The Gambling Industry: What Do We Expect from Online Casinos in 2021?
What will we expect from the gambling industry in the upcoming years? The experts at GamblerKey analyze prospects of development of the industry.
The year 2020 has changed the life of each of us significantly. Due to COVID-19, the global outbreak has been felt by everyone: from small families to global corporations. The iGaming industry has become an industry that has successfully overcome the challenge. What’s more, it has turned the negative consequences of the pandemic in its favor. Will it save the same position on the market in 2021? What is going to happen to the industry? What do players expect from software developers and operators? And what slots will hold the top of the rating? The analytics at GamblerKey make predictions and answer these questions.
The Situation on the Market
The consulting team of H2 Gambling Capital analyzed the situation on the market. Data, which related to the work of the gambling industry in 2020, is depicted in the chart below. It also has predictive values about the dynamics of the market in the next two years. The experts orientated on the global gambling gross win indicator:
Of course, the year 2020 is knocked out from the general tendency by a global loss of almost $ 112 billion. There was a moment when the global gambling market gross decreased to the level of the 2010 year. However, the forecast is going to be optimistic. As you can see from the graph, the industry will be fully recovered by 2022 and even exceed the indicators of 2019 in 2022. The only things that can adjust the forecast are an appearance of a new virus or the beginning of World War III.
The Collapse of the Land-Based Casinos
In July 2019, Macau casinos reported 6% annual revenue growth in June, while Nevada casinos increased the revenue to 11%. The two well-known gambling establishments generated $ 4 billion of revenue in one month. Nothing foreshadowed a forthcoming catastrophe, which would originate in China and begin to drag the whole world into its black nets.
In December 2020, Macau's gambling gross fell 79.3% over the year. The gambling gross of China's special administrative region was 6.15 billion euros for the year, compared with 292.46 billion euros that the industry generated last year.
A similar situation is observed all over the world where land-based casinos are allowed. Forced bans on establishments due to quarantine measures, border closures, and lack of tourists have brought the land-based gambling industry to its knees. Hundreds of institutions were forced to close, and thousands of people lost their jobs.
However, after one of the most unprecedented periods in human history, there is new hope. By the end of 2020, the gambling industry stepped ahead on a recovery path, which a new wave of COVID-19 or something same can knock it off.
Some countries have already started to soften the restrictions. For example, New Zealand has declared itself as a coronavirus free country and has canceled internal restrictions on casinos. Analysts predict that Macau’s land-based casinos will return to the income value they showed in 2019, no earlier than by 2021. It will happen because of mass vaccinations and return to regular life. The forecast for Las Vegas establishments is more pessimistic. If operators overtake the necessary measures, they will reach the revenue of the 2019 year no earlier than by 2023.
Overcoming the Crisis and New Perspective of Online Casinos
The situation is completely different in the niche of online sector. The dynamic and forecast of the total global iGaming gross indicator in this niche have an exclusively upward drive:
In 2019, the chart displayed a net worth of 53.3 billion euros; in 2020, it grew to 59.4 billion. And in 2021, the analysts predict a significant increase to 64.8 billion euros.
Such a discrepancy between the charts (the gambling gross win and global iGaming gross) indicates that the previous year alongside the coronavirus damaged land-based casinos more rather than online gambling establishments. And the online sector has been continuing to feel great and make a profit. The outbreak of COVID-19 has forced people to abandon their usual leisure activities and seek alternative entertainment at online casinos. At the same time, many gamblers who had previous experience in online casinos began to spare more time on the slot, roulette, and poker games.
On the background of significant subsidence of the land-based sector, online casinos are actively strengthening their position and influence on the gambling market. As an example, they crowding out the fashionable establishments of Macau, Las Vegas, and other gambling capitals. According to data released by H2 Gambling Capital, the share of total global iGaming gross increased from 13.4% to 19.6% in 2020. This growth is visible on the chart:
It is noteworthy that it was predicted (before the start of the pandemic) that the market share of the iGaming sector would be 13.19% rather than 19.6%. In preliminary forecasts, they relied only on the popularization of online entertainment and mobile gaming. Nobody could have foreseen that people over the world would be forced to keep a social distance and stay at home to save the lives of themselves and their loved ones.
In 2021, a gradual recovery of the land-based sector is predicted. Relatively soon, betting companies will also back on track. Therefore, as you can see from the forecast graph, the market share of online games will slightly decrease in 2021 and the following years, but it will still maintain an upward trend. If almost 90% of casino revenues have come from the land-based gambling establishments at the beginning of 2020, the online sector will increase its share from 10 to 20-30% in the upcoming years.
The Situation with Live Casinos
Live casinos, as a part of the online segment, did not get any damage in 2020 and found new ways of development. Evolution is a striking example of this. It’s one of the top-tier software developers in the niche of online games and live studio holders around the world. In April 2020, the company announced that its revenue increased by 45% compared to 2019 and reached 115.1 million euros.
The growth of live casinos is primarily due to the lack of sports events. In other words, the gaming segment with live dealers has benefited from the dire situation around the world, the cancellation of sports events, the wreck of betting, and the land-based sector.
Companies quickly responded to changing consumer demand. A lot of new offers from providers of live casinos have appeared on the market. For example, Evolution introduced the world's first live craps game; Pragmatic Play developed new roulette and blackjack studios; NetEnt launched an innovative roulette.
In 2021, the tendency will not only continue to grow but also strengthen its position. The companies, which did react too late to this online revolution, would catch up with competitors by providing more attractive solutions for a live casino to the market.
