In the modern world, consideration of the ESG aspects is not just a popular trend. They are a mark of quality and a symbol of sustainability in the highly competitive iGaming market. Today, most of the investors are focused on compliance criteria.
Experts of the CASEXE studio will explain how these principles are changing the casino and sports betting industry. From us, you can order the development of a successful gambling project with a guarantee of quick payback.
The name stands for Environmental, Social, and Corporate Governance. These standards are used in many sectors of the economy, including finance, insurance, construction, logistics, and, of course, gambling.
The concept was introduced by Kofi Annan, former Secretary-General of the UN. In 2015, he proposed that large brands reduce hydrocarbon gas emissions, given the increasing risks of global warming.
Over time, new principles related to the formation of relationships with partners and employees have been introduced.
ESG is a kind of response to what is happening in the world, including environmental degradation, social inequality, and the risk of famine in certain countries. All this was a basis for the creation and expansion of the criteria.
Attention to these issues is an important factor in the capital movement in the global casino market.
The trend is actively supported by:
Why it is profitable for entrepreneurs to follow the principles of sustainable development:
The majority of the investors believe that eco-friendly, fair, and ethical companies are the best drivers of economic growth. The shares of such firms will increase rapidly because they use an integrated approach to doing business and are not aimed at obtaining quick returns.
Claudio Caruana, General Counsel of Gaming Innovation Group (GiG), noted:
Currently, 65% of investment pools around the world are blocking cash infusion in gambling brands. Implementation of ESG principles could become the solution to such a problem. As a result, the industry will receive a new impetus to the development and scaling.
In March 2022, Moody's Investors Service, an authoritative rating agency, extended its ESG profile by adding the gambling industry to it.
The organisation plans to evaluate casino enterprises based on several factors, such as transparency and timeliness of reporting, creditworthiness, relationships with stakeholders, etc.
Moody's rating has already included:
At first glance, it may seem that the iGaming sector and the ecology are loosely connected. However, this is not entirely true.
Entertainment for money has a huge impact on the environment. While players immerse themselves in virtual worlds, software vendors are constantly pushing the boundaries of technology. Energy consumption, e-waste, and carbon footprints also continue to rise.
Ecological factors that gambling brands should consider:
According to a report by Gambling Insider, CO2 emissions from the casino niche are increasing by 9% every year. This is affected by both the active digitalisation of the industry and the growth of the audience of online entertainment platforms and betting sites. Large data centres that serve the market also harm the environment.
Emissions produced by iGaming firms can be divided into 3 categories:
Gambling initiatives aimed at reducing carbon dioxide emissions:
Let us consider how top operators and software vendors introduce ecological standards:
They show how enterprises form their relationships with interested parties.
Examples of ESG standards in iGaming:
This step is an important and reasonable demand of any regulator. Operators can easily lose a licence if their activities violate the established rules.
Casino companies use the following effective mechanisms:
Entain is considered one of the leaders in the implementation of stable development principles.
In 2021, the corporation introduced the innovative ARC product. This is a virtual bot that works based on artificial intelligence and serves customers in real time.
ARC was created in collaboration with experts from Harvard Medical School. The solution takes into account the behavioural patterns of typical users and people with signs of ludomania and has 26 security markers, as well as an accuracy rating of 90%. The option is available to all Entain B2B partners in 22 jurisdictions.
The brand’s contribution to the entrenching of social sustainable development principles cannot be overestimated. The firm provided:
EveryMatrix is another online casino software vendor that is focused on stable growth. The firm makes regular donations to BeGambleAware, the leading British charity foundation dedicated to the fight against ludomania.
In 2015, the manufacturer launched the Teachstream program. This is an educational mission for needy children from Romania. The company’s goal is to provide access to quality learning in such fields as computer science, mathematics, and English.
In 2023, the brand opened its sixth centre with IT equipment, furniture, TVs, and many training courses.
In this case, we are talking about how successfully sustainable development issues are integrated into the enterprise’s activity.
It is essential for investors, shareholders, and regulators to know the following aspects:
IFC is a recognised expert whose opinions and recommendations are important to cross-border corporations, big holdings, and global FinTech companies.
In 2019, the enterprise released its Disclosure and Transparency Toolkit. Among other things, the document included ESG standards as well.
As soon as an online casino overcomes the first difficulties and reaches a stable level of ROI, sustainable development issues become a priority.
ESG principles affect many aspects of the quality of iGaming platform’s management:
From January 1, 2024, the EU Corporate Sustainability Reporting Disclosure Requirements will come into force. The concept is going to become a key part of the management of all listed businesses, including the gambling and lottery segments.
The CSRD requirements will apply to all large companies that meet at least 2 of the following criteria:
European operators will have to comply with ESG standards as well. The main emphasis is going to be placed on measures to combat corruption, money laundering, and terrorist financing.
The Malta Gaming Authority is the first regulator to publicly speak out about the need to introduce ESG into the gambling sector.
At the beginning of 2023, the local Commission announced the beginning of work on a voluntary ESG Code of Good Practice. The initiative, submitted for discussion in July 2023, is an excellent opportunity for entrepreneurs to strengthen their public image.
Carl Brincat, CEO of the regulatory body, noted:
MGA always strives to be at the forefront of legislative innovation and progress. We work to control and develop the industry, as well as to create a space where business owners can grow and improve. Our ESG code reflects a strong commitment to this approach.
Attention to such issues is one of the key trends in the modern casino market.
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