The Future of Digital Gambling: The impact of regulation, the rise of online services and the evolving competitive environment
NEW YORK, July 7 /PRNewswire/ -- Reportlinker.com announces that a new market research report is available in its catalogue:
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?
Companies mentioned
888 Holdings , Bet365 , Betfair , Bwin , Full Tilt Poker , Ladbrokes , Mangas Gaming , Paddy Power , PartyGaming , PokerStars , Sportingbet , Unibet , William Hill
Table of Contents
The Future of Digital Gambling
Executive summary 10
Market context: an uncertain future 10
Competitor strategies: the rise of online services 11
Leading players: strategic overview 12
The future of digital gambling 13
Chapter 1 Introduction 16
Introduction 16
Who is this report for? 16
Definitions 17
Digital gambling 17
Gross gaming revenue 17
UIGEA 17
Convergence 17
Digital pay-TV (DTV) 17
Internet Protocol TV (IPTV) 17
Online gambling 18
Social networking 18
Chapter 2 Market context: an uncertain future 20
Summary 20
Introduction 21
Defining the digital gambling market 21
Digital gambling market drivers 25
Online services drive industry growth 26
Broadband market development drives online gambling opportunities 27
Higher speeds bring new opportunities 31
Online is the key area of focus for operators 32
Regulatory uncertainty restricts progress 33
Regulation and legislation provides significant challenges 33
UIGEA has had a profound impact 34
A regulated US online gambling market on the cards? 37
Intrastate online gambling services set to emerge 38
The European regulatory environment remains uncertain 41
Asia-Pacific will remain a challenging market for overseas operators 49
A more open and regulated sector will develop 50
Global economic conditions provide cause for concern 51
Problem gaming and match-fixing scandals remain major issues 53
Age verification requires greater focus 54
Chapter 3 Competitor strategies: the rise of online services 56
Summary 56
Introduction 57
Competition comes from multiple angles 57
Monopoly operators retain a strong position 57
The importance of scale 58
Mergers and acquisition activity gather pace 59
Customer acquisition and retention strategies remain pivotal 60
Promotion activities focus on building brand awareness 60
Customer retention is just as vital as attracting new users 63
Attracting new demographic groups should be a key focus 65
Online gambling service evolution 69
Betting industry developments 69
Live betting comes to the fore 70
Betting exchanges offer consumers more options than ever before 71
Events betting offers strong growth potential 75
European online poker operators struggle against US competitors 75
Cross-selling opportunities 76
A changing strategic focus? 76
Poker networks will continue to play a pivotal role 77
Beyond the online market 79
Mobile opportunities increase 79
Rising 3G penetration boosts demand for mobile applications 80
Device evolution boosts mobile content potential 83
Major hurdles remain 85
Digital TV services offer strong potential 86
Chapter 4 Leading players: strategic overview 90
Summary 90
Introduction 92
Bwin 93
Company overview 93
Recent developments 94
Portuguese ECJ setback could be a sign of things to come 94
Betting services remain a core area of focus 94
Acquisitions add greater poker expertise 95
Financial performance 95
Betfair 98
Company overview 98
Recent developments 99
Betting exchange debate continues to rage 99
Acquisitions offer new scope and potential 100
Financial performance 100
PartyGaming 102
Company overview 102
Recent developments 103
Settlement with US authorities wipes the slate clean 103
Cashcade acquisition offers a strong foundation for bingo success 103
B2B opportunities increase 103
Financial performance 104
William Hill 108
Company overview 108
Recent developments 109
Playtech deal significantly boosts online presence 109
Offshore move could save pounds Sterling10m per year 109
Financial performance 110
Sportingbet 112
Company overview 112
Recent developments 113
Optimism surrounding non-European operations 113
Football sponsorship builds brand awareness 113
Financial performance 114
Ladbrokes 116
Company overview 116
Recent developments 117
Offshore move brings financial benefits 117
New sportsbook brings enhanced functionality 117
Italian online service gathers pace 117
Financial performance 118
888 Holdings 121
Company overview 121
Recent developments 122
B2B activities provide strong potential 122
Acquisitions deliver a strong position in the fast-growing online bingo market 123
Financial performance 123
Unibet 126
Company overview 126
Recent developments 127
Acquisitions boost product coverage 127
Initial incursion into the B2B market 127
Financial performance 127
Paddy Power 130
Company overview 130
Recent developments 131
PMU partnership provides a strong B2B foundation 131
Australian investments broaden geographic reach 131
Financial performance 131
Significant privately-held operators 134
Bet365 134
Mangas Gaming 134
Chapter 5 The future of digital gambling 138
Summary 138
Introduction 139
Future digital gambling market trends 139
Regulatory obstacles will remain, with B2B services becoming paramount 139
