{"id":6168,"date":"2022-03-25T03:58:46","date_gmt":"2022-03-25T10:58:46","guid":{"rendered":"https:\/\/wagers.com\/staging\/4285\/?p=6168"},"modified":"2022-03-25T04:03:01","modified_gmt":"2022-03-25T11:03:01","slug":"fragmentation-delay-piles-pressure-on-suppliers-like-gan","status":"publish","type":"post","link":"https:\/\/wagers.com\/staging\/4285\/news\/fragmentation-delay-piles-pressure-on-suppliers-like-gan\/","title":{"rendered":"Fragmentation delays pile pressure on suppliers like GAN"},"content":{"rendered":"<p><em><span style=\"font-weight: 400;\">The US online gambling headlines are dominated by B2C brands, but B2B suppliers are a key component of the sports betting ecosystem and their performances are impacted by the underlying trends that run throughout the industry.\u00a0<\/span><\/em><\/p>\n<p><span style=\"font-weight: 400;\">This was evidenced during GAN\u2019s results statement this week, during which CEO Dermot Smurfit said \u201cthe current state of the US B2B market is having a short-term impact on our business. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">&#8220;While we continue to remain bullish on the mid- to longer-term outlook of the B2B market in the US, there are some well documented near-term headwinds in 2022.\u201d<\/span><\/p>\n<p><strong>Trifecta<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Smurfit said there were three key factors that played a part in the company producing underwhelming figures:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">operators are scaling back their marketing spend, meaning they are driving less players to spend their leisure dollars on products supplied by GAN,<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">market fragmentation has been slower to evolve than the group expected, and<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">online casino regulations have been slower to be enacted than sports betting legislation.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u201cAs a result of these items, we&#8217;re going to see some pressure on our B2B segment in the near term, with stronger growth forecasted for 2023 and beyond,\u201d he added.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are a number of holes that can be picked out of those three arguments.<\/span><\/p>\n<p><strong>No marketing slowdown (yet)<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">The first is that while operators are talking about spending less on marketing, they haven\u2019t really done so in any significant way (yet). <\/span><span style=\"font-weight: 400;\">The statement also only really applies to the biggest brands. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">If the likes of BetMGM, Caesars or DraftKings were to turn off the advertising taps, they are the operators that would make a real difference to the market, not the smaller and midsize companies that make up much of GAN\u2019s actual or prospective client list.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Fragments of markets<\/strong>\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When it comes to market fragmentation, Smurfit said regulated states would have a tier of many smaller operators such as tribal casinos that would compete for online sports bettors and casino players and would provide significant revenues in the long term.\u00a0<\/span><\/p>\n<blockquote><p><em><span style=\"font-weight: 400;\">To an extent the theory makes sense: as more operators launch, Smurfit is saying more of the activity will trickle down to GAN in the shape of B2B revenues. The problem is that it hasn\u2019t happened (yet) and it\u2019s unclear when it will.\u00a0<\/span><\/em><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">In addition, if we look at market share in a state like Michigan, which has regulated online sports betting and casino, the top four brands already have 90% of the market share.\u00a0 <\/span><span style=\"font-weight: 400;\">That statistic also applies to states where only sports betting is regulated. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">So the key point is: how much revenue will the remaining 10% market share represent for GAN, especially as it competes against many other suppliers for it?<\/span><\/p>\n<p><b>Early stages<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Part of the reason for these trends and the pressure they are exerting on companies like GAN is that the US market is developing in somewhat surprising ways. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, <\/span><span style=\"font-weight: 400;\">marketing was always going to be a major factor in how much market share US brands would generate for themselves. Quite how important and costly it is turning out to be may have caught even the most seasoned observers by surprise.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The likes of GAN and other suppliers such as Aspire Global are clear that the market is large enough for smaller and midsize groups like them. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">As mentioned, the theory is that there are enough US consumers and leisure discretionary spend to spread across all stakeholders; from the biggest brands such as MGM and Caesars to midsize regional and tribal\u00a0 casinos that decide to offer online sports betting and, if regulated in their states, online casino.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0<\/span><b>Uncertain regulation<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But widespread online casino regulation is far from certain, in both the small and big states. For the smaller jurisdictions: the argument is simple from a business perspective. For the tribal or regional outlets, land-based casino gaming is their brand and butter and they are (understandably) fiercely protective of it.\u00a0<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\"><em>The idea that tribal or regional casinos would agree to offer online casino, and thus compete with major casino brands and all the other pure players on their patch, seems highly unlikely; or at least a prospect they would strongly resist.\u00a0<\/em> <\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">While the scale is different and the stakes are larger, the rationale in states like Florida or California is not that different and goes a long way towards explaining why only online sports betting regulation, never mind online casino, is being discussed in both jurisdictions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And as Wagers.com\u2019s Steve Ruddock explains, <\/span><a href=\"https:\/\/wagers.com\/staging\/4285\/news\/making-sense-of-the-illogical-resistance-to-legal-online-gambling\/\"><span style=\"font-weight: 400;\">the paths to online casino regulation<\/span><\/a><span style=\"font-weight: 400;\"> are strewn with obstacles and historical factors that are very hard to shift.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As the market matures however, operating patterns and revenue models will develop, with more clarity and revenues stabilising in the process. But for GAN and other suppliers in the same position the pressure is building up.\u00a0 \u00a0 \u00a0 <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The US online gambling headlines are dominated by B2C brands, but B2B suppliers are a key component of the sports betting ecosystem and their performances are impacted by the underlying trends that run throughout the industry.\u00a0 This was evidenced during GAN\u2019s results statement this week, during which CEO Dermot Smurfit said \u201cthe current state of [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[324],"tags":[630,620],"class_list":["post-6168","post","type-post","status-publish","format-standard","hentry","category-news","tag-aspire-global","tag-gan"],"_links":{"self":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/6168","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/comments?post=6168"}],"version-history":[{"count":7,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/6168\/revisions"}],"predecessor-version":[{"id":6177,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/posts\/6168\/revisions\/6177"}],"wp:attachment":[{"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/media?parent=6168"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/categories?post=6168"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wagers.com\/staging\/4285\/wp-json\/wp\/v2\/tags?post=6168"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}