This is a guest contribution by Giorgi Mikhelidze. If you would like to submit a contribution please contact Bill Beatty for submission details. Thank you.
When thinking about gambling markets, Australia might not be the first place that comes to mind. It’s easy to think about Las Vegas, Malta, or even Macau when the word gambling comes to mind, but Sydney? Probably only Australians themselves think about this city during a gambling discussion.
But, as it turns out, the Australian gambling market has been quiet for the last couple of years in the region but has been suffering big hits to its revenues at the end of the 2010s.
All of this begs the question. Is Australia still a viable market for operators? Can profit still be made here? Let’s find out.
Can you succeed when the government is against you?
It’s safe to say that the government is not looking at Australian gambling operators as a source of revenue. In fact, most countries view their gambling locations as assets and not as liabilities. But due to the fact that Australians tend to be the demographic with the biggest losses in gambling, the government can’t simply ignore the operators and let them do as they please.
Therefore, serious restrictions have been plaguing the companies for over a decade now, but somehow, they have managed to squeeze through all of the pressure. But, despite all of the tenacity shown in recent years, gambling revenue has been decreasing slowly. Due to the ban on advertising gambling platforms and furthermore, banning online gambling operators to cater to Australian customers, more and more companies have started crossing the “loss line.”
Facts tell the truth
The recent survey conducted by Roy Morgan Research unearthed a terrible reality for all Australian gambling operators. The younger population of the country is slowly losing interest in gambling. To be more exact, about 25% of the 25-35 age demographic mentioned having visited a gambling website in the last three months, which is a huge drop from last year’s 50%.
As you can see, the restrictions of mass media advertisements have diverted the Aussies’ attention from gambling to a more conventional form of entertainment, which is the primary reason for such massive drops.
Australians are finding better entertainment platforms
The Australian market is quite large, which means that there is more competition for tapping into it. Many people believe that gambling operators should focus on competing with other operators, when in fact the competition range is much higher.
You see, gambling is usually done by participants when they have larger spending power. Meaning that gambling should have a bigger priority than other means of spending their income. Unfortunately, due to advertisements and large scale marketing campaigns being out of the question, the gambling operators are restricted to using Google and various blogs for promotion.
Young Australians prefer video games
The total amount of funds being spent on Video games by Australians per annum is more than $3 billion. Although this doesn’t beat the huge $18 billion annual spending on gambling, it still tells a story about Australia’s future for the entertainment market.
The $18 billion being spent on gambling per year can be accounted for only a small percentage of gamblers. In fact, seeing how Australian’s tend to lose nearly $1,000 per person on average, it would take 18 million people to cover the costs. But due to the fact that this number is more than half of the population, it’s safe to say that only a small percentage accounts for this much spending.
Nevertheless, the $3 billion being generated in a different entertainment market, which targets the future customer base of gambling operators is alarming.
The overall economic situation in Australia
Gambling operators rely on their customers to have good spending power. Therefore they are more tied to the local economy than they may imagine. Seeing how Australia has been relatively stable in terms of growth it should dictate future growth for gambling operators as well right? Well, not exactly.
The economic growth of a country does not mean the economic growth of its population. It’s basically like putting a billionaire and 9 average people in a room and saying that the average net worth is a couple million.
Although the economy has been growing steadily, about 2.5% annually, the AUD has been on a decline ever since 2014. Unfortunately, wages have not caught up with the inflation, therefore leaving many middle-class Aussies with smaller purchasing power. Therefore, we can confidently say that most of the monthly expenses are directed towards essentials such as rent, utilities and food, rather than using them for gambling.
Let’s not intertwine all of the issues that the Australian gambling market is facing. First of all, we have strict regulations that prevent online gambling operations unless significant funds are directed towards acquiring a license. This is not something every company can achieve. Due to alternative entertainment methods being developed, such as gambling natured video games and only generating blockchain games, gambling is becoming less and less popular with the younger generation.
The operators can still rely on their older customers to stay afloat, but profits can be cut more than a half in just 1 generation, the long-term looks bleak.
The purchasing power of the new generation is under question as well, due to the declining currency and a slowly growing economy. The overall GDP per capita may be on the rise, but that doesn’t mean that income is parallel to the inflation indicator. If the situation is to remain as it is, even the older generation will have trouble utilizing the gambling industry due to surmounting costs on daily necessities.
In conclusion, unless serious changes are made in the regulatory framework, which will allow high budget marketing campaigns to recuperate lost customers, the gambling operators in Australia will either have to shrink their operations or leave the country completely.
About the author:
Giorgi Mikhelidze is a Georgian Copywriter, programmer and marketing enthusiast. He also follows a lot of the development in the financial as well as the gambling sector. His insight helps him craft educational articles for all of his readers to enjoy.