Media firms will play an increasingly significant role 140
Innovative services needed to boost uptake 140
Mobile and digital TV services will be the next major growth area 142
Social networking offers potential 142
Online services drive gambling market growth 143
Asia offers strong growth potential 145
Digital services will generate 10% of overall gambling revenue by 2013 145
Europe will continue to lead the way in the online gambling arena 148
Betting will continue to account for the largest share of online revenues 150
US regulation could provide a $6.8bn boost to the online market 152
Index 156
List of Figures
Figure 2.1: Global consumer Internet subscribers (000s), 2007-2012 28
Figure 2.2: Consumer Internet subscribers by region (000s), 2008 29
Figure 2.3: Internet subscribers by region (000s), 2012 30
Figure 2.4: Share prices hit hard by UIGEA (% change since December 2005) 36
Figure 3.5: Football shirt sponsorships becomes a key marketing tool 62
Figure 3.6: Demographic comparison of gambling sites users: age 67
Figure 3.7: Demographic comparison of gambling sites users: gender 68
Figure 3.8: Share of online betting traffic referred by Oddschecker.com by provider (%), August 2009 – January 2010 73
Figure 3.9: 3G share of worldwide mobile phone subscriptions & revenues (%), 2005-2013 81
Figure 3.10: Worldwide mobile connections and revenues, 2007-2013 82
Figure 3.11: Smartphone shipments by region (000s), 2008-2014 83
Figure 4.12: Bwin revenue by sector (euro 000s), 2005-2008 96
Figure 4.13: Bwin revenues, regional share (%), 2005-2008 97
Figure 4.14: Betfair financials (pounds Sterling 000s), 2005-2009 101
Figure 4.15: PartyGaming revenue by sector ($m), 2005-2009 106
Figure 4.16: PartyGaming revenue sector share (%), 2005-2009 107
Figure 4.17: William Hill revenue by sector (pounds Sterling m), 2004-2009 111
Figure 4.18: Sportingbet revenue by sector (pounds Sterling m), 2007-2009 114
Figure 4.19: Sportingbet revenue regional share (%), 2007-2009 115
Figure 4.20: Ladbrokes net revenue by sector (pounds Sterling m), 2003-2009 119
Figure 4.21: Ladbrokes online revenue sector share (%), 2007-2009 120
Figure 4.22: 888 Holdings revenues by sector ($m), 2004-2009 124
Figure 4.23: 888 Holdings revenues, regional share (%), 2004-2008 125
Figure 4.24: Unibet revenue by sector (pounds Sterling m), 2005-2009 128
Figure 4.25: Unibet revenue regional share, 2005-2009 129
Figure 4.26: Paddy Power revenue by sector (euro m), 2004-2009 132
Figure 5.27: Worldwide gambling market by region ($bn), 2008-2013 144
Figure 5.28: Worldwide gambling market by sub-sector ($bn), 2008-2013 146
Figure 5.29: Worldwide digital gambling market by sub-sector ($bn), 2008-2013 147
Figure 5.30: Worldwide online gambling market by region ($bn), 2008-2013 149
Figure 5.31: Worldwide online gambling market by gambling type ($bn), 2008-2013 151
Figure 5.32: Worldwide digital gambling market ($bn), 2008-2013: the impact of potential future US market regulation 153
List of Tables
Table 2.1: Global consumer Internet subscribers (000s), 2007-2012 28
Table 2.2: Consumer Internet subscribers by region (000s), 2008 29
Table 2.3: Forecast consumer Internet subscribers by region (000s), 2012 31
Table 2.4: Share prices hit hard by UIGEA (% change since December 2005) 36
Table 3.5: Share of online betting traffic referred by Oddschecker.com by provider (%), August 2009 – January 2010 74
Table 3.6: 3G share of worldwide mobile phone subscriptions & revenues (%), 2004-13 81
Table 3.7: Worldwide mobile connections and revenues, 2007-2013 82
Table 3.8: Worldwide smartphone shipments by region (m), 2008-2014 84
Table 4.9: Leading digital gambling operators by revenue ($m) 92
Table 4.10: Bwin snapshot 93
Table 4.11: Bwin revenue by sector (euro 000s), 2005-2008 96
Table 4.12: Betfair snapshot 98
Table 4.13: Betfair financials (pounds Sterling 000s), 2005-2009 101
Table 4.14: PartyGaming snapshot 102
Table 4.15: PartyGaming revenue by sector ($m), 2005-2009 106
Table 4.16: William Hill snapshot 108
Table 4.17: William Hill revenue by sector (pounds Sterling m), 2004-2009 111
Table 4.18: Sportingbet snapshot 112
Table 4.19: Sportingbet revenue by sector (pounds Sterling m), 2007-2009 115
Table 4.20: Ladbrokes snapshot 116
Table 4.21: Ladbrokes revenue by sector, 2003-2009 119
Table 4.22: 888 Holdings snapshot 121
Table 4.23: 888 Holdings revenues by sector ($m), 2004-2009 124
Table 4.24: 888 Holdings revenues, regional share (%), 2004-2008 125
Table 4.25: Unibet snapshot 126
Table 4.26: Unibet revenue by sector (pounds Sterling m), 2005-2009 128
Table 4.27: Paddy Power snapshot 130
Table 4.28: Paddy Power revenue by sector (euro m), 2004-2009 132
Table 5.29: Worldwide gambling market by region ($bn), 2008-2013 144
Table 5.30: Worldwide gambling market by sub-sector ($bn), 2008-2013 146
Table 5.31: Worldwide digital gambling market by sub-sector ($bn), 2008-2013 148
Table 5.32: Worldwide online gambling market by region ($bn), 2008-2013 149
Table 5.33: Worldwide online gambling market by gambling type ($bn), 2008-2013 151
Table 5.34: Worldwide digital gambling market ($bn), 2008-2013: the impact of potential future US market regulation 153
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