Mergers & Acquisition in the online gambling industry

Online gambling industry, the big are getting bigger

The online gambling industry is becoming more and more popular. According to some statistics, this is one of the leading online industries in terms of profit. People from almost every country in the world can easily join gambling websites and enjoy a wide array of casino games including roulette, poker, blackjack, betting and more. People love the convenience, bonuses, diversity, and safety that these online gambling sites provide. As a result of this popularity, the number of websites and online platforms focused on online gambling is increasing too. But, not all of them are experiencing the same level of success.

The gambling sector is changing

The history of online gambling has started in the middle of the 1990s and it seems that some of the big players that were introduced back then are still one of the biggest players in this market. Just like any other industry today, the online gambling industry is changing all the time. But, what new online casino owners find a little bit difficult is to make progress on this market. Namely, it seems that the entire industry is becoming more corporate.

If we take a closer look at the situation in the last 15 years, we will notice that the largest online gambling websites and companies, in general, have grown faster than the small ones. The biggest businesses are getting a larger share of the growth too. But, it’s not just the profit that’s making them bigger. In case you are following the news, you will probably notice that there are many mergers and acquisitions in the last few years that have led to the creation of huge enterprises. We will provide some examples to support these claims.

A few M&A examples

First of all, about one year ago the Kindred Group Plc, a European online gambling group has finished the acquisition of 32Red Plc, for more info on ownership you can look up online casino companies and owners. They now own 97% of the shares of this company. The deal was worth 175 million British pounds. What’s even more interesting is that the management of Kindred has confirmed that they have plans to acquire new online betting and gambling websites in the near future.

GVC Holdings PLC is another great example of an active gambling and online gambling company that is acquiring businesses in this sector. For example, six years ago, GVC and William Hill acquired Sportingbet. GVC has acquired all the operations of this company except for the Spanish and Australian operations. About two years ago, GVC Holdings bought Bwin for impressive 1.1 billion British pounds. It’s worth mentioning that they were competing against 888 Holdings and managed to come up with a better deal. This acquisition has proven to be great for both sides because Bwin managed to start growing again after years of problems. Finally, about four months ago, GVC Holdings has finished the acquisition of Ladbrokes Coral. This is by far their biggest acquisition worth 4 billion British pounds.

Catena Media website

The fact is that the news about acquisitions and mergers of operators are more interesting, but there is another market related to the online gambling industry where millions of dollars are involved – the affiliate site market. There are some really big groups that are purchasing affiliate websites in the recent period. For example, Catena Media, which is a Swedish affiliate consolidator has bought Slotsia, a Swedish affiliate worth 8.6 million Euros. Furthermore, the Norwegian Gaming innovation Group has bought an affiliate network for 3.5 million Euros while RakeTech, one of the most famous affiliate networks in the field of gambling, has used 70 million Euros for acquisitions. The same goes for Xl Media, AXL Affiliates, and Better Collective.

AXL AffiliatesIt’s worth mentioning that the volume of acquisition is not growing every year. For instance, this volume was 50% lower in 2016 compared to 2015, but according to some sources it increased in 2017. The regulation of online gambling activities in the developed countries is often affecting these mergers and acquisitions.

The future of the online gambling industry

There are many reasons why mergers and acquisitions are so common in this industry. There were a few surveys that had the same conclusions regarding the driving factors in these activities. For instance, almost half of these deals were completed because the buyers were interested in business expansion or making their product offerings stronger. This is very important because as we said before, this market is changing and includes different categories of people from different countries. For instance, 15 years ago, no one was thinking about mobile gambling while today only a small number of companies are investing in Virtual Reality gambling. One out of ten of these deals was signed in order to access new countries and regions. Just 2% of them were for technology acquisition and the same percentage for cost-effectiveness. In other words, online gambling companies are trying to overcome the challenges related to competition, regulations and laws and international trends with M&A.

Most experts agree that the M&A activity in the online gambling industry will keep increasing in the near future. But, they are not expecting this activity to grow rapidly. The latest reports and news have shown that the regulatory compliance will become stricter and companies that are part of this industry should expect to pay more to the authorities. This is obviously not something that encourages the opening of new businesses in this sector. At the same time, this means that the big businesses will become even bigger because they have the necessary resources, experience, and tools to grow and expand.

The regulations we’ve mentioned before are leading to a situation like this. The consolidation process will continue in the next few years, but the real question is who will make the most from this process? The online market is more competitive, but it also allows companies to unleash their creativity and try new approaches. So, besides M&A, the companies that are part of this market will also keep investing in research and development too.

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