We make some predictions for 2019. What does the coming year have in store for igaming, sports betting, esports and blockchain industries?

Disclaimer: this article solely reflects the views of the author and may not reflect the views of Pentagon Digital Ltd or AYO.NEWS. It does not constitute investment advice, and is for entertainment purposes only.

Let’s look into the AYO.NEWS crystal ball and see what could lie ahead for the igaming, sports betting, esports and blockchain industries in 2019 – including both the terrific and terrifying! But first, we’ll take a moment to reflect on 2018.

2018: a mixed bag

So, 2018 was a wild ride for the industries we cover at AYO.NEWS, particularly blockchain and esports. On one hand nations like Malta passed the world’s first proper blockchain and AI legal frameworks (read more here) and large institutions around the planet started taking crypto seriously, on the other, a retail-driven price crash led to a prolonged bear market in digital assets.

The already explosive growth of esports continued to accelerate, with yet more traditional sports teams and individuals setting up or joining organisations, big brands jumping on the esports sponsorship bandwagon, and global esports infrastructure projects setting the stage for even more dramatic growth.

It was a mixed year for igaming and sports betting. Sure, the massively important US market started to open up after the dramatic repeal of PASPA in May, but over in Europe there was carnage and confusion on the marketing front, with Italy outright banning betting advertising and sponsorships, Belgian, Irish and UK authorities turning increasingly hostile to the gambling industry, and chaos and legal arguments continuing to create confusion in the Netherlands. On a brighter note, the Swedes decided to fix their dysfunctional gambling market, things were looking-up in Spain, and plenty of innovations, especially regarding payment solutions started to hit several markets.

Overall, the global economy was strong, but as we drew towards the year’s end, there were distinct signs that the US was overheating (or maybe even being deliberately overheated), US-China relations were heading in the wrong direction, and political chaos reigned as delusional politicians consistently demonstrated their complete incompetence over Brexit (read more). Europe was witnessing spreading dissent and the rise of a simplistic but highly dangerous nationalist populism showed no signs of abating.

Luckily, Elon Musk’s SpaceX announced it was working flat-out on its Mars project, and Richard Branson’s Virgin Galactic achieved success with its commercial spacecraft, giving us all hope that even if we really fuck up this planet, humanity could still survive!

The world in 2019

Before we look ahead to the individual sectors, let me first outline the general global situation I predict for 2019, so that things can be seen in some context.

In Europe, the UK will fall out of the EU in an unintended ‘No-deal’ scenario (brought about by the complete inability of politicians to grasp the realities), leading to the break-up of the United Kingdom of Great Britain and Northern Ireland. Scotland will hold a referendum in March, which Westminster will of course declare illegal, and will vote overwhelmingly for independence. They will make a unilateral declaration of independence before the March Brexit deadline and try to convince the EU to let them remain.

Meanwhile, Northern Ireland will hold a similar ‘illegal’ vote regarding reunification with the republic. It will be a moderate majority for reunification, at which point unionist paramilitaries will resurface and try to stop it. The Westminster government will split, with moderate pro-EU MPs from all parties forming a coalition to try to remove the Conservatives. Jeremy Corbyn will be removed as leader of Labour, or just ignored (shouldn’t be too hard). The UK will cease to exist by the end of 2019, with an independent Scotland, a war-torn Northern Ireland, a bitterly divided rump state of England, and many regional struggles.

The rest of the EU will come under increasing internal pressure from far-right nationalists, with Hungary and Poland continuing to lead the way. France and Germany will both see bitter struggles as the liberal forces try to quell discontent stoked by the far-right. As usual, these struggles will take more of a ‘physical nature’ in France. The continent’s economy will take a big hit from events in the UK and US, with populists capitalising on unemployment and discontent to sew divisions.

In the east, Russia will continue to stir things in Ukraine, and will likely engineer further incidents like the recent capture of three Ukrainian navy vessels. With the western powers distracted by internal affairs and the EU hamstrung, Putin will look for opportunities to cause incidents in the Black Sea and the Baltic countries.

Across the pond in the United States, Trump’s intransience regarding his pet project of the border wall will lead to repeated paralysis of government, and an economic slump could well result. The dramatic bull market we’ve seen through 2018 will come to an abrupt end and unemployment will soar.

Japan and South Korea will be increasingly jittery over Beijing’s military moves, as the Chinese government turns to hard power as a means of growth, as their economic boom well and truly fizzles out. Expect Japan to continue the trend seen in 2017 and speed up its re-militarization.

