This is the first article from the series of articles from "On scenarios for iGaming industry ". 

Scenario #1. 'Liberegulation' or Non-coexistence of un- and regulated markets

Key driver: National authorities of states, licensing bodies.
Prognosis: negative for the industry.
Epitome: 'Sin industry' curve.
Probability: very likely.
Main leverage: closedness, greed and usage of one against another.

Summary: The governments will follow the path taken in case of other 'sin industries' like tobacco. i.e. increasing the cost of consumption and distributing the tax increments to society till the loss and gain to society strikes the balance. 

In regulated markets, the process of concentration of igaming operators will be underway under the strict control of governments. Later on, advertising bans will be put in force. Affiliate sites will be severely hit by restrictive measures. The Revenue Share model is likely to disappear altogether, so the affiliate marketing as such will cease to exist in this industry. 

Casino platforms focus on new markets and develop a local footprint.

In unregulated markets, the participants of the old casino trio of game providers, platforms and casino owners (operators) will fall into two camps: bigger fill detapart for regulated markets, smaller will focus down to unregulated and establish a divide line of influence with the respective implications thereof. MGA licence sees its demise, non- or quasi-licence operators emerge and install themselves. The ‘fall of Malta’ marks the dissemination of capable workforce with interim huns in US states and Brazil. VCs will hear the death bell to the market of newcomers, appetite for risk will decrease and compliance reins over creativity. 

Problems that prejudice cooperation: 

• lack of creativity, 
• 'slow thinking',
• overreliance on M&A. 

Discussion:

To participate in the dicussion, please subscribe to Bohdan Lytvyn Talks Youtube channel.

Every business is a mix of cooperation and competition. Businesses work within a frame set by authorities, and if authorities want them to start a war, they do it through passing a certain kind of rule.

AUTHORITIES ARE THE "SHAPING POWER" OF LIBEREGULATION

Authorities will set the war with the hands of licensed operators. They will become street cleaners of the ecological chain of industry. The warfare will be in place between all participants of the market: first, between operators and affiliates sites; second, between operators themselves ... 

The state authorities will only impose rules: the small actors will try to use them in their own interests for some time. So, they will be hiding in forests of 'free economics' and actually embarking on total war, till the ecological chain is cleaned and authorities achieve their objective: weathering / hollowing out the iGaming industry till it may only attract those who can economically and morally bear the risks of it. 

REGULATED MARKETS OUTCOME

CASINO OPERATORS

1. Government sets the licensed ones to police over the others through 'non-coexistence clauses' that they must translate over to affiliate sites. The burden of compliance is on the licensed ones.
2. The state of oligopoly with 20-30 brands reigns. 
3. Taxation over the industry is up, through higher compliance costs, licensing costs and fines. The industry sets for M&A. The weaker ones quit the market. Number of licensed ones goes down.

AFFILIATE SITES

1. Number of affiliate sites falls as 'non-coexistence clauses' stop them from taking new unlicensed sites while the licensed advertisers leave the market. Price of advertising as well as their revenues go down. Operators buy affiliate sites. Notably, mainstream media go into the business and start taking the bread from the 'purely' gambling affiliate sites.
2. When the concentration is done, an ganbling advertising ban is imposed (full or partial first, which goes onto a full one with time). Now, there are no more places to get clients, except for affiliate media on the Internet. Mainstream sites' adverts are banned too.
3. Prices go up again, yet, the only few advertisers and affiliate venues. RS disappears as it's not practical anymore.
4. The market balance is struck, industry is set to stagnate.

