The Impact of Global Economic Trends on the Gambling Industry

Experts of the Online Casino Market company will tell you about key international tendencies and the role of iGaming brands in the changes. We are also going to explain how to protect a business from inflationary processes, as well as to make it more technologically advanced and environmentally friendly.

Subdued Global Economic Growth

According to UN forecasts, such a surge will slow down to 2.4% in 2024. A negative impact will be caused by the following factors: the crisis of living costs, high inflation rates, tightening of financial conditions, etc.

In about a quarter of all developing countries, the annual inflation will reach 10%. In the world’s leading economies (the USA, Japan, and Germany), on the contrary, a weakening of inflation processes is going to take place (up to 2.7%).

Antonio Guterres, secretary-general of the United Nations, noted:

This year, we should overcome the consequences of the pandemic and escalating conflicts. However, the global economy still needs additional investment. It is necessary to solve debt problems, as well as strengthen cooperation and the multilateral trading system.

Moderate GDP growth will affect many industries, including gambling.

Increase in the Cost of Services

High inflation is one of the main reasons for the rising expenses for online casino management.

Entrepreneurs are obliged to:

• pay for hosting;
• transfer fees for using financial software;
• take into account the salaries of staff, and much more.

High operating costs force companies to sign long-term contracts with B2B partners, in which the price of services or software is fixed and does not change for several years. However, only a few providers make such a step.

The rest prefer to review the terms of cooperation every 12 months. This will have a direct impact on the net gaming revenue (NGR) of iGaming platforms and reduce the margins of online betting shops.

Against this background, the following entertainment products with maximum configuration are gaining enormous popularity:

• turnkey online casinos;
• White Label portals;
• sportsbook websites and their franchises.

Ready-made solutions include games, payment systems, and CRM account management programs. Betting options include a wide variety of event lines with the acceptance of live and pre-match deposits.

A Policy of Legalising the iGaming Sphere

Subdued GDP growth is forcing the authorities to make bets in online casinos legitimate. If the situation with land-based locations is more or less clear (they work either throughout the country or in designated areas), then many online operations are still not regulated.

That is why jurisdictions do not receive enough taxes, which could be spent on financing education and healthcare systems, as well as constructing social infrastructure.

Today, several states are at the final stage of legalising the iGaming field. The most striking example is Brazil. It is a leading economy with huge domestic demand, a stable socio-political environment, and centuries-old traditions.

At the end of last year, the government allowed digital casinos to provide their services, expecting multimillion-dollar tax revenue.

Georgia is also on the cusp of important changes. The authorities allowed companies to obtain licences to launch online gambling platforms without the need to first open offline establishments with slot machines. Innovations are positively perceived by entrepreneurs and attract huge investments into the country.

From 2024, new tax rates will be applied here. For example, the levy on GGR (gross gaming revenue) was increased from 10% to 15%.

This fact caused concern among businesses but once again confirmed the presence of crisis moments in the global and regional economy. Government bodies are looking for new sources of tax income and are keeping a closer eye on the industry’s development.

Emphasis on Responsible Gambling

Li Junhua, UN Under-Secretary-General for Economic and Social Affairs, noted:

Persistently high inflation has slowed progress made towards eradicating poverty, which has a particular and quite serious impact on least developed countries.

The population of many African and Latin American regions is below the poverty line. Europe is also suffering from high inflation, and its residents’ wages go down. In this regard, more and more people are considering the placement of bets on iGaming sites and bookmakers’ offices as a way to earn money.

All this changes the attitude to entertainment for money and contributes to the spread of ludomania.

The introduction of responsible gambling measures is the main task of regulators. The UK authorities have already banned the use of credit cards in casinos, limited the cost of spins, and set a minimum break between rotations of the roulette wheel and reels in video slots.

France and Spain have allowed advertising of such products only at night, and Georgia has a complete ban on any type of promotion (except for sponsorship contracts).

