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The casino and online gaming market to 2015...

The casino and online gaming market to 2015

Introduction: about this study 2
Executive summary: key trends 4
Part I: Casino gaming 6
Global overview 7
United States 8
EMEA 12
Asia Pacific 16
Latin America 20
Canada 22
Part II: Online gaming 24
The elephant in the room 25
Regulating within borders: an interim step 27
Emerging change drivers 34
The global market in 2015—region by region 36
Conclusion 38

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    Global gaming outlook Global gaming outlook Document Transcript

    • www.pwc.com/e&m Global Gaming OutlookThe casino and onlinegaming market to 2015
    • Use of data within this report Permission to cite This document is provided by PwC for general No part of this publication may be excerpted, guidance only and does not constitute the reproduced, stored in a retrieval system, or provision of legal advice, accounting services, distributed or transmitted in any form or by investment advice, or professional consulting any means—including electronic, mechanical, of any kind. The information provided herein photocopying, recording, or scanning—without should not be used as a substitute for the prior written permission of PwC. Requests consultation with professional tax, accounting, should be submitted in writing to Radhika legal, or other competent advisers. Before Nanda at radhika.nanda@uk.pwc.com outlining making any decision or taking any action, you the excerpts you wish to use along with a draft should consult a professional adviser who has copy of the full report that the excerpts will been provided with all pertinent facts relevant appear in. to your particular situation. The information is provided as is, with no assurance or guarantee of completeness, accuracy, or timeliness of the information and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.2 PwC
    • Contents Introduction: about this study 2 Executive summary: key trends 4 Part I: Casino gaming 6 Global overview 7 United States 8 EMEA 12 Asia Pacific 16 Latin America 20 Canada 22 Part II: Online gaming 24 The elephant in the room 25 Regulating within borders: an interim step 27 Emerging change drivers 34 The global market in 2015—region by region 36 Conclusion 38 Global Gaming Outlook 1
    • Introduction About this study Welcome to PwC’s second annual point- of-view study focused on current and future trends and revenue growth in the global casino gaming industry and the online gaming sector over the next five years. In publishing this report, we are reflecting the increasingly globalized nature of the casino gaming market, Caesar’s Palace, Las Vegas, US while also acknowledging the continuing local nature of gaming habits and regulation. How this point-of-view paper is structured The industry analysis in this paper is divided into two sections. The first part—which makes up the majority of the report—covers traditional physical casino gaming. This consists of betting activities conducted within “bricks -and-mortar” casinos, including land-based casinos, riverboats, dockside casinos, tribal casinos, racinos (slots at racetracks), and cruise ships. Spending totals represent gross gaming revenue, which is the house win, or the amount wagered minus the amount returned to players as winnings. Forecasts for gross gaming revenue take into account the key performance indicators and drivers for each region and marketplace. The second part covers online gaming activities in each region and the evolution of the respective markets. We close the section by describing our vision for each region in 2015.2 PwC
    • Taking the industry’s pulse accommodation and other leisure regulate and/or encourage growthFollowing the success of last year’s choices—are built in existing and new in gaming, and again, online gamingfirst edition of this research report on gaming centers around the world, in particular, within and across theirthe global casino gaming and online the investment required from the borders.gaming industries, we have decided companies behind these developments is often massive. An ever-richer mixto make it an annual contribution. Asa result, our second edition, branded To a large extent, casino gaming will While each new casino development always reflect a local or regionalthe Global Gaming Outlook, carries may generate new incremental atmosphere. Casinos in Macau, Lason the tradition of adding to industry revenues, there is inevitably a risk Vegas, Singapore or London’s Mayfairthinking, insight, and planning. of cannibalization of revenues from all have their own unique and widelyWhen we launched this publication existing casinos in the same city, differing environments and “feel”in 2010, we did so with two main country, or region. As a result, in that represent a key element of theirobjectives in mind. The first was this most dynamic of industries, appeal. The proposed major resortto present our perspectives on the there is always a danger that the development in markets such as Spainopportunities, challenges, and trends additional revenues generated by new and Japan could add still further tofacing participants in the casino developments or marketplaces may not this rich global mix. As online gaminggaming market worldwide, and to be big enough to justify the investment gains momentum, it will be interestinganalyze how these factors will play out involved. to see how much of a competitiveover the coming years. The second was impact it has on traditional casinos. Wider implicationsto underpin this industry analysis with Possibly, people who start playingrevenue forecasts for each segment Clearly, gaming has wider social and online may want to start playing in aand region of the global gaming economic implications. As Singapore physical environment, especially withmarket through the coming five has demonstrated during the past two poker—a trend witnessed by someyears, providing the reader with hard years, the profile and tourism revenues casinos in the UK.statistical data against which to plan generated by casino gaming can bringresponses to the trends highlighted in major benefits to cities and entire Our aim in this publication is to helpthis report. regions. This is why governments all stakeholders in the casino gaming are so keen to encourage and attract industry map out their future plans,As the information panel on the them. The potential for tax revenues wherever in the world they may beopposite page explains, our analysis is a further attraction—and this based or operating. Whether you areand statistical data on the global and consideration represents one of the an operator intending to enter a newregional casino gaming markets are main drivers behind the growing gaming jurisdiction and wanting tocontained in Section I of this report. In willingness of national and state understand its revenue potential; aSection II, we give our views on trends governments worldwide to legalize regulator in a newly formed gamingand future developments in the online and license online gaming operators. jurisdiction needing to evaluate theand mobile gaming markets. However, suitability of potential licensees; aowing to the legal and regulatory Yet the fact remains that in many manufacturer or supplier searchinguncertainties that surround these countries there are moral and for perspectives on short- and-longactivities in many countries across the legal concerns over casino gaming term growth opportunities; or anworld, this analysis does not include in general, and online gaming in online social network assessing thehistorical or projected data for online particular. These can often be blended future opportunities in online gaming,gaming revenues. with protectionist instincts and we hope that you find our Global lobbying on the part of the established Gaming Outlook both informative andReturns on investment operators in a particular marketplace, valuable.As in last year’s study, our financial combined with concerns over theforecasts in this publication focus difficulty of regulating operatorssolely on revenue. However, we based offshore. Tax structures are Marcel Fenezacknowledge the profound cost a further contentious issue in many Global Leader,implications of various industry jurisdictions. All these pros and cons Entertainment & Mediadevelopments. As new casino mean governments face many toughgaming facilities—often including choices when deciding whether toPart I: Casino gaming Playing to win 3
