Outlook 2021: Europe

While there’s no doubting virus fears are set to remain on the agenda for a good portion of next year, those looking to stay ahead of the curve will need to keep track of the breakneck pace of regulatory change in some of Europe’s key markets.

COVID Continued

Early beliefs that Europe would be finished with the global coronavirus pandemic by the end of the year have steadily decayed into ultimately grim acceptance that we will be well into 2021 before any vaccine-powered recovery takes hold.

In the meantime, retail gambling venues should prepare for whiplash, as opening restrictions are introduced, removed and then introduced again.

Until a vaccine is readily available, all major European countries are too far gone in the infection stakes to hope for the kind of return-to-normalcy seen in faster-acting countries like New Zealand and Taiwan.

Since the early disruption to sporting calendars, it appears the online betting sector has returned to a vague sense of normality. Meanwhile, online casinos performed well through the major period of lockdown.

Looking ahead, various experts are confidently predicting that 2021 will see a frenzy of M&A. Even if opportunities for the mega-deals of recent years are likely to be limited, geographic diversification and tech pick-ups are on the cards, as the industry pieces itself back together through the dying days of the pandemic.

New Regulatory Realities

The UK’s review of its Gambling Act is set to reshape the regulatory regime in one of the world’s largest gambling markets.

Initial fears that the government would heed the calls of many campaigners and drop the hammer on the industry have been softened by early calm words from the DCMS, but there is still a long way to go before a draft hits the floor in Westminster.

Whatever path the review takes, there’s no denying the 2005 legislation is outdated. As former deputy Labour leader and new Flutter consultant Tom Watson once wryly remarked, the law contains more references to telephone betting than the internet.

There’s also no doubt that, even if some harsher extremes are avoided, the law that eventually emerges will certainly create a tougher reality for UK gambling companies. Rules on digital advertising look certain to be tightened and there is concerted lobbying from some quarters to sever the link between betting and sports and impose tough stake limits on online slots.

To combat this, the Betting and Gaming Council has staffed up with a team of savvy political operators and the online gambling industry will be hoping that Chancellor Rishi Sunak and his Treasury staff also step in to soften the bill’s most extreme edges as he looks to protect an Exchequer ravaged by the pandemic.

Elsewhere in Europe

Elsewhere, Germany’s traditional whirlwind of uncertainty might look like it is about to peter out in the back half of 2021, as new legislation comes into effect. The law will limit most online casino operators to low-stake slots and enforce monthly deposit limits across the board.

In many cases, those rules are already in effect thanks to transitional online casino deal, something like a complex “gentleman’s agreement”, and the delayed issuing of interim sports betting licenses. Ultimately Germany enters next year as a much tougher place to do legal business.

Still, new reality sketched out by the interstate treaty raises as many questions as it answers. Investors are fretting over exactly how badly companies with exposure to Germany will suffer and it remains to be seen how a yet-to-be-created national gambling regulator will approach implementation and enforcement.

Recent history also suggests that German gambling legislation is especially vulnerable to legal challenges, bolstered by courts particularly sensitive to upholding EU freedoms. Even if anti-treaty arguments are eventually defeated, pending cases and appeals can tie regulation in knots for a meaningful period.

Meanwhile, Spring 2021 will see licensing launched in the Netherlands, where the regulator’s interpretation of its “cooling off” rules will be top of the agenda. Anyone one caught targeting the Dutch market in the 32 months prior to applying for a licence will be automatically rejected, leading to what will likely be a strangely staggered market launch six months later in September.

Early Dutch financials, where available, will also be closely watched, in particular to see whether Sweden’s example of a vibrant grey market not meeting expectations under the reality of regulation is repeated.

By early 2021 we should also have a complete picture of regulatory requirements and tax rates in Ukraine, where a new law enacted in August has re-legalised an industry almost completely banned since 2009.

It’s highly likely there will be room for gaming machine suppliers to do good business as casinos and slot halls are installed at Ukrainian hotel venues, but whether we see more than the cast of local characters paying the big fees for online casino and sports-betting licences is less certain.

Many may take a wait-and-see approach, not least because licence fees drop dramatically once an impending new regulator gets its cross-operator monitoring system up and running.

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