Adapting to change in the post-Covid world
The entire gaming sector ecosystem has fundamentally changed post-Covid 19, forcing businesses to evaluate every aspect of their operations and, in some cases, radically adapt in order to survive.
Yet after adversity comes change, and throughout time when we’ve witnessed challenges to the status quo, we’ve also seen great innovation and creativity.
Alderney eGambling has been involved with many businesses adapting to the changes that are occurring across the industry post-Covid. From land-based operators moving online; businesses assessing concentration risk for the domicile of staff and operations; the diversification of sports betting operators and cost saving measures leading to the potential for increased M&A activity – it has certainly been a time to embrace the potential that the post-Covid world is offering up.
Arguably the biggest hit from this crisis has been felt by the retail sector, with casino and betting shop doors closed since March and lost revenues in the billions. Land-based businesses who had previously ruled out an online offering have had little choice but to diversify, reaching their customers in the online space in order to survive. The Alderney Gambling Control Commission (AGCC) only regulates online gaming (save for local retail on Alderney) and Alderney eGambling is currently working with multiple land-based businesses to help them set up their online offering.
Concentration risk is another factor that needs to be mitigated post-Covid. Global facing businesses can ill afford to have their entire business operations based in one jurisdiction for business continuity and or/disaster recovery. Certain jurisdictions handled Covid in completely different ways, to varying effect, which had a knock-on effect to business operations.
Take for example, POGOs licensed in the Philippines by PAGCOR where volatility in the jurisdiction has meant that it has been virtually impossible for businesses to run as normal. Between regulatory inconsistency, Government management of Covid and even lack of access to office premises, many businesses have found that if it were not for their international cells, they would not have been able to operate at all. The Covid crisis has highlighted cracks in the current set up and caused many businesses to take stock and assess their options.
While there’s been a surge in the appetite for online gaming, for some online businesses, their offering has been directly affected by the circumstances – sports betting operators, for example, who have suffered with the halt to major sporting events. Many large bookmakers have weathered the storm well as they were able to offer their customers a wide suite of products, from casino options to introducing more virtual sports and esports. However, as always, it’s the bottom line that is paramount and management needs to be able to justify results to shareholders. Historically, revenue hits lead to cost saving measures and usually an increase in M& A activity.
The recent megamerger of Evolution and NetEnt would indicate that M&A activity has not been directly impacted by the events of 2020. Although, industry experts have suggested that pricing and valuation is very different post-Covid, let alone additional caveats that will have to be added to each agreement. The full impact remains to be seen and we’ll watch this space with interest.
Times of uncertainty such as we’ve all experienced in the first half of 2020 are a great stress test on the foundations of an organisation. For a regulator such as the AGCC, with a reliable and proven regulatory framework, challenges to the norm can be absorbed by the flexible regime that actively encourages and supports innovation and growth.
Alderney has long been considered a gaming friendly jurisdiction, the Governments of Guernsey and Alderney taking a proactive and supportive approach to welcome the multiple businesses who are currently looking to relocate here. Now more than ever, the jurisdiction’s steady assurance in such unsafe times continues to attract global businesses looking to thrive among the chaos of a changing world.
We’re already witnessing the gaming sector’s innovative and rapid response to the challenges thrown at it by an unprecedented global crisis. While it will take some time to see what the full impact of the events of 2020 will be, I believe we will continue to see businesses breaking from convention, challenging the status quo and ‘building back better’ post-Covid.
This article was first published in Gambling Insider's GI Friday Week 27, 3 July 2020