    • Executive Inevitably, the growth surge in Asia Pacific will ultimately level off, as the region’s market matures and summary capacity moves closer to demand. The big question is how many further territories will seek to create or expand Key trends their presence in the Asia Pacific casino gaming marketplace, with countries such as Japan, South Korea, Thailand, and Vietnam eyeing the potential boost to tax and tourist dollars demonstrated by Singapore’s success. Through its long history, casino The most evident of these challenges— On balance, our forecast is that the at least in markets other than Asia growth in Asian casino revenues will gaming has always been a unique Pacific—is the continuing global start to slow down from 2011-2012, source of entertainment for economic uncertainty, and the and by 2015 will have dropped to 7.9 its customers, and a focus for resulting subdued state of consumer percent—still higher than growth in government regulation spotlight. spending. While the 9.6 percent surge the US and EMEA. However, by 2015 As a highly discretionary element in total global spending on casino the Asia Pacific current growth surge gaming in 2010 appears at first sight will have fundamentally reshaped the of consumer spending, it is also to be a very buoyant performance landscape of the global industry, with exposed to changes in economic compared to most major industries, Asia Pacific then accounting for 43.4 confidence and conditions. this global rise masks a slump of 7.2 percent of total global revenues, ahead Today, all these long-standing percent in 2010 in EMEA (Europe, of the US at just over 40.1 percent (see attributes are reflected in a range Middle East, Africa), and of 2.9 information panel). of challenges and opportunities percent in Canada. Revenues in the Economic and regulatory US—currently the world’s largest facing both the industry’s casino market, but set to be overtaken challenges—but rising capacity established players and also by Asia Pacific in 2013—were virtually The rise of Asia Pacific will be those contemplating entering the flat in 2010, rising by just 0.2 percent, emphasized by the continuing market. the first increase since 2007. challenges elsewhere, as economic trends in other regions continue to be Asia Pacific: the growth engine the main underlying driver of casino In stark contrast, Asia Pacific—which revenues, through their impact on paused for breath in 2009, rising disposable income and job growth. by only 7.1 percent – leapt forward These factors will continue to have an dramatically in 2010. Spending in adverse effect in the near term, but that one year alone rose by a stunning will provide a lift to the market during 49.7 percent, driven by new capacity the latter part of the forecast period. in Macau and Singapore, and the As such considerations play themselves latter’s emergence as a major new out, Asia Pacific’s higher growth resort destination. The fact that we are outlook and scope to absorb rising projecting a further rise of 37.2 percent capacity reflects three main factors. in Asian revenues in 2011 underlines The first is the role of economic the momentum behind the region’s growth in driving disposable incomes growth. The much smaller Latin and the emergence of a prosperous American market has also stayed in middle-class. The second is the deep positive territory in terms of growth in attachment to casino gaming and 2010, expanding by 5.5 percent, with other forms of gambling in many faster growth expected beginning in societies in the region—an attachment 2011 as new casinos enter that market.4 PwC
    • A new global landscape – dominated by Asia Asia Pacific’s five-year compound Breakdown of global gaming market revenues, 2010 versus 2015 annual growth rate (CAGR) of 18.3 2010 2015 percent between 2011 and 2015 will create a globally dominant Asian Canada Canada Latin America 4.9% Latin America 3.4% regional marketplace. As the charts 3.2% 3.1% below show, Asia Pacific’s share of the global market will surge from Asia Pacific Asia Pacific 29.2 percent in 2010 to 43.4 percent 29.2% 43.4% in 2015, representing a geographic shift in revenue origination. This trend reflects the fact that demand in Asian countries currently far outstrips supply—and that, for the next few years at least, operators US US EMEA EMEA 48.9% 40.1% and countries that offer further 13.9% 10% high-quality capacity in the region can be fairly certain that they will soon see it absorbed. Asia Pacific’s rise confirms that this fact pattern continues.that consumers increasingly have the More generally, the global trend in the commercial lending institutions,resources to indulge. current post-downturn environment to governing bodies and licensing is toward more investment in capacity agencies that regulate and monitorThe third factor is the growing by some operators in particular their operations. Complex issues alsoopportunity to take part in casino markets and segments, while others confront gaming regulators: how togaming, as new centers are established are retrenching under the impact of monitor and safeguard enterprisesand as new facilities are opened up competition and/or sluggish demand. that provide gaming tax revenues,in existing markets. Most obviously, As new casinos are introduced, the while also preserving the integritythe prime examples of new territories competitive landscape will continue to of the gaming environment and theentering the market include change, and portions of the market will reputation of all parties involved.Singapore’s dramatic emergence as be siphoned off from existing casinos.a casino gaming center, surging from In the emerging area of online gamingzero in 2009 to revenues totaling more In the US, for example, growth in services, the regulatory complexitiesthan $4 billion in 2011 and more than regional casinos continues to cut and sensitivities are even greater.$7 billion in 2015. into the Atlantic City market. In Asia The past year has seen only sporadic Pacific, the suggested introduction progress toward wider legislation andIn assessing the outlook for growth of casinos in Japan—which remains regulation of online gaming, with littleacross the world, it is important to far from certain—would affect the headway having been made in 2010take into account the likelihood that markets in South Korea and Macau. or to date in 2011 in markets such aslogistical and regulatory changes The launch of resort casinos in the US. However, our view remainsmay continue to have a major impact. Singapore has adversely affected the that the currently dominant approachRecent examples of this include the casino market in Australia. Similarly, of in-country or in-state regulationnew railway that connects Macau with growth in the casino market in Macau and licensing of online gaming willGuangzhou, which has significantly and Singapore may help to dampen be steadily eroded during the nextreduced travel time from mainland growth in Nevada. The launch—if it five years, under the impact of risingChina. This has boosted traffic from happens—of a proposed integrated demand for cross-border gamingthe People’s Republic of China resort in Spain, or a “supercasino” in and liquidity for disciplines such as(PRC)—and the expected completion Ireland, could change the European poker. In Europe, where the Europeanof the Hong Kong-Zhuhai-Macau road landscape. Commission is driving progress bybridge in 2015–2016 will provide a taking legal action against nationalfurther uplift. Less positive external Complex issues going forward online gaming monopolies, we areeffects can be seen in the restrictions To address the market challenges likely to see continued local countryon US visitors that have hurt Canadian while sustaining and growing their regulation, but with progress over timecasinos near the US border, the near- day-to-day operations, gaming toward countries working together onprohibitive taxation of online gaming owners and operators must interact licensing and pooling liquidity acrossstakes in some European countries, with many organizations in both the borders, especially for poker.and events such as Russia’s mass- public and private sectors—rangingclosure of casinos that devastated the from investment banks, analysts andlegitimate market in that country.Part I: Casino gaming Global Gaming Outlook 5
