As we move from the noughties and into the decade that currently has no need for a nickname, it’s sure to be an exciting time for the entire gambling industry – whether it be land-based or on the interweb. This hasn’t escaped the attention of many a financial analyst and it’s little surprise the world of global professional services have climbed aboard the rather full bandwagon.
PricewaterhouseCoopers (PwC) today released a report into this entitled “Playing to Win: The outlook for the global casino and online gaming market to 2014” that looks at the industry as a whole and where it can expect to be in four years time.
In terms of land-based gambling it draws the widely thought conclusion that the sector is heading to the Far East, and that sector will have almost overtaken the American market by the time we reach 2014. It’s the online gaming sector we’re most worried about though as, remember, without it how are we going to make up a good enough excuse to be constantly partying?
Introducing the topic, PwC identifies the fact that there’s no such thing as a coherent market structure in the industry as a whole, and that it’s an unsustainable model. Although, it does say that change is inevitable and already underway, driven by four key factors.
The first key driver is cross-border liquidity, as the “walled gardens” that exist will come under increasing pressure in Europe when smaller countries start to regulate online gaming. The key issue here is that the smaller nations will struggle to gain enough players therefore dooming the “walled garden” approach in favour of cross-border flows of liquidity.
Taxation levels are identified as another of the four key drivers and as we know, it’s one of the main attractions to governments looking at regulation. The report does warn that countries need to be aware of the balance between tax take and market growth. France is used as an example not to follow as it’s contributed to disappointing levels of profitability, a view echoed recently by some of those inside the French market.
The penultimate key driver will be different online gaming disciplines, as varying attitudes to various forms will shape the regulation and growth of diverse types in different markets. An example of this would be poker and its history as a skill game in the US therefore making it a more acceptable form of gambling. On this basis, PwC believes that poker will operate on an interstate basis in the next 2-3 years. In contrast, table games will have little chance, due to the lack of skill involved, and sport betting won’t get off the ground due to concerns from bodies such as the NFL.
Social networking is the fourth key driver, and as was seen with the virtual casinos in Second Life pre-2007, there is already a lucrative alignment between social networking and online gaming. Its role is significant because of the usage of social networking on mobile devices, and skill based games are likely to be most popular. An example of this is the Zynga free play poker available on Facebook.
PwC’s report later goes on to look at where each geographical area will be in 2014, starting with the United States. It’s expected Federal legalization of interstate poker games in 2012-13 will serve to legitimize the online gaming market in general, and act as a catalyst for development in other online gaming disciplines, such as online betting on horses.
Growth from these trends will result in a blend of new onshore and offshore providers entering the market, including the US’s major “bricks-and-mortar” casino operators who are already readying plans to enter the market. Collaborative partnerships between social networks and gaming brands will emerge, and lotteries will continue to expand their reach.
The Europe, Middle East, and African (EMEA) market will be led by Western Europe and South Africa. Cultural factors will restrict growth in the Middle East, whereas concerns over organised crime will stunt it in Central and Eastern Europe. Smaller countries will continue to push for bilateral cross-border agreements, but games of chance will be largely unlicensed and excluded from regulatory regimes. As with the present, sports betting will remain increasingly prevalent.
Gaming in Asia and the Pacific is illegal in virtually all but Australia and Philippines meaning widespread development of legal and licensed services is some way off. The illegal market is buoyant, however, and governments are more focused on enforcing existing regulations rather than creating new ones. The legal market is likely to be still limited to the aforementioned countries, and a handful of state-level “walled garden” markets in India.
Latin America is a sector that is still likely to be at an embryonic stage in 2014, led by Chile and Argentina. In a number of countries, the restrictions on growth imposed by national regulation will be compounded by low – but growing – penetration of fixed and mobile broadband.
Finally, yet importantly Canada, who are somewhat ahead of the US when it comes to joining up state-level “walled garden” regulations into a coherent national regime. It’s thought that Canada will be a test bed for future US offerings and may see some “brick-and-mortar” casinos from the US entering the market.
In conclusion, the report sees a gradual increase in the online gambling market but that it will still but at an early stage worldwide when we reach the year 2014. This is of course unless the apocalypse happens and the planet turns into goo. If that were to happen, at least we can say that we all partook in quite the cauldron full of gamblin’ drinkin’ and carryin’ on!
All link to the full report can be found here.