The situation in Bangladesh has changed dramatically. Are gaming giants giving up on this big pie?

Preface:

The internal protest conflict in Bangladesh began on June 5, 2024, mainly due to dissatisfaction with the government's civil service quota system. The protests initially began at Dhaka University and then quickly spread across the country.

The protest was sparked by an executive order signed by Bangladesh Prime Minister Sheikh Hasina to reintroduce a quota system for government civil servants, a decision that immediately sparked anger among students. The system was introduced in 1972 and was finally abolished in 2018 after much tweaking and controversy.

However, in June 2024, the Bangladesh High Court overturned the previous abolition decision and re-implemented the quota system, so college students across Bangladesh began to join the protest march, which then intensified over the next two months.

The government has stepped down, the military has taken over, and the conflict may escalate further!

And yesterday, the overall situation in Bangladesh took a major turn, and the national situation is likely to deteriorate further!

On the afternoon of August 5, the Bangladeshi army suddenly switched sides and issued an ultimatum to Bangladesh Prime Minister Sheikh Hasina, requiring her to leave Bangladesh within 45 minutes. Oppressed by the military, Hasina announced her resignation and fled Bangladesh with her sister on a helicopter provided by the military to India.

The statue of Hasina's father Rahman, a symbol of hereditary rule, was also removed by the army. After Hasina resigned and fled to India, the Bangladeshi people poured into the parliament building, which also meant that Bangladesh ended years of hereditary rule and entered a state of no actual control.

After violent clashes that left thousands dead and more than 10,000 injured, the conflict in Bangladesh has entered a new phase.

Bangladesh Army Chief Waker-Uz-Zaman delivered a national address, confirming Hasina's resignation and saying, "I have held talks with leaders of all parties." We will form an interim government to run the country again.

Following the army chief's statement, the Student Anti-Discrimination Organization, which has led anti-government protests, issued a statement refusing to accept military rule.They insist that power must be handed over to "revolutionary students and citizens" and consider any other scenario unacceptable. The group stresses that military rule is not the solution to current problems, and that the students and the public who initiated the revolution and won should decide the country's future.

This means that Bangladesh’s internal conflict is likely to shift from the confrontation between the national government and the student public to the confrontation between the military and the student public. Currently, there are three main political forces in Bangladesh: the military, student organizations, and opposition parties. The outside world believes that the separation of the three is likely to continue to intensify the conflict in Bangladesh.

As one of the world's largest gaming markets, is Bangladesh's decline inevitable?

Gambling is generally banned in Bangladesh, the world's third-largest Muslim-majority country after Indonesia and Pakistan, with the exception of horse racing, but users are heavily involved in betting on a variety of sports including cricket, rhythm cricket and wrestling.

According to the definition of local law, the Bangladesh Gambling Act, online gambling is in a gray area and is not completely prohibited.

Because of this, Bangladesh is a market that gaming operators have focused on in recent years.

Bangladesh is rapidly growing into one of the largest gaming markets in the world due to its young population and surging digital adoption, and many operators believe that this market has huge potential.

As of January 2023, the total population of Bangladesh reached 172.1 million. Data shows that from 2022 to 2023, the population of Bangladesh increased by 1.8 million, with a growth rate of 1.0%.

A significant portion of Bangladesh's population is between the ages of 15 and 34, with those aged 15 to 44 accounting for half of the country's population, with an average age of 27.0 years.

In addition to this, Bangladesh's per capita GDP is approximately US$2,457 according to 2021 data, and although this number is relatively low, it has shown a continuous growth trend over the past decade.

The average GDP growth rate remains above 6%, with an economic growth of 8.15% in fiscal year 2019. In fiscal year 2020, despite the impact of the epidemic, GDP still achieved a growth of 5.24%.

According to a rough estimate based on multiplying population by per capita GDP, this will create a large market for the gaming industry with a total volume of nearly 25 billion US dollars.

Meanwhile, according to the latest report from the Global Systems Association for Mobile Communications (GSMA), the number of smartphone users in Bangladesh will increase from 47% in 2023 to 63% by 2025.

