Investing in the Future: How Sports Betting and Casino Gaming Can Secure Tech Dominance

The risks are escalating for the online sports wagering and casino gaming sectors, and industry stakeholders must exercise caution regarding their strategic choices. Influential market dynamics such as consolidation, upstream integration, changing consumer behaviors, and stricter regulations are converging to impact CEO and CTO priorities.

Technology is pivotal in unlocking avenues for achievement. From an investment viewpoint, leaders must concentrate on current technological necessities to stay ahead. This necessitates tackling enduring tech liabilities, integrating new AI functionalities, modernizing offerings, and ensuring technology frameworks are equipped for post-merger integrations—all while investing in enhanced, hyper-personalized user experiences and regulatory adherence.

Consequently, gaming operators need to manage their product and technology strategies as key differentiators while expanding effectively to maintain investment momentum as the market grows more competitive. Smaller entities and niche players may falter under high customer acquisition expenses, compliance obligations, and sophisticated technology demands.

In 2025, we foresee that within the online sports wagering and iGaming realms, there will only be space for three to five dominant entities to successfully invest at scale and expand. As others vie for market share, we anticipate at least one firm will be eliminated from the competitive landscape.

Escalating regulations pose significant consequences for non-compliant operators

Major regulatory bodies are contemplating new checks on affordability, limits on stakes, enhanced verification and background scrutiny, restrictions on credit card transactions, and tougher advertising guidelines. While these measures will enhance player protection, gaming operators must navigate increased costs and potentially diminished revenue. As regulatory agencies intensify their efforts to penalize infringers, operators are left with no option but to comply or risk substantial financial repercussions—or even the revocation of their operational licenses.

Compounding the regulatory hurdles is a vigorous black market that costs the legitimate gaming industry over $44 billion in annual revenue in the United States alone. Regulators are striving to mitigate the effects of unlawful sports betting and online gaming by increasing legalization, which could foster growth in the legitimate sector.

To address these challenges, all operators must invest in foundational platforms to ensure ongoing compliance with escalating regulatory mandates. This involves creating real-time, comprehensive insights into customers and their behaviors, alongside identifying risk profiles and implementing responsible gaming initiatives to enhance player safety.

Successfully assimilating the latest technology—alongside acquired technology—is crucial

GenAI has emerged, and every industry, including gaming, is looking to utilize the technology for practical, scalable, operational, and commercial advantages. While nascent use cases vary in levels of development at this stage, operators with a well-defined strategy can leverage AI’s power for immediate ROI by enhancing internal efficiencies, strengthening risk management and compliance measures, and boosting player satisfaction.

A primary challenge concerning AI implementation is effectively targeting the appropriate use cases for specific objectives, which we examined in a September article. Ultimately, we foresee operators leveraging GenAI to accelerate the game ideation and design process and expedite decisions on which games to approve.

However, while AI presents remarkable opportunities, organizations must not overlook the significance of player experience. Hyper-personalized content is becoming essential to attract and retain players, and operators that can utilize technology to provide individual, customized gaming experiences will enjoy substantial rewards. Immersive, real-time social interactions within the digital gaming environment are also becoming increasingly popular. For instance, Evolution—the leading global provider of online live-casino gaming—is investing $75 million in Atlantic City to establish live-dealing studios, offering online players an in-house betting atmosphere from the convenience of their homes.

In addition to new technology, it is vital for operators aiming to acquire or collaborate with other firms to efficiently integrate their technology stacks to avoid disrupting a seamless player experience. We frequently observe that M&A endeavors falter when new products and technologies are poorly integrated, operators customize third-party components excessively, outdated legacy architectures become costly to maintain and scale, and teams manage too many platforms concurrently.

Entities that thrive will resolve these tech liabilities and re-platforming challenges by ensuring that their choices align with short, medium, and long-term business objectives. Operators can begin by posing four essential questions: To what degree do my platforms:

• Facilitate the rapid and efficient delivery of new products, features, and content?
• Enable swift adjustments to changing regulatory requirements?
• Support operational scaling to accommodate new markets and partnerships?
• Offer a hyper-personalized player experience and player-centric perspective?

Technological progress is primarily fueled by integrating B2C operators with B2B technology, solutions, and content providers. Upon examining the providers that have progressively increased their investments in R&D as a proportion of revenues, it is evident that these leaders have consistently attained premium growth rates.

How will successful operators navigate the future?

Establishing and maintaining scale will be vital to fund substantial technology investments. We predict that larger operators will optimize their economies of scale to drive market consolidation—and those with technology platforms most adeptly arranged to absorb new acquisitions will gain a competitive edge. Smaller participants will likely face challenges, as they lack the scale to support significant investments.

Consolidation will persist as part of the solution. Acquirers are keen on adding new jurisdictions and games to their portfolios while enhancing their current gaming offerings with new functionalities. For instance, Caesars Entertainment has recently acquired sports betting technology firm ZeroFlucs to broaden its same-game parlay selections. DraftKings procured digital lottery application Jackpocket to enter the lottery space, while Aristocrat purchased digital gaming, sports betting, and lottery provider NeoGames to strengthen its position in the interactive sector.

Within online sports betting and iGaming, where technological improvements are more sustained, scale and R&D leadership propel expanding market shares for dominant players, relegating smaller rivals to peripheral positions.

Our forecast for the sports betting and casino gaming sectors in 2025

In the coming year, we believe there will only be space for three to five leading entities to effectively expand and scale within the online sports betting and iGaming sectors. As others struggle for survival, some will inevitably exit the competitive landscape.

As the market sees a reduction in player count but a surge of much larger entities succeed, we will enter a new phase of technology investment that emphasizes efficiency and hyper-personalized player experiences. Consolidation will continue as industry frontrunners endeavor to distinguish themselves to customers—we will be observing which all-in bets yield results.