The news at the end of October that the UK tops the table in terms of the best country in Europe in which to get a business off the ground will likely come as no surprise to anyone involved in the start-up culture within online gambling.
The report from the Legaturn Institute, a London-based think-tank, showed that the low-cost environment for new businesses alongside a generally favourable attitude towards entrepreneurs put the UK ahead of the rest of the EU when it came to fostering an encouraging culture for start-ups. The report noted that at a mere £66 it was cheaper to launch a business in the UK than anywhere else in the world.
The advantages of the UK as a base for a new business are multiplied if that new venture happens to be involved in the online gambling industry. The UK remains one of the foremost hubs for online gambling, partly due to its regulatory position as one of the most open jurisdictions in Europe regardless of the more recent moves to onshore online gambling licensing. Some of the very biggest of the world’s online gambling operators have effectively grown from nothing to become sector heavyweights, including bet365 and Betfair from bases in the UK.
The importance of a country or a city gaining a reputation as being central to a culture of entrepreneurship can’t be overstated. In the gambling industry as with other sectors, the UK is an example of how an existing start-up culture can act as a centrifugal force for talent and ideas from elsewhere.
This is most obviously the case in London with the tech and web-based businesses that are clustered around the ‘Silicon roundabout’ in Shoreditch and surrounds. One company in the gambling sector which has publicly recognised the area’s reputation for innovation is William Hill which set up an office there in December 2013.
At the time of the move the company was keen to point out that it viewed Shoreditch as a “centre of excellence” and that it the new office would “have an emphasis on innovation and developing (the) growing stable of mobile products”.
A year later, when William Hill was announced as one of the headline sponsors of the Digital Shoreditch series of showcases and workshops, William Hill hammered home the benefits of being in one of the world’s leading tech centres, with Crispin Nieboer, director of corporate development and innovation, saying it had already benefitted from “harnessing the rich local environment for technical talent”.
As we know now, the company has taken the hub idea even further with its WH Labs accelerator programme, which is again premised on using the Shoreditch office as the launching point for start-ups with new ideas aimed at the gambling space. But the company is also utilising one of the other hubs for tech – and gambling tech – innovation, in Tel Aviv.
In fact, of the five companies chosen final list of participants in the project two - Skillzzgaming and Winkapp – are based in Israel. William Hill is running its accelerator programme alongside start-up and tech investment fund L Marks and chairman Stuart Marks said at the time of the announcement of the finalists: “Israel and the UK are renowned for their start-up communities and, after a rigorous selection process, we have no doubt that all of the five finalists have the potential to be worthy winners at the end of the programme.”
Skillzzgaming also took part in the recent EiG Launchpad competition and speaking to Gamcrowd founders Eran Sharar and Dadi Neeman said there was something about the culture of the city that threw up innovative start-ups.
“I feel that in general people like to come up with new ideas,” said Sharar. “To take responsibility for what they do. I worked for Playtech, Gala Coral and also Microsoft. You can find this spirit inside companies, people taking responsibility for what they do and being a start-up within organisations. But there is a very supportive culture for starting-up companies in Tel Aviv, there are spaces we can work in, there are a lot of mentors. And specifically there are a lot of gambling industry veterans in Israel.”
Although as Neeman says, “funding is very hard to get anywhere”, he added that he felt that in Tel Aviv “there is more openness to hear new ideas and be part of a start-up”.
There are industry-specific reasons why Tel Aviv has become a hub for online gaming, driven largely by the success of some very high-profile companies including Palytech, but other centres of excellence have grown up around the offshore jurisdictional hubs of Malta, the Isle of Man, Gibraltar and further afield.
Simon Collins, founder and direct at Gaming Realms and previously the founder of Cashcade made the point at a recent conference that if operators were looking at how they might get a foothold in the Scandinavian market would do well to head to Malta, and not particularly Stockholm or Copenhagen to find the talent.
“You need to go to Malta to meet the Scandinavians,” he told GamCrowd News. “We really lack an understanding of that marketplace, the Swedish marketplace, and we put that down to the fact that we don’t have that local knowledge and understanding. I think that is something you can’t get away from; you either need to find the right partner and invest alongside them or invest in them, to create the opportunity.”
Back in Shoreditch, London, Tech City UK is the official non-profit organisation designed to attempt to harness and improve upon the innovative clustering taking place in the city. Its aims make the case for encouraging hubs in any location, providing “appropriate, insightful and timely support to digital entrepreneurs” with the goal of creating the ideal conditions to encourage enterprises and the “accelerate the progress of the UK’s digital entrepreneurs”.
However, before we get carried away with the thought that east London is a land of start-up milk and honey, recent figures from accountancy firm UHY Hacker Young show that the reality of higher rents is having a dampening effect on the ability of newer companies to congregate around each other.
The survey found that the number of start-ups setting up in the Silicon Roundabout area has fallen by more than a third in the last year from 15,620 to 10,280 as companies are priced out of the area by rising rents. It is one of the main locations for digital and technology companies in the UK, but rising rents and a lack of available office space are forcing firms to set up in cheaper neighbourhoods nearby.
Colin Jones, partner at UHY Hacker Young, said: “Silicon Roundabout has almost become a victim of its own success. By attracting larger firms into the area, rents increase, available space decreases, and the smaller start-ups that were initially attracted to the area are forced out into neighbouring areas. That is exactly why we have seen the tech start-ups heading away from Old Street to the City Road area.”
The success of London’s tech hubs proves two things – that start-ups tend to flock together, but also that such conglomerations also attract the money that is interested in innovations and new business ideas.