Implications and questions for potential operators

 1) How big is the company’s investment and returns appetite?

Is this a major play or more of a market understanding venture? What is the overall goal of your launch into the e-gaming market? What represents success? What stakeholder issues need to be considered? What are the expectations in terms of investment and returns - and the associated timeframes?

If generating strong revenues and earnings is the dominant objective, it is unlikely that a new operator will enjoy significant returns if it adopts a niche basis (either in terms of product/geography/channel).If however the objective is to understand the sector in a limited manner prior to a larger scale roll-out then a niche play might be acceptable. 

 2) What/who/where to target?

What are the preferred product, channel and geographic footprint? 

In terms of product categories, there are big challenges relating to the competitive dynamics within poker, casino, skill and bingo and geographic scope. Competing head on in poker is clearly not ideal. Having a standalone casino can be a risky model. Sportsbetting is already mature, with high barriers to entry. Skill offers easier market entry but yields are lower and the sector is still small. Bingo offers some attractive economics and enjoys some similarities with Poker in terms of loyalty and retention rates but as yet it is still a small segment. 

 3) How to enter? 

What is the preferred licensing approach?  Which operating model? Do you want to be an operator, licensee, owner or just a skin?

 4) What is the appetite for regulatory and legal risk?

Are some jurisdictions (e.g. the USA) off limits? Or is it just that some products (e.g. betting) are off-limits? What about the “grey” jurisdictions?  Is avoiding legal and regulatory risk more important than shareholder returns?