The Future of Digital Gambling:The impact of regulation, the rise of online services and the evolving competitive environment
Business Insights
March 1, 2010 156 Pages - SKU: RET2637052
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The digital gambling market - encompassing online, mobile and digital TV-based services - continues to grow, accounting for an increasing proportion over overall gaming revenues. The current state of the global economy is placing significant pressure on gambling industry revenue potential, prompting many providers to deliver innovative services to boost both awareness and customer loyalty. Furthermore, strict regulation with regards to the provision of online services will continue to restrict market potential.
Competition is fierce across the industry, with operators investing heavily in their platforms to deliver compelling services to their consumers. With operational scale vital, M&A activity will be ongoing, while acquiring (and retaining) customers will continue to be the key strategic focus for most operators. In addition, operators will increasingly seek to exploit wider opportunities across the digital gambling space, including the development of mobile and digital gambling services.
This report examines developments across the rapidly evolving digital gambling sector. It underlines the challenges facing companies operating across this space, considers the potential opportunities available, provides market sizing and forecasting by sector and geography, and provides actionable insight with regards how to best approach this fast-changing market.
Key features of this report- Overview of the industry trends, technological evolution and changing business models that have driven development of the digital gambling market.
- Gambling market revenue forecasts to 2013 (including conditional pre- and post-UIGEA forecasts), covering the overall gambling market by region and product type, with breakdowns for online, mobile and digital TV services.
- Market projections for related communications and entertainment products and services including consumer broadband, mobile telephony and smartphone shipments.
- Identification of the key challenges facing the key participants targeting digital gambling opportunities, including actionable insight into how to best approach this rapidly evolving opportunity.
Scope of this report- Gain a comprehensive understanding of how market trends are impacting on the potential of digital gambling services, and the impact such developments will have on operator business models and strategies.
- Understand how the competitive environment is changing, specifically how regulatory issues continue to disrupt industry progress and market consolidation is on the cards.
- Quantify the digital gambling market opportunity, gaining an insight into the revenue potential of online, mobile and digital TV gambling services.
Key Market Issues- A combination of technological and societal developments have boosted the potential of the online gambling sector, with growth in this sector of the market now outstripping that of the overall (e.g. retail + digital) gambling market. Broadband proliferation has enabled the rollout of real-time gambling, seen by many across the gambling sector as one of the most significant sources of potential online revenue growth over the coming years.
- Regulation of the EU and US online gaming markets is seen as the key issue facing the industry; the laws governing online gambling will determine the future growth potential of the market more than any other factor. The regulatory framework within each jurisdiction is constantly evolving; while some countries have moved towards explicitly allowing legalized online gambling operations, others, have moved in the opposite direction.
- Despite continuing consumer demand for digital gambling services, the global economic slowdown is likely to have a negative impact on market growth over the next 2-3 years.
- Scale is essential in the online gambling sector, with larger firms able to provide both a broader range of services and higher prize funds to attract customers. A core aim of most major online operators is to build strong presence across all gambling verticals; betting, poker, casino and, increasingly, bingo. Acquiring expertise beyond areas of core competence is a key driver of M&A activity.
Key findings from this report- The introduction of UIGEA in 2006 was a hammer blow to the fortunes of the online gambling sector; an estimated $4 billion was wiped from online gambling share prices almost overnight, while major public online gambling firms were forced to abandon their US-facing operations.
- The US is under pressure from various angles to ease its anti-gambling stance. However, even if the US market becomes regulated, there are no clear indications with regards to whether overseas operators will be able to offer services.
- Many online gambling firms are placing particular attention in delivering services which appeal to women in order to exploit opportunities across the huge potential market.
- Live (or in-play) betting is the key growth driver for the sector, enabling punters to bet on events in real-time as they progress. To develop a more compelling live betting offering, operators are investing heavily in sports broadcast rights.
Key questions answered- What are the major trends shaping development of the digital gambling market?
- Which factors are likely to restrict the potential of digital gambling services and why?
- To what extent is regulation holding back market progress?
- Which operators are best placed to exploit emerging market opportunities?
- How will the market for digital gambling services evolve, and which future trends will impact on developments over the course of the next 2-3 years?
- How important will digital services be to the overall gambling revenue mix by 2013?
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- The Future of Digital Gambling
- Executive summary
- Market context: an uncertain future
- Competitor strategies: the rise of online services
- Leading players: strategic overview
- The future of digital gambling
- Chapter 1 Introduction
- Introduction
- Who is this report for?
