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The stakes are getting higher for the online sports betting and casino gaming markets, and industry players need to be careful around where they place their bets. Powerful market forces like consolidation, upstream integration, evolving user behavior, and increasing regulation are combining to exert pressure on CEO and CTO agendas.
Technology is quintessential to unlocking potential for success. From an investment perspective, executives must focus on the prevailing technological imperatives to get ahead. This means addressing long-standing tech debt, incorporating new AI capabilities, modernizing products, and ensuring tech stacks are compatible for post-merger integrations—all alongside investments for heightened, hyper-personalized user experiences and regulatory compliance.
As such, gaming operators must take control of their product and technology roadmaps as core differentiators while growing efficiently to sustain investments as the market becomes increasingly competitive. Smaller players and niche operators may struggle to keep up with high customer acquisition costs, compliance requirements, and advanced technology needs.
In 2025, we believe that within the online sports betting and iGaming industries, there will only be room for three to five dominant players to successfully invest at scale and grow. As others fight for market share, we predict at least one company will be forced out of the competitive arena.
Increasing regulation carries heavy implications for operators that don’t comply
Major jurisdictions are considering new affordability checks, stake limits, enhanced verification and background checks, restrictions on credit card payments, and stricter advertising rules. These measures will better protect players, but gaming operators will need to overcome increased costs and potentially reduced revenue. As jurisdictions intensify efforts to penalize offending parties, operators have no choice but to adhere or risk massive financial punishments—or even the loss of their license to operate.
Compounding the regulatory challenges is a robust black market that costs the legal gaming industry more than $44 billion in annual revenue in the U.S. alone. Regulators are working to mitigate the impact of illegal sports betting and online gaming by increasing legalization, which could facilitate growth in the legal sector.
To solve for this, all operators will need to invest in core platforms to ensure ongoing compliance with rising regulatory standards. This includes implementing real-time, 360-degree views of customers and their behaviors, along with identifying risk profiles and enacting responsible gaming initiatives to promote player safety.
Effectively integrating the latest technology—as well as acquired technology—is imperative
GenAI has arrived, and all industries, including gaming, are seeking to leverage the technology for practical, scalable, operational, and commercial benefits. While emerging use cases differ in degrees of maturity at this stage, operators that have a clearly formulated strategy can harness the power of AI for short-term ROI by improving their internal efficiency, bolstering risk management and compliance efforts, and increasing player satisfaction.
A key challenge around AI implementation is effectively targeting the right use cases for a given aim, which we highlighted in an article in September. Eventually, we believe operators will be able to utilize GenAI to expedite the game ideation and design process and accelerate decisions around the right games to greenlight.
But while AI offers incredible possibilities, companies must not lose sight of the importance of the player experience. Hyper-personalized content is becoming table stakes to entice and retain players, and operators that can leverage technology to deliver individual, tailored gaming offerings will reap the rewards. Immersive, real-time social interactions as part of the digital gaming experience are also growing in popularity. For example, Evolution—the leading global operator of online live-casino gaming—is investing $75 million in Atlantic City to house live-dealing studios that provide online players with the atmosphere of in-house betting from the comfort of their homes.
Apart from new technology, it’s critical that operators looking to acquire or partner with other companies can efficiently integrate their tech stack to not disrupt a seamless player experience. We often see M&A activity go wrong when new products and technologies are poorly integrated, operators overly customize third-party components, weak legacy architecture proves expensive to host and scale, and teams support too many platforms at once.
Those that succeed will solve these tech debt and re-platforming issues by ensuring their decisions align with short, medium, and long-term business goals. Operators can start by asking themselves four key questions: To what extent do my platforms:
- Enable new products, features, and content to be delivered quickly and efficiently?
- Provide the ability to rapidly respond to ever-changing regulatory requirements?
- Allow for operational scaling to support new markets and new partnerships?
- Deliver a hyper-personalized player experience and player-centric view?
Technological advancement is largely driven by integrating B2C operators with B2B tech, solution, and content providers. When analyzing the providers that have progressively increased their commitment to R&D as a share of revenues, it's clear that these leaders have consistently achieved premium growth rates.
How will successful operators navigate the road ahead?
Building and maintaining scale will be crucial to fund lofty investments in technology. We expect larger operators will make the most of their economies of scale to drive market consolidation—and those with technology platforms most efficiently set up to absorb new acquisitions will jump to pole position. Smaller players will likely struggle, as they lack the scale to afford large investments.
Consolidation will continue to be part of the solution. Buyers are focused on adding new jurisdictions and games to their portfolios, alongside augmenting their existing gaming offerings with new capabilities. Caesars Entertainment, for example, recently acquired sports betting technology company ZeroFlucs to expand its same-game parlay offerings. DraftKings bought digital lottery app Jackpocket to enter the lottery market, while Aristocrat acquired digital gaming, sports betting, and lottery provider NeoGames to consolidate positioning for its interactive business.
Within online sports betting and iGaming, where technology advancements are more sustained, scale and R&D leadership drive growing market shares for dominant players, relegating smaller competitors to marginal positions.
Our prediction for the sports betting and casino gaming markets in 2025
Over the next 12 months, we believe there will only be room for three to five dominant players to successfully grow and scale within the online sports betting and iGaming industries. As others fight for survival, some will be forced out of the competitive arena.
As the market witnesses fewer but much larger players thrive, we will enter a new era of tech investment that prioritizes efficiency and hyper-personalized player experiences. Consolidation will continue as industry leaders fight to differentiate themselves to customers—we’ll be watching to see which all-in bets pay off.