    • Part I: Casino gaming6 PwC
    • Global overview in 2015 from $34.3 billion in 2010. This growth will see Asia Pacific overtake the US in 2013 as the world’s largest regional casino gaming market. In EMEA, revenues will reach $18.3 billion in 2015 from $16.3 billion in According to our projections, global 2010, an average annual increase of casino gaming revenue across the 2.4 percent compounded annually. US, EMEA (Europe, Middle East, and In the much smaller Latin American Africa), Asia Pacific, Latin America, market, annual revenue growth will and Canada will grow at a 9.2 percent average 8.1 percent compounded compound annual rate during the next annually from $3.8 billion in 2010, five years, rising from $117.6 billion in rising to $5.6 billion in 2015. Canada 2010 to $182.8 billion in 2015. will advance from $5.7 billion in 2010 to $6.2 billion in 2015, a 1.8 percent During this period, spending in the US compound annual rate. will rise by 5.0 percent compounded annually, from $57.5 billion in 2010 Asia Pacific’s higher growth rate to $73.3 billion in 2015. This growth throughout the period will see its share in the US will be strongly outpaced by of the total global market increase Asia Pacific, which will be the fastest- from 29.2 percent in 2010 to 43.4 growing region by a wide margin, percent in 2015. with a projected 18.3 percent increase compounded annually to $79.3 billionGlobal casino gaming market by region (US$ millions) 2010–15Region 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGRUnited States 57,470 60,440 59,433 57,368 57,488 59,500 62,315 65,497 69,110 73,320% Change 8.4 5.2 –1.7 –3.5 0.2 3.5 4.7 5.1 5.5 6.1 5.0EMEA 20,783 20,894 19,959 17,567 16,307 16,175 16,250 16,751 17,350 18,343% Change 2.8 0.5 –4.5 –12.0 –7.2 –0.8 0.5 3.1 3.6 5.7 2.4Asia Pacific 13,687 17,714 21,379 22,898 34,280 47,042 58,124 66,961 73,429 79,266% Change 16.3 29.4 20.7 7.1 49.7 37.2 23.6 15.2 9.7 7.9 18.3Latin America 2,584 2,959 3,269 3,601 3,800 4,096 4,370 4,757 5,165 5,614% Change 25.6 14.5 10.5 10.2 5.5 7.8 6.7 8.9 8.6 8.7 8.1Canada 5,354 5,685 5,694 5,874 5,704 5,597 5,621 5,743 5,986 6,230% Change 10.7 6.2 0.2 3.2 –2.9 –1.9 0.4 2.2 4.2 4.1 1.8Total 99,878 107,692 109,734 107,308 117,579 132,410 146,680 159,709 171,040 182,773% Change 8.7 7.8 1.9 –2.2 9.6 12.6 10.8 8.9 7.1 6.9 9.2Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen AssociatesPart I: Casino gaming Global Gaming Outlook 7
    • United States regional casino market. The regional casino market also will benefit from possible openings of resort casinos Market overview in Florida and Massachusetts. As a result of these positive factors, we expect regional casinos to be the fastest-growing category during the next five years. In contrast, we expect Atlantic City to continue to decline, as that market loses patrons to more conveniently located regional casinos. The Nevada and tribal casinos The casino gaming market in the US still 4.9 percent below their level markets will benefit from an improved regained some degree of stability in in 2007. Growth was generated economy during the latter part of the 2010, following two years of decline, by an expanding regional casino forecast period. but conditions remain uncertain and market, fueled principally by the volatile in many industry centers and strong showing of new casinos in According to our projections, modest sectors. While improved economic Pennsylvania. The gains in the regional but gradually accelerating growth will conditions helped to halt the casino market offset a 9.6 percent see overall US casino gaming revenues decline, many operators still lack the decline in Atlantic City. Revenues regain their 2007 level in 2012. Total confidence to press ahead with major in Nevada and tribal casinos were revenues will increase to $73.3 billion developments in centers such as Las essentially flat in 2010. in 2015 from $57.5 billion in 2010, a Vegas. Yet others are investing strongly 5.0 percent compound annual increase in new capacity. Going forward, the introduction of over the five-year forecast period. Only table games at racetrack casinos and Atlantic City will have lower revenues US casino gaming revenues as a whole slot parlors, combined with their in 2015 than 2010. edged up by 0.2 percent in 2010 accessibility to large population to $57.5 billion, leaving revenues centers, will continue to fuel the Casino gaming market (US$ millions) United States 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Nevada 12,783 13,017 11,599 10,393 10,405 10,700 11,135 11,652 12,290 12,955 Atlantic City 5,218 4,920 4,545 3,943 3,565 3,300 3,080 2,945 2,870 2,815 Tribal casinos 24,889 26,143 26,739 26,482 26,503 27,500 28,800 30,200 31,750 33,350 Regional casinos 14,580 16,360 16,550 16,550 17,015 18,000 19,300 20,700 22,200 24,200 Casino gaming total 57,470 60,440 59,433 57,368 57,488 59,500 62,315 65,497 69,110 73,320 Sources: American Gaming Association, National Indian Gaming Commission, Nevada Gaming Commission, New Jersey Casino Control Commission, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates Casino gaming market growth (%) 2011–15 United States 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Nevada 8.4 1.8 –10.9 –10.4 0.1 2.8 4.1 4.6 5.5 5.4 4.5 Atlantic City 4.0 –5.7 –7.6 –13.2 –9.6 –7.4 –6.7 –4.4 –2.5 –1.9 –4.6 Tribal casinos 10.6 5.0 2.3 –1.0 0.1 3.8 4.7 4.9 5.1 5.0 4.7 Regional casinos 6.4 12.2 1.2 0.0 2.8 5.8 7.2 7.3 7.2 9.0 7.3 Casino gaming total 8.4 5.2 –1.7 –3.5 0.2 3.5 4.7 5.1 5.5 6.1 5.0 Sources: American Gaming Association, National Indian Gaming Commission, Nevada Gaming Commission, New Jersey Casino Control Commission, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates 8 PwC
    • United States information as to the outcome. Beauty pageants, award shows and financialNevada markets are possible candidates for the new betting activity. The emergence of major resort casinos in Asia Pacific—often (asIn its overall revenue mix, Nevada— that baccarat games account for over in Macau) operated by US-basedwhich includes Las Vegas, as well as 42 percent of table game revenues on companies—will divert some of thesmaller centers such as Laughlin and the Las Vegas strip, indicating a high US’s overseas-derived business to thatReno—relies on players from overseas reliance on volatile revenues from a region. As the US’s major internationalmore than other casinos in the US. small number of high rollers. casino gaming center, Nevada willFor this reason, the improved global be disproportionately affected.economic conditions, in tandem However, there are some signs of Consequently, even when the economywith those in the US, contributed to resurgent confidence in the market. returns to healthy growth, we do notNevada’s improved performance in One of the most high profile was expect Nevada to record increases2010. Caesar Entertainment’s confirmation comparable to prior gains achieved in August 2011 of plans for the $550 during periods of economic expansion.After slumping by a cumulative 20.2 million Linq project, including a 550- Accordingly, during the 2012–15percent between 2007 and 2009, the foot observation wheel called “The period we project annual revenueNevada market steadied in 2010 with Las Vegas High Roller”, as well as a gains averaging 4.9 percent eacha 0.1 percent increase. Table games restaurant-entertainment district. year. For the five-year forecast periodrebounded with a 6.1 percent rise, as a whole, the Nevada market willthe decline in slot revenues slowed to More generally, having navigated increase at a 4.5 percent compound2.7 percent, while card