How and where the global iGaming industry looks set to grow in 2023
2022 was a year of significant growth for global iGaming, especially through the increase in new markets embracing legal online sports betting or casino. It’s thanks to this that the industry is starting the new year in a strong position.
Across both North and South America and Europe, new markets for operators to enter haven’t been in short supply. Last year, new jurisdictions going live in North America included New York state and the Canadian province of Ontario, while progress in South America was made in Peru.
But with operators keen to continue their growth and expand into more jurisdictions, what does the next year hold in terms of new markets, and which of them present the greatest opportunities?
Last year, a number of U.S. states including New York, Kansas and Louisiana went live with regulatory frameworks and, as a result, regulated iGaming hit a critical mass in the country.
The industry’s attention now turns to those states which are on the cusp of crossing the line in 2023. Ohio is set to go live in January, and while there are high hopes that game-changer states including Florida and California will finally hit the home straight, previous efforts to pass legislation have not been successful, and we may see history repeating itself.
So, which are the other states that could be on the cards? Legislation to legalize online sports betting has been passed in Maine and Minnesota, but, so far, a launch has not been set. The state of Massachusetts is in a similar position but is widely predicted to accept its first legal online sports bets within the next year.
In Oklahoma, Alabama, Georgia, Kentucky and Vermont, legislation has previously been introduced but it failed to gain traction and news of another attempt to legalize sports betting has not yet been announced.
In Texas, one Senator pre-filed a sports betting bill ahead of the 2023 legislative session, which – if it receives a two-thirds vote from the legislature and approval from state voters in November – would legalize sports betting for the first time. This will likely be high on the radars of the operators.
Further north in Canada, the country’s most populated province, Ontario, was one of the biggest new market launches this year. With expectations that Ontario will grow to become a CAD$1.8bn market by the end of 2026, according to VIXO Regulatory Intelligence, it’s no surprise that it has already attracted some of the world’s biggest operators and betting brands.
The situation in Ontario could act as a catalyst for other Canadian provinces to open their doors to legal online sports betting and casino, and to welcome additional licensed brands.
In 2023, everyone will be watching the second and third most populated provinces, Quebec and British Colombia, which both already offer online sports betting and casino through their respective provincial lotteries (Loto Quebec and its Espacejeux online brand, and BCLC, with its PlayNow offering). Given the potential revenue opportunity in Ontario, we’ll have to wait and see whether other provinces will also look to expand beyond their monopolies.
The opportunity in South America is just as big as the one presented by North America. Several top-tier markets including Colombia and Peru have passed online gambling legislation over the past few years, as well as a number of Argentinian provinces such as Buenos Aires.
With a potential iGaming revenue of $4.4bn by 2026, according to VIXIO – that’s based on the market remaining grey – the most significant opportunity in Latin America lies with Brazil.
Local lawmakers had previously signaled their intentions to launch a regulated betting framework in time for the World Cup, but with that deadline having passed, stakeholders will undoubtedly be keen for the legislation to pass through the country’s Senate as quickly as possible.
The importance of effective customer acquisition to succeed in all markets
It’s evident that there are many new market opportunities which are ripe for operators to explore in 2023, but as we’ve seen in the U.S. over the last year, effective customer acquisition is absolutely vital to a brand’s success.
Operators will also need to keep a close eye on acquisition costs in order to achieve sustainable, long-term success. Many operators in the U.S. are already squeezing their marketing budgets to help achieve a positive impact on the bottom line.
This can go some way to explaining why we are seeing many operators shift their budgets and focus from expensive above-the-line advertising campaigns to channels such as paid media and performance marketing or affiliates.
Unlike TV slots and Pay Per Click (PPC) ads, an affiliate marketing approach ensures operators only pay for the customers that actually make deposits at their books and casinos. This type of commercial partnership structure means the best-performing affiliates are expert digital marketers in their own right and makes performance marketing extremely effective. A mature affiliate programme can account for almost a third of new player traffic, according to data from our Income Access team at Paysafe.
How payments can power customer retention
Alongside player acquisition, which is obviously important for operators looking to take a larger slice of the market, keeping players engaged is also vital to drive the greatest lifetime value from their players.
A highly effective way to power retention is through payments, but the ways players like to pay have never been more diverse. Research we carried out in 2021 among sports bettors in the U.S. revealed that credit and debit cards were the preferred payment methods for casual bettors, but digital wallets were the number one choice for players wagering more frequently (7+ times per week).
It’s important for operators to offer a broad range of deposit methods, with the choice of eCash and local payment options, for example, and ensure the payments journey is smooth and seamless.
Our 2021 research went on to reveal that 79% of U.S. sports bettors were left with a negative impression of the book if a payout takes longer than expected. Ultimately, payments play a critical role in customer retention.
With the bar set so high for competition and cost of acquisition, operators simply can’t afford to drop the ball on retention, and therefore payments. The race is on to get the largest slice of the action in existing markets and those opening up to regulated iGaming in 2023.