The middle east will continue to be its usual mess, and liberalisation efforts seen in countries like Saudi Arabia will slow or reverse as the US and Europe are distracted by their own problems. Iraq will continue to fall under Iran’s influence, Syria will fall back firmly under Assad’s control and there may be conflict with Turkey in the north following the surprise withdrawal of US forces at the end of 2018. Expect a resurgence of Israel-Palestine troubles as the right reassert power in Israeli politics.

Latin America will, as so often happens, absorb itself in political blame games and mismanagement as the global economic downturn puts pay to any hope of sustained growth. Brazil and Argentina will especially suffer from civil disorder as ordinary people protest against rising living and business costs.

Africa will be seen as an increasingly important market by many industries, including igaming and sports betting, driven by rising numbers of people gaining access to internet and alternative financial services. Though, even the most developed of African countries, like South Africa, will be precariously prone to political, economic and social dramas, making any substantial investment very risky.

What’s in store for our industries?

Esports

Despite the generally chaotic global outlook, esports will thrive. With the real world getting more than a little insane, the appeal of simulated worlds will only grow. Due to the resilient nature of esports events, especially the streaming of most viewing and the comparative flexibility and low cost to stage tournaments and leagues, they are especially protected from economic downturns and social disorder.

• Throughout 2019 the dramatic growth of esports will only accelerate. Popularity will continue to surge as millions more children who have grown-up with the popular video game titles reach adulthood and are able to add their spending power to the market.

• Traditional sports teams, especially in football and motorsports, will continue to set-up esports divisions.
• Large brands will flock to sponsor esports teams, organisations, and increasingly individual star players.
• Some of the smaller esports organisations will be absorbed into larger operations in a noticeable consolidation, driven by the emergence of a few true superpowers with the resources to invest heavily in their own infrastructures, especially esports venues.
• Expect regulatory bodies around the world, but especially in Europe, to start paying more attention to esports, more of the ‘loot box’ betting type controversies and concern about violent content etc. Also expect those regulatory bodies to fail to comprehend the industry, make incredibly naïve statements and prepare for plenty of messy, unhelpful regulatory ideas being floated.

Blockchain

Blockchain will come into its own as a way to build order and resilience in an increasingly disorganised world. With people and companies losing faith in traditional authorities and systems, the appeal of decentralisation will only grow. The adoption of cryptocurrencies could also be accelerated by a downturn in the stock markets and traditional economy, as people and institutions look to find safe havens for their wealth.

As major economies, extremely vulnerable to social disorder and disintegration, struggle economically, small nations and islands will thrive as oasis of wealth and prosperity, being able to benefit from emerging technologies without the social and economic disruption and displacement they cause in larger ones.

• More countries, especially in Europe, the America’s and Oceania, will lay down detailed blockchain legislation, following the example of Malta. Small nations like Malta, Liechtenstein, San Marino, Switzerland, Estonia, and Singapore will steal even more of a lead, as the biggest nations like the US, Russia, India, and Brazil flounder, unable to convince their bickering masses of politicians and protectionist lobby groups from reaching consensus.

• Behind the scenes, and ignored by the mainstream media, improved or new legislation will open the door for a raft of institutional-grade digital asset products and services.

• Pension funds especially will become heavily committed to digital assets as people start to wake-up to the sheer scale of the Pension Crisis. This should boost the prices of the major digital assets and encourage more stability in the market.

• Though the big cryptocurrencies, like Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC) and Bitcoin Cash (BCH) stand to gain from a general crisis in the traditional economy, most of the smaller altcoins, of which there are thousands, will fall by the wayside, with their lack of real value highlighted when institutional money avoids them like the plague.
• Expect dramatically tightening regulations regarding retail cryptocurrency infrastructure, like crypto ATMs, as authorities wake-up to their widespread use in money laundering and organised crime.
• Authoritarian and pariah regimes will increasingly look to adopt national digital currencies, though not true-cryptos, as ways of centralising control even further or mitigating the effects of international sanctions. In Venezuela, the ‘Petro’ will probably fail by the end of the year, while Iran and Dubai may well have more success with their ventures.

Igaming and Sports Betting

2019 will see continued consolidation in the igaming and sports betting industries, especially on the affiliate side of things, as smaller businesses struggle to comply with an increasingly complex, fragmented and expensive regulatory environment, especially in Europe. There will also be some seismic directional shifts as new verticals are integrated into operations.

• As the appeal of traditional slots, the ‘bread and butter’ of the igaming industry start to wane, with little appeal to the all-important millennials, smart operators will invest increasing resources into esports. The biggest online casinos and bookmakers will increasingly realise that esports is where the long-term money is at, and that they require entirely new brands in order to be taken seriously among esports fans – they will realise that simply adding esports into their existing product offering is ineffective.