games fell 7.5 through 2010 in survival mode, many annual rate to $13 billion in 2015 frompercent. The momentum generated in operators are facing debt repayments $10.4 billion in 2010.2010 is carrying over in 2011 and we in 2014–2015, meaning they remainproject that the market will increase by compelled to follow the cost-cutting2.8 percent for 2011 as a whole. measures of the last several years. The search for revenues is seeing operatorsHowever, the recovery does not look at new and innovative games tosignal an end to the challenges refresh the Nevada offering.facing all operators and segments.The steel skeletons of uncompleted For example, under new regulationsdevelopments still scar the Las Vegas that went into effect in 2011, casinosskyline, and operators are facing the are permitted to provide betting onresidual effects of high unemployment events and contests other than sports,in California. Also, the most recently so long as the events themselvesreleased gaming revenue reports show are regulated and no one has priorNevada casino gaming revenue (US$ millions) 2011–15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGRSlots 8,306 8,451 7,736 6,823 6,637 6,750 6,920 7,160 7,520 7,900% Change 6.9 1.7 –8.5 –11.8 –2.7 1.7 2.5 3.5 5.0 5.1 3.5Table games 4,316 4,398 3,707 3,424 3,633 3,830 4,100 4,375 4,650 4,930% Change 11.2 1.9 –15.7 –7.6 6.1 5.4 7.0 6.7 6.3 6.0 6.3Card games 161 168 156 146 135 120 115 117 120 125% Change 15.0 4.3 –7.1 –6.4 –7.5 –11.1 –4.2 1.7 2.6 4.2 –1.5Casino total 12,783 13,017 11,599 10,393 10,405 10,700 11,135 11,652 12,290 12,955% Change 8.4 1.8 –10.9 –10.4 0.1 2.8 4.1 4.6 5.5 5.4 4.5Sources: Nevada Gaming Commission, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates Part I: Casino gaming Global Gaming Outlook 9
    • United States visitors to stay closer to home. According to our projections, Atlantic City Atlantic City is on track to decline by an additional 7.4 percent in 2011. Thereafter, improved economic conditions should provide a lift to As we highlighted in last year’s study, continued in 2010 as other areas of the overall casino market, which of all the segments of the US casino the industry began to recover, with will benefit Atlantic City to a degree, gaming industry, the Atlantic City Atlantic City suffering a further 9.6 limiting its annual declines. Atlantic market is at the greatest risk from percent drop despite the rebound in City remains an appealing destination the combined impacts of economic the economy. resort and its resort casinos will uncertainty and intensifying continue to attract overnight visitors. competitive pressures from regional The underlying reason is that Atlantic City attracts most of its patrons from Nevertheless, we do not believe that casinos. These worries are being borne the improved economy will fully offset out by our projections, with Atlantic Pennsylvania, New York, Delaware, and Maryland—and the opening Atlantic City’s loss of revenues to City set to be the only segment of the regional casinos. At best, declines will US market whose revenues will be of racetrack casinos and regional casinos in those markets has cut into moderate to low single-digit levels by lower in 2015 than 2010. 2014–15. For the forecast period as a Atlantic City’s business. At the same This long-term decline is already time, the introduction of table games whole, we are projecting a 4.6 percent well under way, with the Atlantic in Pennsylvania and electronic table compound annual decline from $3.6 City market having plunged by a games and roulette in Yonkers is billion in 2010 to $2.8 billion in 2015. cumulative 31.7 percent between 2006 making those venues more like the This means Atlantic City’s revenues in and 2010. The recession contributed Atlantic City casinos, further eroding 2015 will be 46.1 percent lower than to the downturn—revenues fell by Atlantic City’s appeal. Meanwhile, high in 2006. 13.2 percent in 2009—but the decline gasoline prices are encouraging day Atlantic City casino revenue (US$ millions) 2011–15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Slots 3,804 3,464 3,133 2,722 2,477 2,300 2,150 2,070 2,025 1,990 % Change 3.5 –8.9 –9.6 –13.1 –9.0 –7.1 –6.5 –3.7 –2.2 –1.7 –4.3 Table games 1,414 1,456 1,412 1,221 1,088 1,000 930 875 845 825 % Change 5.2 3.0 –3.0 –13.5 –10.9 –8.1 –7.0 –5.9 –3.4 –2.4 –5.4 Total 5,218 4,920 4,545 3,943 3,565 3,300 3,080 2,945 2,870 2,815 % Change 4.0 –5.7 –7.6 –13.2 –9.6 –7.4 –6.7 –4.4 –2.5 –1.9 –4.6 Sources: New Jersey Casino Control Commission, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates United States and Atlantic City—and then rising only 0.1 percent in 2010. Despite the Tribal casinos weakening economy in 2011 and the introduction of table games at regional casinos, tribal casinos are rebounding. We project a 3.8 percent increase for the year. The Indian Gaming Regulatory Act digit annual gains. Since then, of 1988 permits states that allow there have been few new casinos We then look for an improving gaming activities to authorize tribes to boost the market. The economy economy to lead to stronger gains to operate casinos on Native American has also weakened since then, and beginning in 2012. However, reservations. As of mid-2011, there tribal casinos now face more intense competition from regional casinos were 240 federally recognized gaming competition from regional casinos. will continue to dampen tribal casino tribes with a total of 460 gaming growth, limiting gains to mid- operations spread across 28 states. Revenues at tribal casinos have been single-digit advances. Revenues will relatively flat over the past two years, increase from $26.5 billion in 2010 to Through 2006, the opening of new falling by 1.0 percent in 2009—much $33.4 billion in 2015, a 4.7 percent tribal casinos generated double- smaller than the declines in Nevada compound annual increase.10 PwC
    • United States are affected by the weak economic conditions and high gasolineRegional casinos prices. In the Midwest, for example, where unemployment is high and the economy is especially weak, regional casinos have struggled. In Illinois, casino revenues fell nearlyIn an overall US casino gaming market in Florida. If approval is granted, 4 percent in 2010. However, barringthat was essentially flat, regional the Genting Group plans to build the supply disruptions, we do not expectcasino revenues rose by 2.8 percent in Miami resort within three to five years. incremental growth in gasoline prices2010, making it the best performing to be significant going forward.sector of the market as a whole. Another development, in June 2011, was Boyd Gaming Corp’s acquisition A weak economy in 2011 will partiallyThis strong performance was led by of the Imperial Palace Casino Resort in offset the impact of new casinoregional casinos located in major Biloxi, Mississippi from Mississippi LLC openings and the expansion of tablepopulation centers. Philadelphia had and Key Largo Holdings LLC. This is its games in several states, and we projectthe largest regional casino in 2010 at second resort property in Mississippi, a 5.8 percent increase. A strongermore than $750 million, followed by whose casinos compete with those in economic expansion during the latterYonkers at more than $580 million. Of Florida and Alabama. part of the forecast period will benefitthe top ten regional casinos in 2010, the casino market as a whole as willfour were in Pennsylvania. In Illinois, Midwest Gaming in 2010 possible openings of resort casinos. was approved as suitable for licensure We look for regional casinos to growTable games were introduced in and began construction of a riverboat at rates of 7.2 percent or more duringwestern Pennsylvania in mid-2010 casino, which is expected to be 2012–14 and project a 9.0 percentand are now available in the rest completed by late 2011. The Video increase in 2015 on the assumptionof the state. Table games also were Gaming Act, enacted on July 13, 2009, that the resort casinos in Miami andintroduced in Delaware and West authorizes up to five video gaming Florida begin to open that year.Virginia and electronic table games terminals in licensed