US powerhouse Goldman Sachs has said that bookmakers face increasing challenges in today’s post-Brexit markets.
It said that although Euro 2016 helped bookies to a solid first half, it expects the likes of Coral, Ladbrokes, and William Hill et al to feel the effects of Brexit more throughout the rest of 2016.
“We expect slightly lower growth for the UK gaming market as a result of lower UK macro forecasts post the UK’s decision to leave the EU,” Goldman said in a note today,
“Operators on the UK high street would be most exposed to any slowdown in the UK consumer environment.”
To deal with the “intensifying competition” within the gaming industry, Goldman thinks consolidation and mergers should be viewed as good options going forward, despite the recent failure of the proposed 888, Rank Group and William Hill merger.
“We continue to see consolidation as a possibility in the market given the opportunity scale presents to drive further share gains via increased marketing spend.”
Aside from Brexit, Goldman isn’t too optimistic about the opportunities for UK bookmakers outside of its domestic markets.
“As ever, the regulatory outlook is uncertain in Australia. In particular, the states of New South Wales and the Australian Capital Territory have banned greyhound racing, and Southern Australia will introduce a point of consumption (POC) tax.
“In addition, the US shows little sign of opening up to online gaming more broadly.”