In the last decade, investors have become increasingly more interested in Environment, Social and Governance (ESG), a set of criteria that represents the company’s operational activities and their impact on the environment, the people and how the company manages its business. However, ESG investing is extending in less conventional areas, such as the industry of online gambling.
The popularity of online gambling
A market that has seen exponential growth since the COVID-19 pandemic is that of online casinos. Based on a study by Grand View Research, the global industry of online gambling has been evaluated at USD 63.53 billion in 2022.
Although the industry has been criticized for encouraging gambling addiction, money laundering and social harm, it has been constantly growing. From 2023 to 2030, there has been an estimated annual growth of 11.5% of new players.
Online gambling and the ESG criteria
The evaluation of the industry through the ESG lens is a controversial and skeptical topic. From an environmental standpoint, the gambling industry does not have a huge impact, with the exception of the high energy consumption. The rising popularity of gambling using cryptocurrency could become an issue, hence the casinos adopting multiple sustainable practices.
The constant association with financial stress, mental health issues and addiction makes the ESG criteria regarding social responsibility more important as a topic of discussion. To combat these issues, online casinos have implemented various measures to prevent and promote responsible gambling such as self-exclusion methods, deposit limits and partnerships with mental health organizations according to Europa Libera Romania.
There are some companies that have implemented artificial intelligence as a tool to help the players under risk of addiction. By identifying the problematic behavior, the companies can intervene early and assist the player in combating a potential gambling addiction.
Is gambling a responsible investment?
The answer is difficult, based on complex criteria. Even if the gambling industry can be a very profitable one for investors, the reputational risk can increase. According to market data, Romania has over 100.000 gambling addicts, with these being only the official estimations. Therefore, even if the industry tried to have tools that encourage responsible gambling, the results are slow.
Any thoughts?