• Larger operators will continue to merge and acquire smaller ones, creating betting super powers in a bid to create synergies, cost savings and maximise market reach.
• Marketing will get exponentially more difficult as the old methods fail to deliver or are blocked entirely by new regulations in specific markets. Companies will urgently need to up their advertising game and find the best talent. Simply throwing more money at sponsorships will be futile or impossible.
• Smaller affiliates will hang on for the foreseeable future, but the writing is well and truly on the wall, as they are essentially locked out of more and more markets due to increasingly tough regulations. The days of the traditional small affiliate are over, though larger affiliates will continue to find ways to innovate and work around regulations, it will see their business model change dramatically and the increasing importance of new verticals like esports and fintech.

• Malta, the current igaming and sports betting hub of Europe, will start to lose its draw as increasing numbers of markets regulate, negating the perceived value of a Maltese license, and as living costs on the island continue to rocket, making recruitment and staff retention increasingly difficult. There may be a blip as companies relocate from Gibraltar due to Brexit, but by the end of 2019 it will be clear that Malta can no longer rely on the industry to drive its growth. Curacao will also find its remote gaming licenses lose their appeal to operators for the same reasons.

• Gibraltar, the Isle of Man and the Channel Islands will inevitably suffer from the chaos of Brexit, with both physical access to their territories and service access likely to be thrown into confusion and chaos for an extended period – bad news for operators based there.
• The United States will be the focus of most investment by both operators and supplies in 2019, as companies jostle to position themselves to make the most of the rapidly emerging market. Expect another dozen or so states to legalise sports gambling in the coming year. Though, there will be many expensive mistakes and failures and the very particular intricacies of offering products in the individual states, and potential federal interference from those still opposed to betting, throws up unexpected surprises and costly obstacles. Watch out for litigation as the vast US legal industry identifies a juicy new target.
• 2019 will also see operators increasingly look to emerging markets in Latin America, Africa and Asia for growth, as conditions become ever tougher in Europe, and struggling governments desperate for more tax revenues court the gambling industry.
• In terms of technological innovation, the much heralded virtual reality revolution in igaming will probably remain on hold as poor economic conditions will dissuade or prevent the general public from buying into the technology in sufficient numbers for the foreseeable future.
• Innovation in online betting will mostly manifest itself in the form of payment and security solutions, especially instant banking.
• Any UK-facing operators should also bear in mind that all those legal firms that have spent the past 20 years building an industry around PPI claims will be looking for a new target in 2019, as the deadline for claims passes. Could wagering requirements and other similar historic practices be the target for the next scandal? One thing is for sure, there will be a lot of lawyers looking for something new to do, and the gambling industry has a big red target painted on it. We warned you at AYO.NEWS first.

Challenges and opportunities

Looking back over the last year, it seems obvious that the world stands on the brink of another global economic crisis. The underlying financial, economic and political problems that led to the 2008 crash were never fixed, just swept under the rug and hidden. In fact, as demonstrated by the increasing civil disorder being witnessed in many parts of the world, social problems have actually continued to grow worse. Though unemployment is at historic lows in many major countries, many more people are employed in unstable, insecure ‘gig’ work and are horribly vulnerable to even the most marginal of economic downturns. Europe and North America especially are veritable powder kegs of conflicting ideologies and increasing economic inequality.

However, whilst some industries will be pummelled by this environment as we go forward into 2019 (especially retail and construction), others, like esports, blockchain, igaming and sports betting, can actually continue to flourish and grow. In times of adversity people embrace entertainment and crave escapism. As for blockchain, as people lose faith in traditional institutions, decentralisation can increase resilience and decrease both businesses’ and individuals’ exposure to national and international crisis and political madness. From supply chains and planning to payments solutions, investment and wealth storage, blockchain-based technologies mean that whilst the traditional world may start to crumble, it doesn’t have to take down everything with it.

As the old nation state, class-based world stands on the brink of death, it is undoubtedly going to thrash around like a shark caught on a line, with reactionary political forces appealing to the fear and uncertainty of the masses. This is sure to result in more Brexit-style insanity, an avalanche of unhelpful and misguided regulations (can anyone say “GDPR”) and lots of political theatrics.

However, it also gives industries, and perhaps non more so than those covered here, the opportunity to help create a new global economy, truly borderless and decentralised. Of course, this won’t be achieved by the end of 2019, but it does seem that was we stand on the threshold of the second decade of the twenty-first century, things are going to get interesting!