As the land-based and online gaming sectors converge, bricks and mortar businesses are better placed to take advantage of consolidation opportunities, it has been claimed.
Speaking to InterGaming, Deloitte’s Simon Oaten suggested that there is a great deal of movement from traditional land-based to internet gaming and although this may prove challenging for bricks and mortar businesses, it opens the door to new possibilities.
"There are lots of opportunities on the horizon," he said. "However, they are all encumbered by the challenging credit environment."
Despite there being a host of businesses potentially ripe for takeover, often the credit simply is not available to support such acquisitions, Oaten explained. "The biggest driver of change, which at some point is going to accelerate dramatically again, is the convergence between the offline and online sectors in the broader market."
From a consumer’s point of view, these forms of gaming are very complementary, he said, adding that there will be "significant" convergence between the sectors over the next five years. This has stalled in recent months due to the fact that the credit environment for the online space is even more challenging than it is within the traditional space - regulatory uncertainty has seen online gaming companies "undervalued" when compared to their bricks and mortar counterparts. Oaten believes this places land-based businesses in the driving seat.
"It gives the bricks and mortar players significant value because they can raise some debt against their assets. When you bring two entities together, the bricks and mortar operators can take on debt, whereas online operators can’t. You end up with a more optimised, leveraged combined entity.
"If the credit markets continue in the way that they have, we’ll see bricks and mortar operators using that to their advantage."
