Consolidation within the gambling industry has taken unprecedented scope over the past several years. In 2015, three pairs of some of the world’s largest operators decided to tie the knot, thus changing the global gambling landscape significantly.
Increased merger and acquisition activity in an industry that serves rapidly growing demand is something that should not surprise anyone. Consolidation is also very often boosted by regulatory changes that operators can endure more easily if they join forces with peers.
Such regulatory changes are expected to be introduced in the UK very soon. As recent figures have shown, the British gambling market has gradually become among Europe’s and the world’s largest. And it is also among the most strictly regulated ones. The country’s gambling regulations may be changed drastically very soon. A triennial review of its gambling industry will be completed and published anytime now.
Following bitter criticism from concerned parties, the UK Government will likely change the way a certain type of offering – the controversial fixed odds betting machines – is regulated. Any big changes could hit operators severely and this is why industry insiders have expected and expect a new wave of consolidation within the industry by the year’s end.
Merger and acquisition deals among UK-facing operators may also be prompted due to a new taxation regime in relation to iGaming freeplays. Those will be treated as taxable entities from August 1, 2017 and will have a certain amount of negative impact on iGaming companies that rely heavily on said freeplays to attract and retain players.
It can be said that consolidation activity was moderate during the first quarter of the year. There were three acquisition deals that can be noted here as the ones that defined the three months ended March 31, 2017.
Swedish online gaming and betting operator Betsson announced in early February that it would acquire interactive gambling company NetPlay TV for a purchase price of £26.4 million. The latter operator currently runs sports betting, casino, and bingo operations under a license from the UK Gambling Commission. The deal is expected to be finalized by the end of April and comes as part of Betsson’s strategy to expand its footprint into the UK iGaming market.
Betsson has recently announced that it had changed its dividend policy in order to be able to play an active role in the gambling industry’s consolidation, so we might expect more of the company in the months and years to come.
Developer and supplier of gambling services and solutions Playtech extended its shopping spree from the previous year into 2017 with the acquisition of Australian bingo company Eyecon for a maximum consideration of £50 million. Playtech finalized several key acquisition deals last year and has stated on multiple occasions that it intends to boost both its Gaming and Financials divisions through the addition of more related businesses.
Last but not least, Kindred Group, rebranded from Unibet, has recently made the headlines with its bid to buy Gibraltar-licensed operator 32Red. The amount of £175.6 million has been announced as a purchase price. The deal has received the necessary approval and it will not be long before the transaction is completed.
Kindred Group may turn into an important consolidation driver this year, as the company has reportedly entered acquisition talks with Danish state-run operator Danske Spil. Danish media has reported that a DKK4-billion (approximately $570 million) price tag has been put on operator’s gaming assets. However, it does not seem that a deal will be closed for now as Danish regulators are still split on whether the state-owned operator should be privatized. Yet, the mere fact that consolidation talks have taken place show indication enough that Kindred Group is ready to further expand through acquisition and possibly merger deals.
It may have been relatively quiet on the M&A front during this year’s first quarter. But we should not forget that the UK Government is yet to announce what it has decided in relation to the broadly demonized FOBTs. And more unexpected regulatory and other challenges may appear within the industry in the months and quarters to come, challenges that could spur increased consolidation activity and could change the global gambling scene drastically.