- Definitions
- Digital gambling
- Gross gaming revenue
- UIGEA
- Convergence
- Digital pay-TV (DTV)
- Internet Protocol TV (IPTV)
- Online gambling
- Social networking
- Chapter 2 Market context: an uncertain future
- Summary
- Introduction
- Defining the digital gambling market
- Digital gambling market drivers
- Online services drive industry growth
- Broadband market development drives online gambling opportunities
- Higher speeds bring new opportunities
- Online is the key area of focus for operators
- Regulatory uncertainty restricts progress
- Regulation and legislation provides significant challenges
- UIGEA has had a profound impact
- A regulated US online gambling market on the cards?
- Intrastate online gambling services set to emerge
- The European regulatory environment remains uncertain
- Asia-Pacific will remain a challenging market for overseas operators
- A more open and regulated sector will develop
- Global economic conditions provide cause for concern
- Problem gaming and match-fixing scandals remain major issues
- Age verification requires greater focus
- Chapter 3 Competitor strategies: the rise of online services
- Summary
- Introduction
- Competition comes from multiple angles
- Monopoly operators retain a strong position
- The importance of scale
- Mergers and acquisition activity gather pace
- Customer acquisition and retention strategies remain pivotal
- Promotion activities focus on building brand awareness
- Customer retention is just as vital as attracting new users
- Attracting new demographic groups should be a key focus
- Online gambling service evolution
- Betting industry developments
- Live betting comes to the fore
- Betting exchanges offer consumers more options than ever before
- Events betting offers strong growth potential
- European online poker operators struggle against US competitors
- Cross-selling opportunities
- A changing strategic focus?
- Poker networks will continue to play a pivotal role
- Beyond the online market
- Mobile opportunities increase
- Rising 3G penetration boosts demand for mobile applications
- Device evolution boosts mobile content potential
- Major hurdles remain
- Digital TV services offer strong potential
- Chapter 4 Leading players: strategic overview
- Summary
- Introduction
- Bwin
- Company overview
- Recent developments
- Portuguese ECJ setback could be a sign of things to come
- Betting services remain a core area of focus
- Acquisitions add greater poker expertise
- Financial performance
- Betfair
- Company overview
- Recent developments
- Betting exchange debate continues to rage
- Acquisitions offer new scope and potential
- Financial performance
- PartyGaming
- Company overview
- Recent developments
- Settlement with US authorities wipes the slate clean
- Cashcade acquisition offers a strong foundation for bingo success
- B2B opportunities increase
- Financial performance
- William Hill
- Company overview
- Recent developments
- Playtech deal significantly boosts online presence
- Offshore move could save £10m per year
- Financial performance
- Sportingbet
- Company overview
- Recent developments
- Optimism surrounding non-European operations
- Football sponsorship builds brand awareness
- Financial performance
- Ladbrokes
- Company overview
- Recent developments
- Offshore move brings financial benefits
- New sportsbook brings enhanced functionality
- Italian online service gathers pace
- Financial performance
- 888 Holdings
- Company overview
- Recent developments
- B2B activities provide strong potential
- Acquisitions deliver a strong position in the fast-growing online bingo market
- Financial performance
- Unibet
- Company overview
- Recent developments
- Acquisitions boost product coverage
- Initial incursion into the B2B market
- Financial performance
- Paddy Power
- Company overview
- Recent developments
- PMU partnership provides a strong B2B foundation
- Australian investments broaden geographic reach
- Financial performance
- Significant privately-held operators
- Bet365
- Mangas Gaming
- Chapter 5 The future of digital gambling
- Summary
- Introduction
- Future digital gambling market trends
- Regulatory obstacles will remain, with B2B services becoming paramount
- Media firms will play an increasingly significant role
- Innovative services needed to boost uptake
- Mobile and digital TV services will be the next major growth area
- Social networking offers potential
- Online services drive gambling market growth
- Asia offers strong growth potential
- Digital services will generate 10% of overall gambling revenue by 2013
