Trends and Effects of Online Casino Mergers
Posted on November 10, 2017 at 12:11pm
There have been several high profile mergers and acquisition deals in the world of online casinos lately. Notably, William Hill and The Stars Group have resumed the billion-dollar merger talks that were shelved last year, and the UK-based bookmaker has extended its content deal with Realistic Games.
LeoVegas has also made news by acquiring all the shares of Web Investments Limited; a Maltese company whose holdings include the Royal Panda trademark, while Playtech continues its aggressive acquisition campaign and Scientific Games has purchased Tech Art Inc. and NYX Gaming. Why the huge influx in mergers and acquisitions? What does it mean for the online gambling industry in Canada, and for the online Canadian players that we in particular are so dedicated to? We decided to conduct an in-depth examination to find out.
Market, Regulation and Legal Changes
As the costs of tax, compliance and evolving technology goes up, gambling destinations are understandably keen to offset them. A major issue is the recent clampdown on Fixed-Odds Betting Terminals in Britain, as lawmakers seek to more strongly curb problem and underage gambling. Many operators, William Hill in particular, relies heavily on these. This has an effect on the operators’ overall business plans, which affects the industry around the world. In the same way, anticipated changes in the sportsbetting regulations of the United States mean that operators want to prepare for that market, which affects the services they offer and has an indirect effect on Canada.
For William Hill, the potential need to lean more on the iGaming branch of its business was enough to see the brand re-launch talks with The Stars Group. The negotiations were stalled last year amid concerns that The Stars Group (previously Amaya Gaming Inc.) was not strong enough in the iGaming sector to warrant the billions’ worth of debt that the merger would create. However, with the increased legal pressure on gambling operators and continued demonstrable success by The Stars Group, the benefits of the deal were highlighted again.
With the profits of William Hill falling by 1% in the first half of 2017 and the firms’ strengths thought to be able to complement each other, the merger now seems like something of a no-brainer.
More Complete Products in Increasingly Competitive Environments
The continued popularity and prosperity of online gambling in Canada and around the world means online casinos remain very lucrative business prospects. As the industry attracts greater interest and generates more money, the market becomes increasingly competitive and operators need to find new ways to grow. Mergers and acquisitions are a very good way to achieve that; more products are added to diversify portfolios, and the products and services that are on offer complement each other and appeal to a broader base of consumers. The potential merger between William Hill and The Stars Group is an excellent example of this. Most operators and software companies have actually plainly stated their desire to deliver products across platforms. The deal that William Hill has struck with Realistic Games, extending the range of casino games that will be on offer, highlights this clearly. Playtech has taken things even further by creating a financial division called TradeTech and offering financial markets services. The casino game giant has also acquired ECM Systems, which provides software and hardware for several heavyweights in the United Kingdom Bingo industry including Mecca Bingo and Gala Leisure. Once again, this shows serious branching out into different areas of software and hardware. For some companies, such as the LeoVegas Group, it is simply about bringing more casino brands together for increased profit and variety in the products they offer. Royal Panda and LeoVegas Casino are both strong brands in their own right and considered successful independently of each other, and their combined strength is expected to be even greater. Royal Panda also recently launched its own sportsbook, allowing for even more diverse services to be offered by the parent LeoVegas Group.
The Impact for Canadian Gambling Enthusiasts
While there are no serious changes in the gambling regulations around Canada, the changes in other parts of the world impact the site operations in the country. As operations become more centralised and localised to the biggest heavyweights of the industry, this only becomes more evident. Ultimately, it seems like what we are seeing is online casinos, online sportsbooks and casino software developers working to adapt and survive in a changing environment with dedicated schemes of diversification.
The ambitious companies will do what they need to do in order to appeal to the public, and to stay afloat. This could have positive and negative outcomes for gamblers in Canada. Accessing a full range of gambling services from a single parent provider would mean easier concentration and management of funds and any bonuses that are awarded. These promotions may also be more quickly accumulated, which could be seriously beneficial to players. In addition, each gambling destination should be able to offer a greater selection in each of its product categories; more casino games and betting markets of each kind would be seen on the sites of each mega-operator.
While fewer operators could mean less overall competition between them and thus less lucrative bonuses to entice gamblers from the opposition, enough groups should remain on the field that this is not a serious issue. More concerning are the other implications of less competition and the fact that, over time, the online casino business environment may prove too hostile for the launch of any independent outfits, so that players would have less choice and diversity. Less diversity in the gambling industry may mean that it is less robust over time, but for now mergers and acquisitions seem to be the best way to continue making real profits. The higher margins that the remaining heavyweight players would get to enjoy would be beneficial not only to operators but also to players themselves.
A more prosperous casino can offer lower minimum bets and higher payouts on wins. It could be a case of losing variation, but gaining financial rewards.