Entry Into the Technological Race

The world's largest countries are trying to make innovations a factor of economic dominance.

The developments affect many areas, including:

• digitalisation;
• introduction of artificial intelligence (as well as quantum computing);
• space (deployment of low-orbit installations, sensing of the Earth in real-time, and creation of a new communication system);
• medical technologies.

The US continues to hold the lead in such important sectors as software, semiconductors, and AI. China prevails in such industries as smartphones, drones, and electric vehicles. Other countries (for example, Japan, India, and Germany) are also participating in the technology race, making a huge impact on the growth of the world economy.

At the Global Forum in Davos, the following statistics were announced:

• China made 48% of the total investment in artificial intelligence. However, it will take the country 5 years to overtake the United States in the adoption of such a concept. The most famous Chinese development is the Sense Time facial recognition system.
• 1 billion mobile Internet users live in the country. The second place is occupied by India, and the third one is taken by the US. The top 10 states in terms of digitalisation also include Germany, France, Japan, and Indonesia.
• 27% of people in the world are willing to share personal data. However, they are concerned about issues of fraud, theft of money on the Internet, and compliance with confidentiality standards. The most conservative users are Germans and the Dutch. Only 8% of respondents are ready to undergo KYC checks on various online platforms, including casinos and bookmakers’ offices.

Artificial Intelligence

This is a set of programs that imitate human behaviour. They are aimed at analysing and self-learning and can solve a wide range of problems, improving their skills over time.

Experts predict that by 2030, more than half of entertainment companies will use AI in their work. These are software vendors, casino and betting operators, as well as digital poker tournament organisers. Today, 25% of businesses that work in the niche use components of the solution and remain extremely satisfied with the results.

The role of AI in managing projects that offer games for money:

1. Personal recommendations. Artificial intelligence is an important tool for creating customised offers and improving user experience. AI algorithms can collect and analyse terabytes of seemingly unrelated facts. This is a browsing history, the nature of the game, clients’ preferences, bonuses, and payment methods. Based on the data received, the technology forms personal offers for each casino visitor.
2. Protection against fraud. The ability to gather and process large amounts of information increases the effectiveness of the struggle with attackers. Players are profiled according to various criteria. After that, the AI program identifies those customers who could cause harm to the iGaming platform, for example, by stealing bonuses or using bots to gain an illegal advantage.
3. Faster and more accurate verification. Speech recognition and natural language processing (NLP) tools have become important AI components. They are used to conduct KYC (Know-Your-Customer) checks. Thorough identification allows operators to filter out potential violators at the stage of entering the website and offer honest clients more personalised solutions. Authentication based on artificial intelligence significantly reduces the risk of fraud with bank cards and bonuses.
4. Measures to ensure responsible gambling. When entrepreneurs analyse behavioural patterns with the help of AI, the program allows them to accurately determine the moment when a user crosses the line (an unjustified risk, long sessions, and atypical actions).
5. Balanced betting line. Owners of bookmakers’ offices are increasingly using AI-based wagering platforms. Artificial intelligence algorithms allow operators to track the history of matches and the achievements of teams or individual athletes, as well as generate fair odds and update data in real time.

Blockchain

In traditional sectors of the economy (such as logistics or commercial construction), distributed ledger technology is only gaining momentum.

The slightly cautious attitude on the part of entrepreneurs is explained by the fragmentation of the regulatory framework in different countries. In some regions, digital currency is equal to ordinary means of payment and in others, it is considered an investment tool.

Gambling is one of the niches that benefit most from the adoption of blockchain.

Advantages of the solution:

• decentralised structure;
• anonymity;
• minimal cost of operations;
• high security;
• end-to-end control, etc.

