The iGaming industry thrives in a regulated environment. Much like the banking sector, it is deeply intertwined with legal frameworks that dictate how businesses operate and grow. Navigating these complexities requires foresight, adaptability, and a proactive approach to risk management. Over recent years, the global landscape has seen significant shifts in regulatory frameworks, opening new opportunities but also presenting challenges. Here’s an in-depth look at how iGaming businesses can tackle these hurdles effectively.
The evolving landscape of iGaming regulations
Regulation has been both a gatekeeper and an enabler in iGaming. Recent years have brought notable opportunities through the emergence of white markets, such as the U.S., Argentina, and Canada. These developments have provided fertile ground for growth, complementing the existing gray markets. Meanwhile, market closures have remained relatively infrequent, offering a favorable climate for expansion.
However, regulatory disruptions are inevitable. When they occur unexpectedly, they can severely impact operations, especially for unprepared businesses. For instance:
- Belgium: Restrictions on promotional codes over several years significantly hindered market growth. Operators faced challenges in acquiring new customers, stifling a maturing market.
- Brazil: A pivotal growth engine for many operators and affiliates, Brazil transitioned from a gray market to a soon-to-be-regulated one in 2024. This brought constraints such as limiting the number of operators and imposing stricter compliance rules. These changes have fundamentally reshaped the competitive dynamics in the region.
Businesses in the iGaming sector often find themselves at a crossroads when faced with such regulatory shifts. They must either comply, exit the market, or risk operating illegally with potentially dire consequences.
The perils of dependency
Dependency on external factors like regulations or SEO can expose businesses to vulnerabilities. At The Gambling Cockpit (TGC), we advocate for a diversified, resilient approach that minimizes reliance on single revenue streams or markets. Over-dependence increases susceptibility to shocks, underscoring the importance of strategic risk management.
Strategies to anticipate and prepare
Preparation is the cornerstone of resilience. iGaming businesses can mitigate regulatory risks by adopting the following measures:
1. Conduct comprehensive risk assessments
Developing a detailed risk matrix is critical. This involves identifying potential risks, from workforce absenteeism to economic crises, and assigning priority based on their likelihood and impact. A robust matrix doesn’t end with identification; it must lead to actionable mitigation strategies.
For example:
- High-priority risks: Should trigger immediate action plans.
- Moderate risks: May require long-term mitigation projects.
If resources or expertise are lacking, outsourcing to specialized services like TGC ensures this critical process isn’t overlooked or rushed.
2. Align investments with market risks
Every market has unique risk factors. Tailoring investment strategies to account for these ensures that businesses remain agile and prepared for changes. This approach minimizes overexposure to high-risk markets while enabling informed decision-making.
3. Leverage regulatory monitoring tools
Staying informed is essential. Advanced tools like TGC’s Notice enable businesses to track:
- Confirmed regulatory changes.
- Emerging trends and discussions within regulatory bodies, allowing operators to adapt conditionally to potential shifts.
Proactive monitoring also uncovers opportunities. For instance, ongoing discussions around online casino legalization in France or New Zealand could allow businesses to pre-develop their offerings and be ready for licensing processes.
Building resilience amidst regulatory shifts
Resilience comes from diversification—both in operations and markets. This ensures that the impact of regulatory changes is distributed, minimizing risk.
1. Diversify revenue streams
Expanding revenue generation beyond core iGaming operations can bolster stability:
- Monetizing proprietary technology: Internal tools like affiliate tracking systems or business intelligence platforms can be commercialized to serve other industry players.
- Retail media models: Pairing existing audiences with external stakeholders interested in engagement can open new avenues of income, as seen in sectors like retail distribution.
2. Diversify market presence
Avoid over-reliance on a few key markets. By expanding into multiple regions, businesses mitigate the risk of simultaneous market closures.
- Employ Pareto’s Principle: While 80% of revenues might come from 20% of markets, aim to reduce this imbalance by diversifying your portfolio.
Overcoming operational hurdles
Despite these recommendations, many iGaming companies face operational constraints. Day-to-day business demands and growth initiatives often overshadow strategic projects like risk assessments or market diversification. This is where external expertise becomes invaluable.
At TGC, our mission is to alleviate the burden of these critical yet time-intensive tasks. By providing dedicated resources and expertise, we enable our clients to focus on their core business while staying prepared for regulatory and market changes.
Regulatory challenges in iGaming are inevitable, but they can be effectively navigated with the right strategies. By proactively assessing risks, diversifying operations, and leveraging specialized tools and expertise, businesses can remain agile and resilient. At The Gambling Cockpit, we empower iGaming operators to future-proof their businesses, ensuring they thrive in an ever-evolving landscape
Reach out to learn how we can assist in your challenges !
Pierric Blanchet
Founder @ TGC