Two days of the ICE expo in Barcelona were partly given over to discussions hosted by Jefferies Equity Research. Analyst James Wheatcroft reported back that talks tended to focus “on regulation, legalization, competitive intensity, sports margins, product development, and Brazil.”
Wheatcroft’s summaries were boiled down into a January 23 investor note. In it, he reported, “As always, regulation remains a key topic of conversation, this time focused on the evolving attitude being taken by some leading market regulators.”
Suppliers from the United Kingdom attending ICE reported that British regulators have adopted an increasingly proactive stance, “with operators advised to terminate relationships with suppliers serving unregulated UK operators.” Some investors worried that this might have an adverse effect on operators and suppliers who function within gray or black markets.
In turn, the discussions pivoted to United States sweepstakes games, perceived by some as a means of circumventing laws against igaming. “Operators and investors wondered whether the rise of sweepstakes could act as a catalyst to kickstart U.S. online casino legalization, similarly to daily fantasy sports and the advance of online sports betting,” Wheatcroft chronicled.
Igaming legalization itself was considered possible in such U.S. jurisdictions as Illinois, Indiana, Maryland, New York, Virginia, and Wyoming. However, potential federal oversight was also noted by attendees.
Despite the consideration of legalized igaming, attendees thought it unlikely in the near term beyond online sports betting in Missouri. Explained Wheatcroft, “Operators anticipate that the general backdrop for U.S. state legalization remains subdued, with 2025 seen as a year when U.S. state budgets may require a focus on incremental sources of tax income.”
Less than a month into legalized gambling in Brazil, the consensus was that it’s “generally strong,” especially with regard to igaming. The newness of the market was emphasized, as only 14 licenses are in operation, with as many as 168 applications pending.
Another factor slowing the ramp-up of Brazilian gambling is that soccer season doesn’t begin until March. It was felt that operators would make fuller commitments once they had full licensing in hand.
Whether in North or South America, igaming was deemed “the sweet spot,” particularly live-dealer gambling. The Americas were “key focus markets” for the industry, although U.S. competition was reported to be subdued.
Light & Wonder was highlighted as one of the few active U.S.-facing providers of igaming. “New state regulation could entice further entrants, particularly [as] states follow West Virginia by not requiring a local studio presence,” observed Wheatcroft.
“The sports data vertical remains an attractive way to play global gambling themes (e.g., online migration, new markets) without picking specific winners,” he continued. Proposition bets are one way that U.S. providers were seen to be driving toward less volatile wagering with higher profit margins.
Still, the influx status of Google and the continuing duopoly of FanDuel and DraftKings provoked some investor concern. “However,” Wheatcroft wrote, “companies continue to mitigate potential risk through further diversification of revenues,” such as Gambling.com’s purchase of OddsJam.
