by 2%. Overall, revenue for the whole quarter fell by 1% to GBP 1.2 billion, but industry stakeholders are not alarmed.
It was expected that after the country emerged from COVID-19, there would be a dip as people who had been de facto stuck at home for over a year surged to in-person entertainment values. But the dip was not as big as expected, leaving operators hopeful that the upwards trend will continue in due course.
In Portugal, however, it is a different story. The online gambling sector there saw revenue jump nearly 25% year-on-year in quarter four when inflation was already starting to creep up. By the end of the year, revenue for the quarter was EUR 141.1 million, up from EUR 113.2 million in the same quarter during 2021.
Out of these, casino games saw the biggest uptick in value, some 53%, while sports betting increased by nearly 3%. In addition to this, consumers increased the size of their wagers by up to 27%, depending on the type of gambling they were partaking in.
Portuguese regulators also reported that 212,600 new accounts were opened throughout the course of the year.
On the other side of the bloc, Lithuania reported a 90% increase in gambling revenue during quarter one to a total of EUR 43.4 million. Most of the revenue was derived from online slot games, with an increase of almost 60%, while table games increased by 25%.
On a company level, one of the world’s biggest eSports companies said its profits increased 166% during the first three months of 2022, compared to the same months in 2021. The company’s revenue stood at some $19 million.
Fast Offshore
There has never been a better time to start an online gambling business. Even amid the great unknown of the current and short-term economic situation, people are still logging on to gamble. This means there are many opportunities to be had for entrepreneurs with the will to succeed.
Fast Offshore has been working in the business for 25 years now, so we are ideally placed to help. Our team can assist with all corporate matters such as licensing in the top jurisdictions, incorporation, payments, compliance, and ongoing maintenance. To find out more, contact a member of our team today!