establishmentsand roulette were added in Yonkers. where liquor is served. These terminals In general, because of their closerThe availability of table games along expand gaming activity outside of the proximity to population centers, wewith slot machines makes the regional riverboat casinos. expect regional casinos to gain sharecasinos feel more like destination from Atlantic City and tribal casinos.casinos, benefiting attendance. In Massachusetts, legislation was Regional casino revenues will rise to introduced in 2011, which would $24.2 billion in 2015 from $17.0 billionIn other developments, the Genting permit three resort casinos. The in 2010, a 7.3 percent compoundGroup, the Malaysian-based Mohegan Sun, which operates a annual increase, making this segmentinternational casino operator that resort casino in Connecticut, is the fastest of the four categories.opened the $4.8 billion Resorts World looking to enter Massachusetts withSentosa in 2010, entered the US a $600 million casino. Paper Citymarket. Its first US facility, Resorts Development also plans to bid for aWorld New York, will open this fall license to create a $450 million resortat the Aqueduct Race Track with casino. Legislation enabling resort4,500 video terminals. The Genting casinos has yet to be enacted.Group also is planning a $3 billionresort casino on the waterfront in While Pennsylvania is thriving,downtown Miami, having purchased Yonkers is growing, and new projects13.9 acres from the Miami Herald are being planned, regional casinosfor $236 million. For the project to as a whole face their own challenges.move forward, legislation needs to Since they rely almost exclusivelybe enacted to permit resort casinos on day visitors, regional casinosPart I: Casino gaming Global Gaming Outlook 11
    • Europe, Middle East, countries. Russia, for example, had the largest casino gaming market in EMEA in 2006–07, but because the Africa (EMEA) government closed most of the casinos, Russia now has the smallest market in EMEA. Market overview The pain for EMEA is not yet over, and we are projecting a further 0.8 percent decline in 2011, amid continuing weak economic conditions. We then expect the market to expand as economic The casino gaming market in EMEA conditions improve. A new destination has been the hardest hit of any region center being proposed in Spain by the economic downturn, with may boost revenues, although the revenues slumping by 12.0 percent in regulations are not yet in place and the 2009, followed by a further 7.2 percent timing is uncertain. in 2010, the third consecutive decline. We project that EMEA’s overall casino Between 2007 and 2010, revenues fell gaming revenues will increase at by a cumulative 22 percent. In 2008 a projected 2.4 percent compound EMEA was overtaken by Asia Pacific as annual rate to $18.3 billion in 2015 the second biggest region. from $16.3 billion in 2010. As well as being hurt by the recession, the EMEA market has been impacted by regulations or restrictions that have curtailed spending in several Casino gaming market† (US$ millions) 2011–15 EMEA 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Casino gaming 20,783 20,894 19,959 17,567 16,307 16,175 16,250 16,751 17,350 18,343 % Change 2.8 0.5 –4.5 –12.0 –7.2 –0.8 0.5 3.1 3.6 5.7 2.4 †At September 26, 2011 exchange rates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates12 PwC
    • EMEA Germany has one of the strongest economies in EMEA, and its marketMajor national markets continued to expand during the past three years, albeit at annual rates of less than 1 percent. We look for somewhat faster increases during the latter part of the forecast period as Several countries have substantial economic conditions strengthen and gaming activity that occurs outside of as private companies enter the market casinos. In Italy, for example, gaming as privatization occurs, by taking on machines throughout the country existing licenses. generated more than $5 billion in 2010, but most were located outside South Africa had the fastest growing of casinos. The casino market itself in market in 2010 with a 3.5 percent Italy is tiny, consisting of just a handful increase. Going forward, casino of casinos. upgrades and a new casino license will enhance the South African Likewise in the UK, gaming machines casino market, but compared with generated more than $3 billion in total the prior decade—when a number revenues in 2010. The casino market, of new casinos opened—there will however, totaled only $1.2 billion. be relatively little growth from new The UK was one of the few countries casinos during the forecast period. to post an increase in revenues in A new 15 percent tax on winnings 2010, with a 0.6 percent advance, but of R25,000 ($3,099) or higher, spending will decline again in 2011. provisionally scheduled to go into effect in 2012, is expected to have In terms of casino gaming, France had an adverse impact on the market. the largest casino market in 2010 at However, there is currently no detail $3.8 billion, followed by Germany and available on how the proposed tax is to South Africa at $2.0 and $1.8 billion, be calculated or collected. respectively. France has declined during the past two years, and we expect a further drop in 2011 with modest increases projected thereafter as the economy improves.Part I: Casino gaming Global Gaming Outlook 13
    • Casino gaming market† (US$ millions) 2011–15 EMEA 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Western Europe Austria 581 619 629 615 608 604 606 629 656 683 2.4 Belgium 365 385 401 397 392 391 399 412 433 453 2.9 Denmark 245 258 262 258 254 253 255 263 272 282 2.1 Finland 838 877 885 880 876 875 879 906 939 973 2.1 France 3,595 3,825 3,898 3,855 3,798 3,785 3,818 3,920 4,055 4,190 2.0 Germany 1,953 2,000 2,014 2,015 2,027 2,048 2,082 2,142 2,217 2,298 2.5 Greece 933 1,048 1,000 845 710 642 608 615 629 649 –1.8 Ireland NA NA NA NA NA NA NA NA NA NA — Italy 118 119 115 111 108 107 107 105 104 103 –0.9 Netherlands 877 920 852 724 665 651 662 676 696 723 1.7 Norway 708 761 768 818 839 856 882 921 959 1,002 3.6 Portugal 55 59 54 45 41 38 38 39 42 45 1.9 Spain 646 654 588 510 478 460 453 466 493 845 12.1 Sweden 186 198 214 207 205 203 205 211 218 225 1.9 Switzerland 1,056 1,128 1,097 1,035 961 940 964 1,078 1,111 1,139 3.5 United Kingdom 1,245 1,260 1,160 1,202 1,209 1,191 1,198 1,237 1,291 1,353 2.3 Western Europe Total 13,401 14,111 13,937 13,517 13,171 13,044 13,156 13,620 14,115 14,963 2.6 Central and Eastern Europe Czech Republic 573 527 534 523 488 471 465 468 481 498 0.4 Hungary 449 476 493 466 440 419 410 414 428 442 0.1 Poland 379 503 428 426 417 415 416 424 438 456 1.8 Romania NA NA NA NA NA NA NA NA NA NA — Russia 4,536 3,645 2,893 935 31 28 30 34 41 50 10.0 Turkey - - - - - - - - - - - Central and Eastern Europe Total 5,937 5,151 4,348 2,350 1,376 1,333 1,321 1,340 1,388 1,446 1.0 Middle East/Africa Israel NA NA NA NA NA NA NA NA NA NA - Middle East North Africa (MENA)‡ - - - - - - - - - - - South Africa 1,445 1,632 1,674 1,700 1,760 1,798 1,773 1,791 1,847 1,934 1.9 Middle East/Africa Total 1,445 1,632 1,674 1,700 1,760 1,798 1,773 1,791 1,847 1,934 1.9 EMEA Total 20,783 20,894 19,959 17,567 16,307 16,175 16,250 16,751 17,350 18,343 2.4 †At September 26, 2011 exchange rates. ‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria and the United Arab Emirates. Sources: Casinos Austria, European Gaming Organization, Gaming Board for Great Britain, Gaming Board of Hungary, Holland Casino, Lotteri Inspektionen, Ministry of Finance of the Czech Republic, National Gambling Board of South Africa, Netherlands Gaming Control Board, Norwegian Gaming Foundation Authority, Spain Ministry of Interior, Swiss Gaming Commission, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates14 PwC
