When providers change hands – navigating acquisitions as an iGaming operator
The iGaming market continues to grow, with participants striving to improve their competitive position in various ways. Among providers, operators, and game studios, two main growth strategies can be observed: organic or through mergers and acquisitions. A notable case of growth through mergers and acquisitions is EveryMatrix’s recent acquisition of FSB Technology, a white-label solutions provider.
In an official statement, the company said, “This transaction facilitates our long-term growth strategy of entering and growing within a greater number of regulated markets, including the UK, Ireland, and Africa, where many FSB clients operate. It also allows us to accelerate this process, diversify our customer and revenue profiles, while simultaneously migrating customers to a stronger, high-performing product proven to deliver exceptional results.” – Ebbe Groes, Group CEO of EveryMatrix.
Regardless of the business motivations behind this specific deal or the broader acquisition strategy, we’ve prepared a subjective list of concerns that current white-label platform operators might face when their provider undergoes an acquisition. Such market changes can give rise to uncertainty and worry. Below, we highlight the key elements that deserve attention:
Change in business philosophy
A new owner may alter the way a company collaborates with operators after an acquisition. This could result in losing access to previously available or promised features that operators relied on for their marketing communication and growth strategies. Additionally, the communication style between the provider and the operator could change. Operators may fear that they will be lumped together with others, reducing their bargaining power.
Change in customer service standards
For operators, being acquired by a larger player in the market, may mean a drop in communication standards with their platform provider. Support might become less responsive or less customised to operators’ specific needs, which could indirectly impact player satisfaction and retention.
Financial consequences for casino operators
A significant concern after an acquisition is the potential for price increases by the new owners. Rising costs could significantly impact casino operating budgets, forcing a shift in business strategy due to a modified budget. This might mean fewer resources for acquiring new players or increasing retention, which would ultimately affect the casino’s profitability and market position.
Data migration and service accessibility
Responsible gaming regulations heavily scrutinize player data security. During mergers or acquisitions, the data migration process can be particularly challenging, with risks of data loss or security breaches. Operators may need to invest additional time and resources to verify their databases to ensure accuracy and safety. Any potential data loss during migration could weaken customer trust and loyalty, both essential for maintaining a competitive edge in iGaming.
Market competitiveness
Another key consequence of platform provider acquisitions is a potential drop in market competitiveness. When a provider gains control of too many operators, it can limit competition, making it harder for operators to negotiate favourable contract terms. This consolidation may hinder competitive advantages, as more operators gain access to the same solutions. In the end, operators may be forced to switch to another white-label provider or transition to a custom solution to stand out in the market.
Reduction in player LTV
Ultimately, any changes in the provider’s offering or service quality directly impact player satisfaction, and thus their lifetime value (LTV). Maintaining high levels of customer satisfaction is crucial for operators’ growth, and any service disruptions could have long-term consequences on player loyalty and revenue.
Forced technology changes
Operators who have successfully grown their business using a specific ready-made solution may fear the discontinuation of their service and a forced transition to another solution. This could require significant organizational resources and a shift in how the company communicates with the market.
Loss of security and control
Casino operators working with a white-label model accept a high degree of dependence on a third party. Everything works fine when a company carefully chooses their provider and develop a growth vision together. However, the situation changes drastically when, overnight, the casino becomes fully dependent on a provider the operator didn’t choose. Realizing that even though they own the business, the company has no control over its most critical elements can lead to destabilization and a loss of business security.
In conclusion, while acquisitions and mergers can bring positive changes, it often introduces a range of challenges and uncertainties for casino operators. Understanding these potential implications can help operators navigate the complexities of such transitions and develop strategies to minimize risks, ensuring the company continues to meet their players’ needs in an ever-evolving market.