CONTENT PROVIDERS 

1. Content providers snap new local licences one after another. Yet, with a relatively small number of licensed casinos, working through content aggregators & platforms is not practical.
2. Direct integration is up. Platforms clash into severe competition with content providers, especially those who work as content publishers themselves (like Yggrasil or Relax Gaming). Also, the competition is tough between content providers themselves.
3. Platforms are doomed in regulated markets. Without content integration, their margin of sales is much lower, so they'd focus on new markets only.
4. With market concentration, the margin of sales of content providers is down as the few incumbent operators will renegotiate better terms for them. 
5. Affiliate sites will ask for advert fees for covering new games releases. Content providers will find themselves in the situation of war against all: platforms, other providers, operators, affiliate sites. Operators in the local markets will try to purchase or create their own pocket studios to further wage a war on providers margin.
6. The industry sets for M&A. Each market will finally have 5-7 game providers only.

AGGREGATORS & CASINO PLATFORMS: quitting, making bets on new markets & focus on natural allies who become more dependant on them

1. 1. Aggregators feel greater competition from operators doing direct integrations as well as content providers that built their own publishing platforms. 
2. 2. With an increase in the number of regulated markets and squeezing of the unlicensed brands from them, casino platform's offers are becoming less interesting. The market of newcomers is going to end. Some platforms will quit the regulated market.
3. 3. Platforms will try to focus on new markets and develop a local footprint (sales, operations and support).
4. 4. Platforms will prioritise smaller content providers that are more dependent on them. 

NEW MARKETS OUTCOME: localisation

CASINO OPERATORS: BIG TAKE REGULATED, SMALL TAKE NEW ONES

1. Small international casinos and networks will focus on new markets solely. Big names will tend to quit unregulated markets, leaving more space for smaller ones. Exception is the markets that are going to open-up soon. 
2. Yet the competition on new markets will increase tremendously. There will be a situation of great local focus: one brand per one geo. More local service, more hard work with local traffic providers, affiliates, etc. 
3. The handling (transactional) costs of deals will rise: affiliate teams will employ more local stuff, etc.

CASINO PLATFORMS

1. Set-up fees of platforms will suffer: the platforms will change their fee structure too.

CONTENT PROVIDERS

1. Larger ones will try to focus on core regulated markets with addition of the regulated-to-be.

CASINO AFFILIATES

1. Due to the underdeveloped structure of local traffic providers, the industry can't make a huge jump. At first, an ecosystem of affiliates need to emerge as per each unregulated geo. Without large capital investment (that will be locked in the regulated markets), it will take much time to follow-up.
2. Also, affiliate sites feel the immense pressure from main street media sites: sports, news, etc.

CITIES / LICENCES

1. The MGA license is dead. 
2. Many local licences arise. Burden of compliance is getting harder by the day.
3. Curacao will become a "new Malta".
4. The status of Malta as an iGaming hub will be destroyed. It can no longer be a magnet for people who work in the industry.
5. Overall, the availability and quality of the workforce will be greatly impaired. With the rise of the US market, the new local 'dominion' is likely to emerge in NY, etc. Brazil will likely become a LATAM industry hub too.
6. Quasi-license or no licence arrangements emerge.

NO LICENCE CASINOs

1. ‘Bitcoin foundation certified’
2. Why do content providers need to stick to the licence at all? Banking is the weak point. The shadow of Costa Rica & Belize jurisdictions. 
3. Rise of small crypto-games (turbo / crash, etc no licence games).

START-UPS

Start-up will mostly focus on the following issues / nature:

1. Compliance
2. Bonuses
3. Payment
4. Their origin is likely to be Ex-big brands or Paytech only.
5. Going for operators' internal start-up / early stage buy-outs.
6. Small in size 

Casino Owners (VCs) 

1. This scenario rings a death bell for the market of newcomers. 
2. VC and investors will flee for other markets. Number of casinos will go down. 
3. Break Even point is much longer than before (no more 12-18 months). 
4. Online casino business becomes much riskier.
5. Very dependent on local affiliate footprints.

ECOSYSTEM IMPLICATIONS

1. Fragmentation over unification. Compliance over creativity.
2. Less VC, less incentives.
3. House-born start-ups.
4. Demise of geographical hubs, lower quality of workforce.
5. Appetite for risk will decrease.