In this segment, the principles of green management play an extremely important role. Top providers are striving to implement ESG principles, demonstrating stable growth and becoming more attractive to investors.
Experts of the Casino Market studio will tell you about the main environmental initiatives in land-based and digital locations that offer entertainment for money.
ESG As a New Benchmark for Business
The concept was introduced by Kofi Annan, former UN Secretary-General. His directive became a response to dramatic climate changes. Over time, the list of standards has been significantly expanded.
The abbreviation ESG stands for:
- Environmental (care for nature);
- Social (protection of consumer rights);
- Governance (effective corporate administration).
The introduction of sustainable development principles is still considered a recommendation. At the same time, any initiatives of entrepreneurs are fully supported by the authorities. They provide businesses with tax breaks and holidays, as well as access to cheap loan grants.
Individuals also benefit if they invest in ESG. A 50% discount on the installation of solar panels in private households for all EU residents is a perfect example.
Many countries are working on the smooth implementation of such standards, so within 10 years, these rules will become mandatory in most sectors of the economy. This fact can be confirmed by the Paris Climate Agreement of 2015.
The UN Framework Convention plans to gradually lower greenhouse gas emissions. Each state that has signed the agreement has its deadlines and levels of CO2 reduction.
At first glance, it may seem that concern for the environment has little to do with gambling. Climate changes mostly affect other industries, such as construction, airlines, mining, and chemicals. However, everything is not so simple.
Environmental Challenges in the Casino and Sportsbook Niche
Like other areas of the economy, the sphere is closely related to energy conservation.
As players immerse themselves in virtual worlds, software vendors can:
- expand the frontiers of technology;
- increase power consumption;
- enhance the levels of e-waste and hydrocarbons.
Even if we are talking about online casinos or bookmakers’ offices, such platforms still use offline data centres. The amount of energy they consume and the volume of greenhouse gases are constantly growing.
According to the BBC, digital gambling increases pollution and produces 3.7% of global CO2 emissions. For comparison, waste in the aviation sector is 4.8% of carbon dioxide.
Professors from Lancaster University (UK) predict that by 2030, air pollution of this type caused by casino platforms on the Internet will increase by 30%. Experts from Gambling Insider share the same opinion. The report published by the company states that every year, the volume of CO2 in the niche grows by 9%.
The iGaming field, more than other sectors of the economy, is focused on the development of cloud technologies. These are remote data storage and information transmission systems that leave a huge digital footprint. Maintenance of cloud solutions requires enormous amounts of energy, which also harms the environment.
The construction of land-based locations often leads to deforestation, air pollution, degradation of biodiversity, etc. Casinos consume significant amounts of energy and water, further increasing carbon dioxide emissions.
Why Entrepreneurs Need to Implement ESG
Let us consider the benefits of introducing sustainability principles.
Improvement of the Image
In 2021, the UN conducted a large-scale study, Playing for the Planet. It involved 50 leading brands and 400,000 punters from different countries. These are fans of multi-user video solutions and traditional betting options.
According to the research:
- 68% of respondents said they want to be more involved in environmental issues;
- 70% of users were open to climate-related entertainment content;
- 87% of enterprises wish to support further action to protect nature.
The UN survey confirms the readiness of all industry representatives (operators, players, and B2B partners) to implement sustainable development standards. Moreover, firms that already adhere to such principles cause great trust and inspire confidence among the audience. Such brands are ready to scale and promote their businesses.
Investment Attraction
In 2023, economists Stephen Myers and Robert Montgomery published a report on the impact of ESG rules on the gambling sector.
Experts say that at the beginning of last year, the market value of the 40 leading casino enterprises was $271.91 billion. The implementation of sustainable development initiatives, at least at a basic level, will increase the total income of companies by 2% or $5.44 billion equivalent.
Andrew Millington, head of British shares at Aberdeen Standard Investments, said:
ESG measures may attract investors who were previously ambivalent about the industry. We can see the rapid growth of the sector and how much firms are losing due to a lack of awareness.
The best strategy in 2024 is the gradual implementation of sustainability principles. Reorganisation of businesses with an emphasis on environmental protection will attract large capital to the niche, stimulate its growth, and give impetus to new startups.
In 2022, Moody's reputable agency included large casinos in the annual credit rating: Entain, 888 Holdings, and other corporations with a fresh perspective on ESG.
Risk Reduction
The right environmental policy makes firms:
- resistant to natural disasters and technical failures;
- open to innovation and modern IT solutions.
Companies become less dependent on the consumption of all important resources, due to which the expenditure budget is also reduced.
Environmental Initiatives
Land-based and digital enterprises have different impacts on climate change, so their ESG rules are also different.
