Amid tightening gambling regulations in many markets, a war raging in Europe and talk of recession in the US, a group of CEOs say emerging markets in Latin America, as well as mergers and acquisitions driven by a strong US dollar, will provide the industry with opportunities for growth.
Speaking at the SBC Summit Barcelona, gambling executives reached a rare consensus about the new opportunities for operators and affiliates in regulated markets.
Jesper Svensson, CEO of the Betsson Group, said he “loves” Latin America as an opportunity but added that “anything outside of Europe” is favourable at the moment.
Svensson explained that right now is a tough time for many European firms, particularly for affiliates, with valuations “nowhere near their peak”, making it unlikely that many of them will be keen to be sold at the moment.
However, the Betsson CEO believes prospects are “really good” on a global scale for the industry.
“We will continue to see more and more M&A in regulated markets as it's always key for companies looking to scale up. But it’s hard to agree on a price today [for affiliates] as these companies were worth double 1-2 years ago,” Svensson said.
David Flynn, CEO of the Glitnor Group, who sees Latin America as “very exciting”, believes when it comes to B2B opportunities, any regulated market “is a good one” and that for affiliates the big opportunities are still in the US.
“Many small and medium [brands] are available for sale at the moment. But there is no capital available for the right price at the moment. More M&A will be driven by the fact the US dollar is 20 percent up compared to the euro over 12 months. US companies buying European ones is something to look out for,” Flynn said.
Paris Smith, CEO of Pinnacle Sports, is similarly “keeping an eye” on “lots of opportunities” in Latin America as countries such as Brazil continue to develop gambling regulations.
With regard to M&A, Smith believes that moving forward they “will be about showing true value”, meaning “localisation will help a lot of companies”.
“The future is in regulated markets”, but innovation may be delayed as operators deal with a range of unique requirements, making “the biggest challenge pushing out your innovations”, Smith said.
Another alternative market outside Europe earmarked for change is Curaçao, with the Pinnacle CEO “excited to see how the new incoming regulations develop”.
However, Smith warned that “when regulators go with a banking-type approach to the AML process, that is concerning. Ideally, it will take that black mark off of Curaçao. It is moving in the right direction. We are keeping a close eye on it.”