    • EMEA In general, casino gaming markets in EMEA tend to attract customers on aKey developments and trends local or national basis. So there would appear to be a major opportunity for a Las Vegas strip-style destination casino resort to attract revenues and tax dollars across borders. For this reason,The 7.2 percent decline in EMEA Going forward, the industry picture there has been ongoing speculationcasino gaming revenues in in EMEA will brighten gradually, with about such a development for years, a small decline of 0.8 percent in 2011 generally focused on Southern2010 reflected a combination turning into a rise of 5.7 percent by European countries because of theirof weak economic conditions 2015. Overall EMEA revenues will relatively warm climate.and the impact of adverse reach $18.3 billion in 2015 from $16.3 One contender, the much-delayedregulatory developments in some billion in 2010, an average annual Gran Scala project in Spain, is havingcountries. In the Netherlands, for increase of 2.4 percent compounded annually. difficulty in obtaining credit and theexample, casino revenues fell by project remains in limbo. In early27.7 percent between 2007 and In Russia, a law enacted in 2006 2011, however, the Las Vegas Sands2010, playing a major part in the limited casino activity to four zones Corporation proposed a $21 billion in the remote areas of Krasnodar, project to build a Las Vegas stylewider EMEA decline. While the casino strip with 20,000 hotel rooms, Rostov, Kaliningrad, and Siberia. Inrecession contributed to the fall in the absence of licensed casinos in and convention and retail space, butthe Netherlands, the introduction populated areas, underground casinos this proposal remains at a very earlyof a smoking ban and an increase have emerged and are operating, stage. Cataluña and other regions arein the gambling tax also hurt the allegedly run by organized crime. vying to be the site for the proposed In 2011, new legislation mandates casino strip. In Ireland, it has beenmarket. reported that Caesars Entertainment six-year prison terms with manual labor for operators of illegal casinos. has advised the sponsors of a proposed Meanwhile, the legitimate casino supercasino in County Tipperary. market has virtually disappeared. In Switzerland, the government In the UK, it was expected that the granted two additional licenses in 2011 casino market would expand as a for land-based casinos in the cities result of the Gambling Act of 2005. of Zurich and Neuchâtel. The former But this growth has not yet taken is expected to become the country’s place, for a variety of reasons— largest casino, with annual gaming including the smoking ban and revenues far in excess of $100 million. changes in machine regulation, both introduced in 2007, and the fact that In South Africa, the National Gambling the new licenses envisaged in the 2005 Act permits 40 licensed casinos. Act are still in the process of being Currently, there are 37 operating awarded, with none of the 16 new casinos, which leaves little room for casinos actually open yet. Looking further expansion. Nevertheless, forward, the Asia-based gaming we do expect new investment in the company, Genting Malaysia Berhad, casino market. The Limpopo Gambling is investing in the UK, and this could Board awarded a casino license to the provide a lift to the market. Growth Peermont Global Group. Peermont over the period will also be supported also upgraded the Umfolozi Hotel and by the opening of the eight large and Convention Resort. Sun International eight small new casinos permitted plans to upgrade the Boardwalk under the 2005 Act, which we expect Casino in Port Elizabeth and Tsogo will help to generate gains averaging Sun Gaming plans to upgrade the 4.1 percent compounded annually Hemingways Casino in East London, between 2012 and 2015. However, having been awarded a new 15-year with the economy weakening in the license by the Eastern Cape Gambling near term, we project a decrease in Board. These upgrades combined with casino revenue in 2011 and a modest an expanding economy will provide a 0.6 percent advance in 2012. lift to the casino market.Part I: Casino gaming Global Gaming Outlook 15
    • Asia Pacific rapid emergence of casino gaming in Singapore. Except for a small market in Vietnam, and the 1.2 percent increase Market overview in Australia, the four other countries in this region had spending declines in 2010. Asia Pacific will be the fastest-growing Going forward, Macau and Singapore region for casino gaming spending will continue to fuel growth in Asia over the coming five years. Having Pacific during the next few years, while overtaken EMEA as the second-biggest other countries in the region may look region in 2008, Asia Pacific will to encourage growth in casino gaming surpass the US in 2013 as the biggest to gain tourism and tax dollars. By region, and will end the forecast 2015, the Asia Pacific market will period accounting for 43.4 percent of reach $79.3 billion from $34.3 billion the total global market. in 2010, an 18.3 percent compound annual increase. Casino gaming revenues in Asia Pacific surged by a remarkable 49.7 percent in 2010, boosted by a 57.8 percent increase in Macau and the Casino gaming market† (US$ millions) 2011–15 Asia Pacific 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Casino gaming 13,687 17,714 21,379 22,898 34,280 47,042 58,124 66,961 73,429 79,266 % Change 16.3 29.4 20.7 7.1 49.7 37.2 23.6 15.2 9.7 7.9 18.3 †At September 26, 2011 exchange rates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates 16 PwC
    • Asia Pacific it is fair to note that on a property-by- property basis, Singapore casinos haveMajor national and territory markets returned higher margins overall. South Korea is a well-established casino gaming center, and is expected to benefit from a new gaming center. ItThe jewel in the crown of Asia Pacific’s become an established market. could be adversely affected however,casino gaming industry is Macau, the by competition from Japan if—aslargest single destination market in the This competition is intensifying, as currently proposed—casinos open inworld at $23.4 billion in 2010, more Singapore has already become a major that country during the latter part ofthan twice the revenue of Nevada casino destination in just its first year the forecast period. Declines projectedin the US. Fueled by new casinos, of operation, with revenues projected for 2014–15 will leave South Korearevenues in Macau will more than to grow significantly in 2011, due to lower in 2015 than in 2010, the onlydouble during the next five years to the build-out of facilities, increased country in Asia Pacific where that will$62.2 billion, representing 34 percent tourist visitors, and the impact of a be the case.of total global casino revenues in 2015. full year of operation. Revenues will reach nearly $7.2 billion by 2015, The Philippines already has a vibrantAustralia was a distant second at $3.4 which is impressive, given that only casino gaming market, and newbillion in 2010 with Singapore at $2.8 two licenses have been issued. Total casinos in that country will propelbillion and South Korea at $2.6 billion. market growth forward will be subject spending at a 16.9 percent compoundThe revenue figures for Australia do to regulatory constrictions. While annual rate to $1.2 billion in 2015,not include gaming machines (pokies) Singapore’s total market revenue making that country a major gamingin hotels, pubs, and clubs. Australia is achievement is put into perspective area as well.facing increased competition in luring by the fact that Macau’s revenues will“high rollers” now that Singapore has exceed $62.2 billion by that same time,Casino gaming market† (US$ millions) 2011–15Asia Pacific 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGRAustralia 2,801 3,125 3,316 3,388 3,429 3,429 3,439 3,478 3,576 3,698 1.5Hong Kong NA NA NA NA NA NA NA NA NA NA —India NA NA NA NA NA NA NA NA NA NA —Indonesia NA NA NA NA NA NA NA NA NA NA —Japan — — — — — — — — 327 784 —Macau 7,049 10,335 13,541 14,860 23,447 34,608 44,862 52,553 57,680 62,167 21.5Malaysia 847 885 933 980 948 940 942 964 1,012 1,059 2.2New Zealand 383 364 373 373 365 350 353 369 388 408 2.3Pakistan — — — — — — — — — — —Philippines 515 565 602 593 558 618 719 941 1,102 1,217 16.9Singapore — — — — 2,827 4,396 5,090 5,784 6,516 7,172 20.5South Korea 2,044 2,388 2,555 2,639 2,637 2,628 2,641 2,770 2,706 2,620 –0.1Taiwan — — — — — — — — — — —Thailand — — — — — — — — — — —Vietnam 48 52 59 65 69 73 78 102 122 141 15.4Total 13,687 17,714 21,379 22,898 34,280 47,042 58,124 66,961 73,429 79,266 18.3†At September 26, 2011 exchange rates.Sources: Australian Productivity Commission, Macau Gaming Inspection and Coordination Bureau, New Zealand Department of Internal Affairs, Philippine Amusement and Gaming Corporation,PricewaterhouseCoopers LLP, Wilkofsky Gruen AssociatesPart I: Casino gaming Global Gaming Outlook 17
