Online gambling is regularly described by insiders as the fastest growing industry on earth. As a sector in which players are not neatly tied to one geographical location or regulatory framework, that claim is not immediately provable. Precise figures for the overall industry are necessarily somewhat vague since not all online gambling is strictly accountable in the conventional sense. However, where figures are available they make the dramatic reading.
The highly regarded Statista predicts the global online gambling market to be set for a 30% expansion over the three years leading up to 2015. Statista estimated the global market worth 22 billion euros in 2012 and predicted its increase to 28 billion euros with that three-year span. Setting those figures in a broader historical perspective, Statista shows the level of activity from 2003 at just 6.62 million euros. Growth in the sector has been sustained year on year and is expected to rise further beyond 2015*.
The online gambling market is comprised of the categories sports betting, online casino, poker and bingo, with the bulk of activity deriving from sport-betting which comprised over half (53%) of all online gambling activity. Casino gaming accounted the second-largest proportion of gambling activity with 25.4 percent of the total whilst. Poker and bingo comprise 14.2 and 7.4 percent of the market respectively.
Whilst online gambling is expanding there is a general anticipation that the overall gambling market, which includes the enormous revenues enjoyed by bricks and mortar casino operators worldwide, is set to see a deceleration in overall growth. Saturation in the marketplace combined with external geopolitical factors is seen as the primary reason for this.
What is happening online is provoking a recalibration of the overall industry, with many casual gamers switching their activity from bricks and mortar gambling to an online platform. For example, a recent report predicted an increase of 100 million in people online gambling in the period leading up to 2018. In contrast, Macau’s Gaming Inspection Co-ordination Bureau reported earlier this year that the resort’s revenues had fallen 3.75% year on year this June and the figure recorded for September is being predicted as a reduction of between 12% and 13%.
Macau’s proximity to China represents a local and highly specific set of circumstances. However, such has been the effect of the Chinese economic surge that what happens there inevitably resonates on a worldwide scale. What is happening in Macau is merely a concentrated reflection of a wider global pattern. As China’s growth slows, and as the authorities there appear set to tighten their crackdown on corruption, the flow of money from China is expected to slow.
The focus here on the Far East is significant because this has been an area identified in numerous reports as representing an opportunity for expansion. In contrast to the market saturation that is being predicted in areas that have an established history and culture of regulated gambling, the emergence of new markets in places such as India and the Chinese periphery represent virgin territory, ripe for exploitation. But as China’s growth is reigned in, that is bound to have an impact on those calculations.
Established industry players such as bet365, 32Red, 888.com and William Hill have been aggressively targeting these potential online markets. These well-resourced competitors have been committing extensive resources to brand-building marketing campaigns designed to establish an early foothold in these developing marketplaces. In the early phase of this wave of activity great dividends were anticipated, although expectations are being downgraded somewhat. However, this is not to say that the strategy or the allocation of resources has been misplaced, merely that the enormous growth potential in this part of the world is simply less spectacular than some may have hoped.
At the same time, the picture in the rest of the world is not without its points of encouragement. The US market, for example, has begun to be opened up, with online gaming recently being legitimated in New Jersey as well as Nevada and Delaware. It has been reported that a further ten states are contemplating similar moves to open up their territories. Those states are California, Colorado, Hawaii, Illinois, Iowa, Louisiana, Massachusetts, Mississippi, New Jersey and Pennsylvania. At the same time, there are moves to bring online gaming into the regulatory fold in South Africa, and there is a bill before the Japanese parliament to make casino gambling legal there for the first time.
There is little doubt that there remains considerable potential for growth within the gambling sector. There is still sufficient uncertainty as to how – and where – might be the best places to exploit that potential. But with cash-strapped legislators increasingly sensitive to the tax revenues that gambling can generate, it does appear that online gambling is well placed to continue its remarkable growth for some time to come.
* The figures described here represent a measure of ‘Gross Win’ which is calculated as the accumulation of all stakes/wagers placed, less prizes and payouts (but including bonuses – such as loyalty incentives).