Responds of Authorities on the Growth of the Online Sector and Plans for 2021
The authorities were the first to react to the popularization of online gambling entertainment in 2020. The authorities have begun to encourage the transition to online gambling but have created harsher environments for operators. This is about tightening the requirements for licensees who operate on the legal market.
Facing a new reality, regulative institutions began to revise and adjust gambling policies. First of all, authorities have tightened their control over the market. For example, Ukraine has legalized the gambling sector; Russia has created a new Unified Regulator of the Gambling Market; Sweden and the UK have taken additional measures to strengthen control over operators. Fines reached tens of millions of euros for violations of the terms and conditions.
In 2021, the tendency towards tightening the regulation will continue. The Curacao Commission has already announced the plans to tighten requirements for operators this year. These actions should bring an order among its licensees to get rid of the reputation of an unfair jurisdiction. In addition, new measures are expected:
- introduction of new age restrictions (for example, the UK Gambling Commission plans to prohibit access to online lotteries for persons under 18 years old);
- strict restrictions on advertising of gambling operators and their products;
- stricter standards for obtaining a license;
- intense verifying of player data and account verification;
- improved terms and conditions for self-exclusion.
Despite the tightening of regulatory requirements, the “white market” share is predicted to increase in the upcoming years:
According to data of analysts, the share of global iGaming gross win on the white market was 65.5% in 2019. In 2020, this indicator increased to 68.5%, and the officially operating segment is expected to expand to 71% in 2021.
Without any doubts, this chart indicates a qualitative improvement on the market. At the same time, adjusting standards is the basis of public trust in games and a guarantee of fair service delivery. The official activity of operators is an opportunity to bring gambling to a new level, in which countries receive income to the treasury in the form of tax from the gambling business. And in its turn, gamblers are protected from unscrupulous operators and can always get professional help in case of gambling addiction.
What Will Happen to Game Manufacturers: Merger or Acquisition?
Another consequence of this growth was the essential increase in competition among software developers in response to player demand. Accordingly, the they put more effort into their service and gambling content to stand out from the crowd and keep players engaged.
Faced with such a challenging situation, the business began to look for new ways of cooperation. The most effective move was to strengthen positions through the merger. But the turning point of the year was the takeover of the NetEnt studio by Evolution. This act was accompanied by scandals and legal proceedings. As a matter of fact, the companies have become stronger than ever before after this unification.
The competition in this field is undoubtedly a stimulus to progress. A high level of competition is unlikely to fade in the next few years. And this is the reason for the expected further growth of players' interest in the online segment. Therefore, companies will continue to conduct partnerships and unite with competitors to withstand the fierce fight for the attention of players in 2021.
Slot Machines: Changes, Tendencies, and Improvements
Player behavior has changed in 2020, and slot developers have quickly adapted to the new demands of gamblers. Hub88.io analyzed a huge collection of slot games and processed almost a billion bets in more than 40 online casinos around the world. The analysis aims to reveal the real preferences of players. The analysis displayed that in 2020 gamblers:
- Gamblers picked slot machines related to the topic of nature and the surrounding world. A quite understandable tendency that most of us have been locked up for several months;
- Most of the time spent playing games with a high level of volatility. Almost 47% of players prefer slots with a high level of risk in pursuit of the missing bright emotions and sensations;
- Players massively switched to the game on mobile devices. The share of players who launch online casinos using gadgets has grown from 35% in 2017 to 46% in 2020.
Tracking the market allows us to make a forecast for this year. In 2021, slot machine developers will set a course for:
- New mechanics and technologies. The popularization of online games requires developers to find out new ways to attract players. In 2020, the leadership in this direction was deservedly taken by Big Time Gaming. The company sold the license to use its Megaways and Megaclusters mechanics to leading gambling software developers. Last year, a number of Megaways slots literally swept the iGaming market. But what mechanics will become a trend in 2021 is still unknown;
- Gamification. In 2021, game elements, a plot, and interesting functions, and bonus features will come to the fore in slots. The gameplay will become something much more than just a scheme of “bet – win, bet – lose.” In pursuit of the release of a new blockbuster, game developers prioritize gamification. And the only one who can provide players with the most engaging content will win in 2021. Gamified solutions based on modern mathematical models will be the key to growth and player engagement;
- Cooperation. The year 2020 showed how successful could be the cooperation between developers and specialized communities. A fascinating example of this is the Iron Bank slot, which Relax Gaming has released together with the streaming community CasinoGrounds. Due to a great number of positive responses, we can safely assume that many studios will take this strategy and present their products together with well-known streamers, communities, and thematic groups in 2021;
- Mobile gaming. A modern player is not the one who sits in front of the desktop after a working day. This is a person who is waiting for a bus, has taken a break, or spend time on the road. Mobile games in 2021 will actively occupy a leading position.
In 2021, the world of online slots will offer players even more valuable and reasonable content. It will fill the niche of lost real-time sports betting and fully compete with entertainment in land-based casinos. Operators have experienced a powerful leap in 2020 and don’t intend to give up their positions either in 2021 or in the upcoming years.
The year 2020 swept through each of us as a real tornado. But a big crisis is huge growth potential. Surely the collapse of the land-based gambling industry was like a star falling in the sky. Despite this, the industry as a whole has shown resilience, flexibility, and the ability to overcome the crisis with innovative solutions.
Last year, the online iGaming market experienced a multitude of experiments, successful collaborations, and creative solutions. And 2021 will be filled with even more opportunities and endless potential.