Regardless of the kind of brand, they are required to disclose the following information:
- data on greenhouse gas emissions and targets for their decrease;
- energy administration policies;
- the impact of gaming operations on areas sensitive to biodiversity;
- methods of controlling the exposure to hazardous substances;
- water consumption data;
- waste management initiatives.
iGaming Sector
In the digital niche, ESG principles come down to 2 factors:
- Reduction of greenhouse gas emissions. In the casino sector, these are CO2 and fluorinated substances, which lead to global warming and climate change. The key objectives of gambling companies are to disclose information about current problems and their gradual resolution. Many providers are also switching to renewable energy sources, which also eliminate contamination of the Earth.
- Energy management. This includes the creation of effective programs and the promotion of “green” options. The use of virtual or cloud solutions instead of physical processing analogues reduces the load on data centres and makes the iGaming sector more eco-friendly.
Playtech is one of the leaders in the field of implementation of ESG initiatives. Since 2018, the provider has reduced greenhouse gas emissions by 39.6%. The manufacturer’s goal is to cut CO2 volumes by 40% by 2025. About 56.4% of the firm’s total energy consumption already comes from renewable sources.
The Kindred Group vendor has completely switched to alternative options. The reduction took place in all areas of activity, including gambling operations, the purchase of electricity, business travel, and the acquisition and transportation of IT equipment.
The enterprise’s initiatives have been recognised by several independent organisations:
- B rating by CDP (Carbon Disclosure Project). It is a charitable foundation that runs the world's leading platform for disclosing information on the climate.
- AAA rating from MSCI. The Morgan Stanley Capital International investment highly appreciated Kindred Group's activities in the ESG field.
The IGT Bulgarian casino software vendor is a member of the global Science Based Targets (SBTi) initiative. It identifies and promotes best practices aimed at reducing emissions and achieving zero indicators.
For its active ecological position, the brand was included in the prestigious S&P Global Ratings.
Land-Based Gambling Business
Offline establishments, locations with slot machines, and betting shops have high chances of becoming environmentally sustainable:
- Reduction of energy consumption. This is a reasonable approach to heating and cooling buildings (offices, casinos, and live studios) and the generation of renewable energy.
- Asset management. It includes the creation of green spaces (such as roofs), installation of photovoltaic panels and electric vehicle chargers/indoor LED lighting, as well as toning of window glass, and much more.
- Water consumption. This is the introduction of leakage detection systems, the integration of economy cycles, and the implementation of a recycling mechanism. Many companies are also investing in water-saving technologies and supporting relevant international initiatives.
- Procurement. This is the use of eco-friendly office equipment and furniture (tables, chairs, and bar counters), taking into account the life cycle of electronic products, and presentation of recommendations for the selection of fabrics for the clothes of croupiers etc.
- Waste management. It includes the launch of recycling programs, the introduction of comprehensive strategies, and the use of biodegradable materials.
- Certification. It is provided according to the ISO 50001:2018 standard and defines the requirements for the creation, implementation, support, and improvement of an energy-controlling system. Gambling firms can check the property based on the BREEAM.
Boyd Interactive, a well-known US casino operator, has reduced energy consumption by 31% in just 3 years. The company's investments are aimed at offering safe jobs, as well as lowering water consumption.
La Francaise des Jeux (FDJ), the French national lottery, is committed to biodiversity conservation and more effective waste management. All furniture installed in its gambling halls has the FSC (Forest Stewardship Council) quality mark. The provider's activities have been recognised by the Moody's ESG Solutions international agency.
In 2022, Playtech completed the reconstruction of its live studio in Lithuania. The building’s facade was completely covered with a special sun protection film. The goal of the changes is to reduce indoor temperature.
Major land-based operators, such as Flutter Entertainment, Betsson Group, Entain, and many others, have joined SBTi's international initiatives. Their goal is to achieve climate neutrality and completely switch to green energy.
The Main Things about the ESG Policy in the Casino Niche
Such principles are a key objective and main focus of entertainment providers.
Their key characteristics are the following:
- Such rules are associated with the reduction of the consumption of all important resources and greenhouse gas emissions. Enterprises are trying to effectively manage waste, lower water consumption, and much more.
- The implementation of an ESG strategy has a positive effect on the image and reputation of companies, making them attractive to investors and B2B partners. Adherence to the relevant principles eliminates operational risks and increases tolerance to climate change and technical failures.
The Casino Market studio is your reliable business assistant in the gambling market. We implement tasks of any complexity level and offer the following services:
- business plan writing;
- assistance in obtaining a licence;
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- promotion of iGaming projects, and much more.
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