Distributed ledger technology is used in the entertainment field for several purposes:

1. Popular financial option. Today, more and more operators are installing cryptocurrency payments on their platforms. The use of digital money speeds up and simplifies mutual settlements with players and B2B partners, reduces the size of commissions, and increases the security of personal data. Transactions can be carried out anonymously and from anywhere in the world.
2. Provably Fair system. It is based on cryptography and guarantees that the online casino or a sportsbook portal works honestly, does not manipulate the results of sessions, and pays out prizes on time. Thanks to the solution, all money is instantly sent to the winner of the round. To do this, iGaming platforms do not require the consent of controlling persons.
3. Unique content. The use of blockchain makes the placement of bids truly exciting and unpredictable, improves customer experience, and attracts new solvent traffic to the website. Crash entertainment from the BGaming European provider can be a perfect example. These are products with innovative and continuous gameplay, as well as powerful social features.

Digitalisation

According to the GSMA trade organisation, 4.3 billion people (54% of the world's population) own smartphones, and this figure is constantly growing.

The ITU states, 75% of young people (from 18 to 35 years old) have access to the Internet. In 2021, the indicator was 72%. In Europe, the highest share of online users is record-high (93%). In Africa, it is much lower, only 61%.

Gambling, like other sectors of the economy, only benefits from the spread of smartphones and Apple technology. Digitalisation makes betting accessible from anywhere in the world. To launch the reels in slots, players only need to make a few clicks.

Entertainment for money is becoming accessible to a wider audience. There are no restrictions on location, dress code, or social status, unlike many land-based locations.

The best decision in 2024 is to launch mobile casinos. Such universal platforms will attract traffic from different countries, provide safe gameplay, and improve the user experience. The income of operators will also grow, as will the popularity of their brands in the market.

Global Climate Challenge

Human rights organisations have been talking about environmental issues for many years now. Kofi Annan, the former UN Secretary-General, formulated the main ESG standards. These are the rules for the sustainable development of commercial activities, which are based on 3 principles: social/corporate responsibility and careful attitude to climatic changes.

The public's attention is focused on the so-called energy transition. This is the use of alternative sources of energy by businesses, as well as an attempt to fix the requirements of a green economy as a factor of competitiveness.

Innovations make it difficult to sell “dirty” products, such as coal, oil, metals, fertilisers, chemicals, etc. Therefore, it is much more beneficial to provide goods and services with a high added value.

Although the gambling industry is independent of the energy sector, it is still actively implementing the following ESG rules:

• reduction of CO2 emissions;
• reconstruction of processing and data centres and their transition to alternative sources of energy;
• financing environmental protection projects, etc.

The implementation of the ESG strategy improves the image performance of enterprises and makes them recognisable in the market. Online casino brands position themselves as strong enterprises that keep up with the times and establish an eco-friendly and safe business.

The leaders in the field of implementation of such principles are:

• Playtech;
• Pragmatic Play;
• Kindred Group;
• Entain;
• 888 Holdings;
• Betsson;
• EveryMatrix, and others.

For example, by 2025, Playtech will have committed itself to reducing carbon emissions by 40%. About 56.4% of total energy consumption already comes from renewable energy sources, and in a few years, this figure will increase even more.

The company also finances several international projects aimed at protecting the environment and raising awareness among its partners.

The Main Things about the Impact of Economic Trends on Gambling

The industry is legitimate and is characterised by high profits.

Key features that must be taken into account when monitoring global tendencies in the casino niche:

• Analysts expect a moderate improvement in the world economy and a slight weakening of inflationary processes. This affects the cost of gambling services and regulation policies. Many countries are soon going to legalise the iGaming sector, having assessed its positive influence.
• We are currently observing a multi-year technological race. It is developing in many directions, including artificial intelligence, blockchain, and digitalisation. These technologies significantly affect the global economy and make the casino market safe, customer-oriented, and more modern.
• The climate challenge has a huge impact on the gambling and sportsbook industry. Top providers implement the principles of sustainable development, which reduce CO2 emissions and finance international projects aimed at protecting the environment.

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