    • Asia Pacific and 5,800 rooms, including hotels from Starwood, Shangri-La, Hilton Key developments and trends Worldwide, and Intercontinental Hotels Group. The structure for legal casinos is beginning to fall into place in Japan. If regulatory approval is given, the The next five years will see Asia Macau will remain the largest casino likelihood is that integrated casino Pacific emerge as the world’s gaming center in Asia Pacific, growing at a CAGR of 21.5 percent through resorts would be built in three leading region for casino gaming. 2015, outpacing Singapore’s growth regions yet to be determined, the For Asia Pacific as a whole, casino rate of 20.5 percent compounded Cabinet Office would oversee casino gaming revenues will expand from annually. The global recession had operations, and a regulatory body would be established to approve $34.3 billion in 2010 to $79.3 only a mild impact on Macau in 2009, licenses. The casinos would fund billion in 2015, an 18.3 percent with growth slowing to 9.7 percent from 31.0 percent in 2008. In 2010, the cost of industry regulation. An compound annual increase. revenues surged by a 57.8 percent entry fee would be levied to pay for increase as global economic conditions economic development and to assist improved and as foreign tourism in rebuilding areas destroyed by the rebounded. earthquake and sunami. Revenues in Macau in 2011 will grow If the proposed opening of casinos by an estimated 47.6 percent, boosted in Japan takes place, it would have by increased traffic from the PRC a ripple effect on the region. Japan mainland and by new hotels. A new could be expected to attract visitors railway that connects Macau with from South Korea, which could divert Guangzhou significantly reduces them from going to Macau. Singapore travel time from the mainland, and also represents a new significant the Hong Kong-Zhuhai-Macau road market that will offer an alternative bridge currently under construction to Macau, and while the strong is expected to be completed in 2015– Chinese economy will continue to 2016. More convenient access from boost Macau, we expect fewer visitors the mainland is leading to an increase from other countries as major resort in the number of day visitors and casinos become more available in Asia contributing to revenue growth. Pacific. As a result, we project that revenue growth in Macau will drop to Growth is being fueled by new single-digit levels in 2014–15, but will capacity. Galaxy Macau was opened still average 21.5 percent compound in Cotai in May 2011 with 450 annual growth for the forecast period gaming tables, approximately 1,100 as a whole. electronic gaming machines and 2,200 hotel rooms. Meanwhile, Sands In Singapore, Resorts World Sentosa China, which halted construction in and the Marina Bay Sands opened in 2008 because of the drop in credit 2010. With a full year’s operation for availability, is now scheduled to open both of the new resorts in Singapore, phase I of Sands Cotai Central in 2012 we expect revenues to reach $4.4 and phase II in early 2013. Sands billion in 2011 and grow to $7.2 billion Cotai Central will have approximately by 2015 as Singapore becomes a major 300,000 square feet of gaming space destination in Asia.18 PwC
    • Galaxy MacauIncreased competition from Singaporeand Macau is adversely affecting theAustralian market as growth slowedto 1.2 percent in 2010 from 2.2percent in 2009. Australia’s casinosare finding it harder to attract highspenders from other countries, asthere are now more resort casinos inAsia Pacific. We expect the market tobe flat in 2011 and to grow by only0.3 percent in 2012. We then look forgrowth to pick up reflecting improvingeconomic conditions. We do not expecta return to the double-digit and highsingle-digit gains that characterized2006–08.One significant factor in theprofitability of operators in AsiaPacific is the widespread use of “junketoperators”. In Macau, these businessesorganize and help to arrange currencyfor “high roller” gamblers andvisitors from other territories such asmainland China. While their use iscommonplace in Macau, they are not casinos will be open to local citizens. Zone, which issues its own casinocurrently operating in Singapore, nor The government also announced its licenses. Casinos in the Cagayan regionpermitted to operate in Australia, and intention to build several integrated are only open to foreigners.have to be licensed in the US. There casino resorts to better compete forare stringent rules applied to register foreign tourists. The casino gaming market in Malaysiaas a junket operator in Singapore, and is expected to pass the $1 billion levelat this stage there are no approved In New Zealand, the government is in 2014, but it is being impacted byjunket operators in this market. If looking to gambling as a way to attract competition from Singapore, andjunket operators are permitted in tourists and help rebuild the country growth will be modest. GentingsSingapore, then they could boost following its earthquake in February Highlands is the major casino operatormarket growth. In some jurisdictions, 2011. SkyCity Entertainment is building in Malaysia.there are concerns over the legality of a new convention center and casino. In Vietnam, the MGM Grand Hosome junket operators’ activities. In the Philippines, casino gaming Tram, the first Las Vegas-style resort,In South Korea, except for Kangwon revenues fell 5.9 percent in 2010, is scheduled to open in 2013 on theLand in the Gangwon province, but are rebounding in 2011, and we Ho Tram Strip. A more modest resortcasinos are only open to foreigners. In project a 10.8 percent increase for the casino opened in 2010 in Da Nang.2010, 1.7 million tourists from Japan year as a whole. Belle Corp’s planned Flights from Guangzhou in the PRCvisited casinos in South Korea. If and complex in Manila Bay is expected to bring tourists to the casino. Casinos inwhen casinos open in Japan, many open in 2013, although the project Vietnam are only open to people withof the Japanese gaming tourists will has experienced a number of delays. foreign visas.stay at home, cutting into the South The Philippine Amusement andKorean casino market. To counter that Gaming Corporation (PAGCOR) is thepotential loss, the Minister of Culture, monopoly provider with the exceptionSports, and Tourism announced that of the Cagayan Special EconomicPart I: Casino gaming Global Gaming Outlook 19
    • Latin America in 2009 was driven by a large increase in the number of operating casinos in Chile, which led to a large increase in Market overview that country Latin America will also be the second fastest-growing region—well behind Latin America has the smallest Asia Pacific—over the next five years. regional casino gaming market by a Revenues will expand at high single- wide margin. However, it registered digit rates averaging 8.1 percent the second-fastest growth of any compounded annually, rising to $5.6 region in 2010, when revenues rose billion in 2015 from $3.8 billion in by 5.5 percent in 2010, down from the 2010. 10.2 percent increase in 2009. The rise Casino gaming market† (US$ millions) 2011–15 Latin America 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Casino gaming 2,584 2,959 3,269 3,601 3,800 4,096 4,370 4,757 5,165 5,614 % Change 25.6 14.5 10.5 10.2 5.5 7.8 6.7 8.9 8.6 8.7 8.1 †At September 26, 2011 exchange rates. Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates Latin America Casinos in Venezuela generated total revenues of $3 million during the Major national markets year. Brazil—Latin America’s biggest economy—has bingo, lotteries, and betting parlors, but prohibits casinos and slot machines. Argentina is the largest market in Latin America, with revenues of $2.3 billion in 2010, accounting for 61.1 percent of the region’s total casino gaming revenues. Mexico is next at $639 million, followed by Columbia at $526 million and Chile at $310 million. Casino gaming market† (US$ millions) 2011–15 Latin America 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Argentina 1,796 1,981 2,105 2,198 2,322 2,501 2,632 2,894 3,179 3,501 8.6 Brazil — — — — — — — — — — — Chile 22 24 26 234 310 478 581 649 707 765 19.8 Colombia 481 521 532 529 526 525 529 548 574 601 2.7 Mexico 284 432 605 638 639 589 624 662 701 743 3.1 Venezuela 1 1 1 2 3 3 4 4 4 4 5.9 Total 2,584 2,959 3,269 3,601 3,800 4,096 4,370 4,757 5,165 5,614 8.1 †At September 26, 2011 exchange rates. Sources: Superintendencia de Casinos de Juego, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates20 PwC