The following report titled "Mobile Economy in Asia Pacific 2022" states that the user penetration rate in Bangladesh is 55% in 2021 and will reach 59% by 2025.

Based on the above, Bangladesh can undoubtedly provide a wide audience for the online gambling market.

However, such a thriving market has now suffered a heavy blow.

The impact of this nationwide conflict on business activities is becoming increasingly serious, and it is likely to hinder the entry of operating investors from various countries, and may even prompt many operators to choose to withdraw.

1. As protests develop, transportation disruptions and infrastructure damage occur, leading to supply chain delays and a rapid increase in production and operational costs.

Network operators can’t even continue to maintain services, let alone web-based online gambling operators.

For example, during the Russian-Ukrainian war conflict, Groes, the president of Igaming operator EveryMatrix, once said in an interview:"The Russian invasion of Ukraine had a profound impact on EveryMatrix, as we have over 200 employees there. We had to host our servers elsewhere and have several other development offices around the world.We are luckier than most. We are based in Lviv, a city in the west near Poland. So far, Lviv has hardly been attacked.”

2. Political turmoil may weaken consumer confidence, leading to a decline in consumer spending. In special times, Bangladeshis are more inclined to save cash for spending on essential consumer goods.

All service providers will face the problem of reduced customer traffic and declining revenue.

In the first quarter of 2022, for example, sports betting platform Flutter's international unit (led by PokerStars) saw revenue fall by 5%. Operators attributed this to the impact of the Russia-Ukraine conflict on Russian and Ukrainian operations.

3. Political instability may affect domestic and international monetary policies. Domestic currency and stock markets may face the risk of collapse, accompanied by the collapse of the banking system; the corresponding countries will adjust interest rates or intervene in the foreign exchange market.

This will further aggravate the financial situation of Bangladeshis. Continued political instability will make foreign companies review their business prospects in Bangladesh, and a large number of companies may choose to withdraw, which will further affect the job market and form a domino effect.

For example, at the beginning of the Russia-Ukraine conflict, the online game provider Evoplay made an emergency relocation plan. Since Russia began its invasion of Ukraine in February 2022, about 15% of its employees have moved to Cyprus, and for those who chose to stay in Ukraine employees, Evoplay has opened a brand new office and living facility in Lviv, eastern Ukraine.

Evoplay developers have also established a fund for all employees, and all team members based in Ukraine will receive full financial and logistical support to relocate to the safest areas of the country.

In summary, the political situation in Bangladesh has had a multi-faceted impact on business activities, especially since the online gambling industry is in such a sensitive position that a large number of operators need to assess risks and respond.

Pay attention to the changes in the situation in Bangladesh, and operators are waiting for the spring to come

According to a local report in Bangladesh in 2022, 250,000 people in Bangladesh had registered to participate in online gambling in 2012. As of 2017, there were about 50 online gaming companies operating in Bangladesh, and more than 4 million people played online games.

At this growth rate, it is conservatively estimated that by 2024, there will be more than 26 million people playing online games in Bangladesh.

However, all this seems to have come to an abrupt end because of the outbreak of this conflict. As an industry that requires stability and order, the gaming industry will be severely hit when faced with political turmoil and social unrest.

From the sharp decline in the number of consumers on online gambling platforms to the wait-and-see attitude of international investors, Bangladesh's gaming industry is experiencing unprecedented challenges.

However, there are also operators who are still holding on, waiting for the dawn to come. For example, the online gambling company 1xbet, whose cricket betting service is still the most watched project in Bangladesh, has not yet stated that it will withdraw from this large market.

Because crises often breed turning points, I believe that many gaming operators are continuing to pay attention to the evolution of the social situation in Bangladesh. Once the situation eases and society is rebuilt, the gaming industry is expected to regain vitality with the joint efforts of the government and enterprises.

Of course, this requires not only time and patience, but also cooperative innovation from all parties, such as innovation in payment methods and website supply. Only in this way can the gambling industry regain its foothold in Bangladesh.