- Europe will continue to lead the way in the online gambling arena
- Betting will continue to account for the largest share of online revenues
- US regulation could provide a $6.8bn boost to the online market
- Index
- List of Figures
- Figure 2.1: Global consumer Internet subscribers (000s), 2007-2012
- Figure 2.2: Consumer Internet subscribers by region (000s), 2008
- Figure 2.3: Internet subscribers by region (000s), 2012
- Figure 2.4: Share prices hit hard by UIGEA (% change since December 2005)
- Figure 3.5: Football shirt sponsorships becomes a key marketing tool
- Figure 3.6: Demographic comparison of gambling sites users: age
- Figure 3.7: Demographic comparison of gambling sites users: gender
- Figure 3.8: Share of online betting traffic referred by Oddschecker.com by provider (%), August 2009 - January 2010
- Figure 3.9: 3G share of worldwide mobile phone subscriptions & revenues (%), 2005-2013
- Figure 3.10: Worldwide mobile connections and revenues, 2007-2013
- Figure 3.11: Smartphone shipments by region (000s), 2008-2014
- Figure 4.12: Bwin revenue by sector (€000s), 2005-2008
- Figure 4.13: Bwin revenues, regional share (%), 2005-2008
- Figure 4.14: Betfair financials (£000s), 2005-2009
- Figure 4.15: PartyGaming revenue by sector ($m), 2005-2009
- Figure 4.16: PartyGaming revenue sector share (%), 2005-2009
- Figure 4.17: William Hill revenue by sector (£m), 2004-2009
- Figure 4.18: Sportingbet revenue by sector (£m), 2007-2009
- Figure 4.19: Sportingbet revenue regional share (%), 2007-2009
- Figure 4.20: Ladbrokes net revenue by sector (£m), 2003-2009
- Figure 4.21: Ladbrokes online revenue sector share (%), 2007-2009
- Figure 4.22: 888 Holdings revenues by sector ($m), 2004-2009
- Figure 4.23: 888 Holdings revenues, regional share (%), 2004-2008
- Figure 4.24: Unibet revenue by sector (£m), 2005-2009
- Figure 4.25: Unibet revenue regional share, 2005-2009
- Figure 4.26: Paddy Power revenue by sector (€m), 2004-2009
- Figure 5.27: Worldwide gambling market by region ($bn), 2008-2013
- Figure 5.28: Worldwide gambling market by sub-sector ($bn), 2008-2013
- Figure 5.29: Worldwide digital gambling market by sub-sector ($bn), 2008-2013
- Figure 5.30: Worldwide online gambling market by region ($bn), 2008-2013
- Figure 5.31: Worldwide online gambling market by gambling type ($bn), 2008-2013
- Figure 5.32: Worldwide digital gambling market ($bn), 2008-2013: the impact of potential future US market regulation
- List of Tables
- Table 2.1: Global consumer Internet subscribers (000s), 2007-2012
- Table 2.2: Consumer Internet subscribers by region (000s), 2008
- Table 2.3: Forecast consumer Internet subscribers by region (000s), 2012
- Table 2.4: Share prices hit hard by UIGEA (% change since December 2005)
- Table 3.5: Share of online betting traffic referred by Oddschecker.com by provider (%), August 2009 - January 2010
- Table 3.6: 3G share of worldwide mobile phone subscriptions & revenues (%), 2004-13
- Table 3.7: Worldwide mobile connections and revenues, 2007-2013
- Table 3.8: Worldwide smartphone shipments by region (m), 2008-2014
- Table 4.9: Leading digital gambling operators by revenue ($m)
- Table 4.10: Bwin snapshot
- Table 4.11: Bwin revenue by sector (€000s), 2005-2008
- Table 4.12: Betfair snapshot
- Table 4.13: Betfair financials (£000s), 2005-2009
- Table 4.14: PartyGaming snapshot
- Table 4.15: PartyGaming revenue by sector ($m), 2005-2009
- Table 4.16: William Hill snapshot
- Table 4.17: William Hill revenue by sector (£m), 2004-2009
- Table 4.18: Sportingbet snapshot
- Table 4.19: Sportingbet revenue by sector (£m), 2007-2009
- Table 4.20: Ladbrokes snapshot
- Table 4.21: Ladbrokes revenue by sector, 2003-2009
- Table 4.22: 888 Holdings snapshot
- Table 4.23: 888 Holdings revenues by sector ($m), 2004-2009
- Table 4.24: 888 Holdings revenues, regional share (%), 2004-2008
- Table 4.25: Unibet snapshot
- Table 4.26: Unibet revenue by sector (£m), 2005-2009
- Table 4.27: Paddy Power snapshot
- Table 4.28: Paddy Power revenue by sector (€m), 2004-2009
- Table 5.29: Worldwide gambling market by region ($bn), 2008-2013
- Table 5.30: Worldwide gambling market by sub-sector ($bn), 2008-2013
- Table 5.31: Worldwide digital gambling market by sub-sector ($bn), 2008-2013
- Table 5.32: Worldwide online gambling market by region ($bn), 2008-2013
- Table 5.33: Worldwide online gambling market by gambling type ($bn), 2008-2013
- Table 5.34: Worldwide digital gambling market ($bn), 2008-2013: the impact of potential future US market regulation
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