During an exclusive interview with Yogonet, Fast OffShore’s founding partner Ron Mendelson, expert consultant for the iGaming industry, shared an overall assessment of the industry’s recovery coming out of the pandemic and how it boosted iGaming as people embraced more digital habits. He offered a global panorama and further explained the various advances the industry has undergone in general as new markets become regulated. Lastly, he shared the company’s expectations for 2022 as well as the main issues driving the agenda for the upcoming year, and how the metaverse can revolutionize the online gambling industry.
What would be your year-end assessment for the iGaming industry, especially regarding the gradual recovery from the pandemic, emerging/booming markets and technology use, and other critical developments in the different business areas and verticals?
As we come to the end of the year, we can truly appreciate what an exceptional 12 months it has been. Following the uncertainty and unpredictability of 2020, this year was somewhat easier. Growth continued in an upwards trajectory, and people became accustomed to a more digital way of doing things.
By the end of 2021, the global online gambling market is set to exceed $74 billion, growing at a rate of 11.4% going forward. If this continues, we expect to see it reach $158.20 billion in the next six years. At the same time, we have seen interest in land-based casinos and gambling drop. Many did not reopen after 2020, and those that did note players’ new preference for gambling online. Luckily the iGaming sector was not overly impacted by the pandemic, and operators quickly adapted. This sets a good precedence.
During this year, we also saw several legal developments. Malta fell onto the FATF grey-list and streamlined its application process in terms of Key Function roles. We saw the UK tighten rules around payments and slots, signaling more to come in the future. This approach was replicated in other jurisdictions as responsible and fair gambling became a focus.
Overall, compliance was a talking point during 2021, and the need to protect customers and abide by AML/CFT obligations will increase. After all, as more people come online and start gambling, the temptation for abuse and criminality will increase. Therefore, it is up to regulators and operators to ensure the best and most secure experience possible.
Some new regions opened up during the last year. Governments in The Netherlands and Germany issued their first licenses, and Ireland took steps towards creating new laws to regulate iGaming.
We also saw several strategic mergers and acquisitions. For example, Esports Entertainment Group bought Bethard to expand into Spain and Swedish markets.
In terms of emerging regions, we noted an uptick in inquiries for licenses covering players in Latin America. Interest from operators piqued as more countries in the region move towards legalizing online gambling and even issuing their licenses. A largely untapped market and one that is fond of land-based gambling, this is an area to watch and consider next year.
APAC remained strong, particularly the Asian segment, with more growth in eSports, online betting, and slots and strong demand for integrating innovative technologies. Europe remains stable with moderate growth as more countries allow online gambling and issue their own licenses.
Technology became a focal point amongst our clients in 2021. We fielded inquiries about blockchain systems in gambling and provably fair blockchain-based algorithms. eSports continued to enjoy mainstream interest and was adopted by multiple online betting operators. We also noted a renewed interest in fantasy sports in the sports betting sector.
Additionally, AI was a technology of interest, and many of our clients have started using it for matters such as onboarding, compliance, and monitoring player behavior. The iGaming sector took a step forward in terms of technology and quality, including VR and AR in their portfolios.
All in all, 2021 was an exceptional year, and it gives us high hopes for what is in store in 2022!
Based on feedback from your customers and research, what are your outlooks, expectations for 2022? What do you think will be the new challenges and trends in the iGaming industry? What will be the main issues driving the agenda?
We expect that 2022 will be even bigger and better than 2021. We are incredibly excited about what the next 12 months will bring in this climate of evolving technology and continual growth. There are a few things that we expect to pop up in the next year.
Firstly, the metaverse (web 3.0) is something that has been on industry insiders’ minds for quite some time. For those not in the know, the metaverse is a 3D version of the internet comprised of multiple virtual environments. It can be accessed via computer or mobile, but also with VR and AR headsets and compatible devices. A couple of years ago, this kind of technology would have seemed like something out of a sci-fi movie, yet here we are at the end of 2021, talking about how it will revolutionalize gambling in 2022!
We have no doubt that the metaverse will change the online gambling sector forever. Some companies are already working on integrating casino and betting into the metaverse, which will allow users and their avatars to gamble while exploring. While the kit needed to access the metaverse (headsets and a powerful PC) is still quite expensive, these costs are likely to reduce as demand increases.
In terms of the gambling sector on a practical and regulatory level, we are expecting some big news coming out of Curacao in the coming months. Without saying too much, things will be changing, but we will be sure to update you with all the information as soon as it happens. As mentioned above, we expect to see regulation take center stage, focusing on responsible gambling, fairness, and compliance in the fight against money laundering and terrorist financing. Fast OffShore has always pushed for compliance, recognizing that non-compliance ultimately leads to over-regulation, which puts the sector at risk for us all.
Other hot topics for the next 12 months include the continued growth of eSports. Perhaps we have been saying this since the start of the pandemic, but we really cannot emphasize enough how big this sector is going to be and how much potential there still is untapped. When we look at the size and growth rate of the gaming sector, streaming, and the demand for digital entertainment and then combine that with gambling’s growth, you can get a good idea. We will look forward to seeing more big eSports investments and mergers, as well as high-level funding from big names in venture capitalism. This will also spill over to other types of gambling companies including fantasy sports, casinos, and betting, as big names look for strategic investments to increase reach and expand their portfolios.
Live dealer games are also something to be aware of as players continue to look for social aspects in their gambling activities. This, combined with streaming and the metaverse, creates plenty of opportunity for iGaming entrepreneurs who are willing to embrace technological innovation. Finally, on the game front, it is likely that game graphics will undergo something of an overhaul in the near future. As our devices are more capable and graphic quality in other game types reaches a new high, the gambling sector knows it must catch up.
In terms of regions, we will be watching carefully to see what happens in LatAm and Ireland, as well as in mainland Europe. 2022 could also be the year that Malta shakes off its unfortunate grey-listing. We also expect to see continued interest in Kahnawake as a leading jurisdiction for online gambling licenses.
As for the sector's value, it is likely to surpass an impressive $80 billion by this time next year. This will be driven by all the exciting new verticals and segments we have mentioned. And also, increased access to high-speed internet, smartphones, and declining interest in land-based casinos. More and more players will look to the digital realm for entertainment purposes in 2022.
As for Fast Offshore, we will continue in our work, assisting and guiding startups, entrepreneurs, and existing companies in their gaming endeavors. We are prepared to provide our portfolio of services, including incorporation, licensing, payments, compliance, and of course, ongoing administration. As ever, we will do all of this with complete transparency, accountability, and a hefty dose of professionalism.