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Corona vs Regulation: Whose Impact is Bigger?

Spain's new laws for gaming communications reshuffled the deck. How exactly? Here are the numbers behind it

On the 31st of March, the Spanish government approved urgent measures to limit the advertising of games of chance and online betting in all channels such as radio, television, YouTube, and other video exchange platforms, including individualized communications in emails or equivalent means and social networks.

Those regulations prohibit advertising bonuses (except on the betting pages themselves). The prohibition also includes promotions and gifts that aim to attract or retain customers.

According to data from the Gaming Business Council (Cejuego), In February, the Ministry of Consumption estimated the advertising investment of the entire sector to be around 300 million euros.

The Spanish Ministry of Consumer Affairs is aiming to broaden these regulations, joining other countries that have done so in the past months, such as Italy and Romania.

Of course, such dramatic measures have a significant collateral impact. for example, prohibiting gaming operators form advertising hurts the media outlets, especially the sports one – that are anyway in a dire situation as no sports being played for weeks and weeks, because of the coronavirus.

But we are here to talk about what we can see in the data – and tell you how these limitations have been affecting player behavior.

To do so, we analyzed the gaming operators in Spain by looking at three periods: before COVID-19 (February till mid-March), after the outbreak, and the lockdown (mid-March to the beginning of April), and the last period of COVID-19 with the new regulations.

What We Saw

After a great increase in number of daily active online casino players, generated by the hectic COVID19 period, (24% period over period in Spain), the first noticeable shift was the decrease in number of Active Players – a drop of 39% compare to pre-outbreak period.

Although the dramatic drop in the number of players, a very surprising insight was the increase in the total deposit amount for the brands, 9% on average! We assume it was probably caused by the high retention of loyal and profitable players during covid19 period.

But how is it even possible, and what does it mean?

From the Pareto analysis below, we can see that in Spain, during April, the top 5 percentile generated almost 50% of the total deposit amount. Those are the players that were not impacted by the new regulations. It might be the reason for the increase in the total deposit amount.

The Impact on Acquisition

Most of the impact, as expected, came from the onboarded new customers – on average, brands experienced even a stronger decrease in the number of new depositors compare to the pre-pandemic stage – a 45% drop. Below is the number of weekly new depositors compared to the period average.

Just like the active players, the decrease in the number of players caused an increase in monetary values average. The average deposit amount per player in the week following their first deposit was higher by 43%. Also, the first deposit amount is higher compared to previous periods. As we can see in the chart below, more players deposits within the higher bin of over 100€ and less within the lower bin of 0€-25€.

But, does this decrease in the volume of new players being compensated by how other players are depositing more? Well, probably no.

The total weekly deposit amount decreased by 21% on average, comparing the COVID-19 after regulations to COVID-19 before regulations.

The decrease in the number of players is more significant than the income per player, and accordingly – the companies suffered a revenue loss as a result of the new regulations.

Given the fact these regulations were coming regardless of the pandemic, we estimate that had it not been for the pandemic, the damage would have been much more serious because the retention rates would have been lower.

Summary

While we know VIP players demand bonuses, they are also the kind of players who are much less susceptible to communication changes through regular media such as email, SMS, and other channels.

VIPs usually have VIP Managers (hosted players). Thus, regulation on the marketing program on those channels to these customers, at the moment, has less impact. But we do see clearly how the regulations do affect the business core. And that’s the main point to keep looking at in the future, especially as coronavirus related restrictions are being lifted gradually. We will keep updating, so come back to check for new analyses.

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