IGB: What effect will the US macroeconomy have on igaming in 2025?

発行日 15 December 2024

The Impact of US Macroeconomy on iGaming in 2025

As US macroeconomic indicators shift, the iGaming sector is poised for significant changes. Ben Robinson, founder of Corfai Capital, highlights the potential for rising company valuations and increased private equity activity, driven by more accessible capital.

Effects of the Fed’s Dovish Policies

The US Federal Reserve has recently cut interest rates to a range of 4.5%-4.75%, marking a cumulative reduction of 0.75%. This dovish monetary stance lowers borrowing costs, benefiting capital-intensive industries like regulated iGaming. In public markets, gaming companies may see valuation growth as investors are drawn to high-growth opportunities. Private equity firms, in turn, are likely to increase M&A activities, leveraging the liquidity-rich environment to acquire or divest gaming assets.

Money Supply and Debt Concerns

The M2 money supply has dropped by $500 billion but is expected to rebound with further rate cuts, bringing liquidity back into the system. While this could create favorable lending conditions for startups and scaleups in iGaming, the $35.9 trillion national debt and its servicing costs raise concerns about inflationary pressures and dollar strength. Such dynamics could impact market stability and long-term investor confidence.

Regulatory Trends and Market Dynamics

Key markets like Brazil and the US continue to evolve regulatory frameworks, with Brazil’s liberalization efforts and the post-PASPA US expansion attracting significant investments. However, overregulated jurisdictions are seeing a rise in sweepstakes and crypto gaming operators, presenting growth opportunities for private investors while posing challenges for regulators.

Outlook and Hypotheses

Looking ahead to 2025, several opportunities emerge for the iGaming sector:

1️⃣ Capital Inflows and Valuation Growth:
Lower rates and increased liquidity signal a potential influx of investment into high-growth assets, driving up valuations.

2️⃣ Inflation Risks and Policy Adjustments:
Should dovish policies lead to inflation, the Fed may pivot to hawkish measures, dampening enthusiasm in leveraged industries like iGaming.

3️⃣ Expansion of Unregulated Markets:
Unlicensed operators will likely continue to flourish, particularly in overregulated regions where they offer more competitive alternatives.

Despite macroeconomic risks, current liquidity and market trends suggest a promising short-to-medium-term outlook for the iGaming industry. Investors positioned in this space could find 2025 to be a pivotal year for returns.

News Reference: iGamingBusiness