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SOCIAL RESPONSIBILITY
with one major gaming operator that reckons they pay as much as 4 % more for debt than businesses in other sectors . If companies could endeavour to rectify this the benefits would be stratospheric .
THE IMPACT FOR INVESTORS
It ’ s also important to focus on the benefits for investors . Asset allocators are chasing returns and many want to be able to put capital to work in the regulated gaming sector and are looking for a basis to do so . The regulated gaming sector needs to provide the reasons for investors to act in this way .
A deep dive into sector-specific data for the regulated gaming sector is critical for investors to fully understand the whole picture . In our view , companies all have specific key risks that affect the sector they are involved in .
The gaming industry has a tremendous opportunity to achieve beneficial impact if it is prepared to report consistently and be more transparent in its reporting .
THE STANDARDISATION CHALLENGE
It ’ s a noble goal , but it ’ s a big ask . Our data shows a chaotic picture whether looking on a qualitative or quantitative basis . An area that comes to mind is the measurement around what is likely the most risky area , responsible gambling , which can be opaque in reporting terms . We often see little detail compared to the narrative provided by a company .
Inconsistent methodology surrounding KPIs and lack of measurement on an ongoing basis clearly does not place the gaming industry in a space where some investors feel comfortable . But this does not have to be the case .
Furthermore , in the case of gambling , sustainability and ESG has a wider risk context than many sectors . Responsible
“ In the case of gambling , ESG has a wider risk context than many sectors ”
gambling actions are at the forefront of this , and investors , institutions and others struggle to fully understand the actions of a company .
Still the industry does much good work although a key shortcoming is an inability to share and report on a consistent basis .
Many of the larger gaming companies are customers of one or more ratings agencies which do their best . However , the biggest issue we have heard from investors is a lack of industry-specific data and a lack of confidence in the data itself , full stop .
The elephant in the room is selfreporting of data by companies to the traditional ratings agencies . Many investors just don ’ t believe the numbers .
Simply put , in terms of standardisation , there is no standard in sustainability reporting for regulated gaming today .
A NEW BENCHMARK FOR ESG REPORTING IN GAMBLING
Yet standardisation is eminently possible . The data is there . Our FiNTEL Sustain platform considers over 170 different factors spanning financial performance and operations metrics as well as typical ESG metrics and including deep-dive data specific to the regulated gaming market . Eleven subsector scores provide a key analysis of how companies perform .
This is all gleaned from publicly available data and using AI rather than self-reporting .
The breadth of factors enables the ability for companies to understand where they stand relative to their peers and what they need to do in order to reap the financial benefits of solid sustainability performance . Furthermore , FiNTEL Sustain allows for the comparison of companies in all segments of the gaming sector , and indeed facilitates the comparison between regulated gaming and myriad other industries .
The one area that always comes to mind in ESG is climate and it seems to have been the most important factor at play in the politicisation of sustainability , such as in the United States . However , climate is only a small component of the metrics considered .
A good way to think about sustainability reporting is to consider it to be a measure of the overall efficacy of management , strategy and execution taking into account short , medium and long-term considerations .
In the case of gaming , materiality tends to focus on regulatory intervention . This may be in the form of fines , changes in legislation or guidance , or possibly legacy findings in a period after M & A activity . In terms of M & A , much of the consequential regulatory
68 • ISSUE 136 • iGB L ! VE 2024