    • Latin America In Chile new regulations allowed the number of casinos to jump from eightKey developments and trends in 2008 to 25 in 2009, resulting in a large increase in revenues in that year. Seven of the 25 were existing casinos supervised by municipalities, and 18 were new licenses regulatedFor Latin America as a whole, Argentina, with 45 casinos, is the by the new supervisory body, thegrowth in per capita income over leading casino gaming market in Superintendencia de Casinos de Latin America. There are no national Juego. The new licenses were awardedthe next five years will help to licenses, and all casinos are licensed at to private and experienced gamingdrive increased expenditure on the provincial level. Revenue growth companies, and of the 18 non-entertainment, including casino has dropped to mid-single-digit levels municipal regulated casinos, three aregaming. As a result, we project during the past three years from yet to be opened. Revenues in 2010casino gaming revenue in the double-digit gains in 2006–07, but rose by 32.5 percent, reflecting full- we expect a return to double-digit year operations for the new casinos.countries we track in the region growth during the latter part of the New openings will lead to a furtherto increase to $5.6 billion in 2015 forecast period as economic conditions 54.2 percent increase in 2011 followedfrom $3.8 billion in 2010, an improve. Spending will expand at an by a 21.5 percent advance in 2012. We8.1 percent compound annual 8.6 percent compound annual rate to expect growth to drop to single-digitincrease. $3.5 billion in 2015. levels in 2014–15. For the forecast period as a whole, growth in Chile will In Mexico, there are approximately average 19.8 percent compounded 300 licensed casinos, not including annually to $765 million by 2015. an estimated 60 casinos that are operating without a license. The In Venezuela, the opening of new issuing of new licenses propelled casinos boosted revenues from $1 the market in 2007 and 2008. million in 2006–08 to $3 million in More licenses are expected to be 2010. In addition to two new casinos issued, which will lead to continued on Margarita Island, casinos including expansion in the underlying market. Casino El Dorado, Fiesta Casino In 2011, however, the industry was Guayana, and Maruma Hotel & Casino hit by adverse events, including the are now open. We do not expect more death in August of over 50 people new licenses and project that the caused by armed men who set fire to industry will remain stable during the one casino in northern Mexico, and a next five years, rising to $4 million number of closures by the authorities. in 2012 and remaining at that level As a result of the closures, casino through 2015. revenues are projected to decline by 7.8 percent in 2011. The market will begin to rebound in 2012 and will rise to $743 million by 2015, a 3.1 percent compound annual increase from 2010. Colombia has more than 20 casinos in eight cities. The market has declined during the past two years under the impact of the slowdown, and we expect a further drop in 2011 before growth resumes as the economic conditions improve. We project a 2.7 percent compound annual increase to $601 million in 2015.Part I: Casino gaming Global Gaming Outlook 21
    • Canada Market overview Canada has a buoyant casino gaming in 2013–15 as economic conditions market, which has been hit by the improve. Revenues will reach $6.2 downturn later than its counterpart in billion in 2015 from $5.7 billion in the US. 2010, a 1.8 percent compound annual increase. Revenues in Canada fell by 2.9 percent in 2010 as the weak economy and new competition from regional casinos in the US near the Canadian border cut into casino gaming. We expect the market to fall by an additional 1.9 percent in 2011, stabilize in 2012, and then expand Casino gaming market† (US$ millions) 2011–15 Canada 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR Casino gaming 5,354 5,685 5,694 5,874 5,704 5,597 5,621 5,743 5,986 6,230 % Change 10.7 6.2 0.2 3.2 –2.9 –1.9 0.4 2.2 4.2 4.1 1.8 †At September 26, 2011 exchange rates. Sources: Canadian Gaming Association, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates22 PwC
    • Casino de Montréal, CanadaCanada dollar and the continued economic challenges faced by US consumers.Key developments and trends As a result, casinos in other provinces fared better than Ontario in 2010. Casinos in Canada will benefit from improving economic conditions during the latter part of the forecast period,While casino gaming spending in Excluding First Nations casinos, the helping revenues to rise at rates aboveboth the US and EMEA declined ownership of provincial casinos in Canada is a mix of government and 4 percent in 2014 and 2015.in 2008 and 2009, Canada took private ownership, depending on thelonger to be hit by the economic province in which the casino operates.downturn, with spending fallingin 2010 and 2011. The reason In 2010, casinos in Ontario experienced revenue declines as newwas that new casinos that opened casinos near the Canadian border,in prior years—such as Tsuu in Michigan and New York, reducedT’ina First Nation Casino in the number of Americans travelingCalgary, and a renovated Caesars to Ontario to gamble. The impositionWindsor—sustained spending of tighter restrictions on US citizens entering Canada, which were put ingrowth through to 2009. place in 2009, also reduced traffic from the US. This trend was exacerbated by the strengthening of the CanadianPart I: Casino gaming Global Gaming Outlook 23
    • Part II: Online gaming24 PwC
    • The elephant in the Given the pervasive nature of Internet- based services and their seamless ability to cross borders, the legal androom regulatory position of online gaming, even within a particular jurisdiction, is often unclear and open to different interpretations. The rigor with which In any discussion of the casino industry regulators and governments apply and its future prospects anywhere in the rules in practice also differs. This the world, there is always an “elephant creates uncertainty for consumers and in the room.” Online gaming is market participants alike, and even for happening across the world, whether shareholders in companies that offer regional, national, and state regulators online gaming. These uncertainties and lawmakers like it or not. The fog are partly due to the fact that much of of uncertainty that surrounds the size, the applicable legislation predates the scope, and often the legal basis of Internet, so its application to online online gaming makes it hard to assess services is inevitably open to debate its current and future impacts, or to and challenge. plan strategies around it. Multiple ambiguities… In this section, we will examine One prime example of this is the the forces and trends affecting the U.S. Federal Wire Act of 1961, which regulation, use and growth of online outlaws the placing of sports bets gaming, and its potential impacts on over the telephone, and which is now the traditional “bricks-and-mortar” surrounded by multiple ambiguities. casino gaming industry. We will then Historically, the law has been go on to look at the wider dynamics interpreted by some authorities— of the gaming industry as a whole, including the Department of examining the parallel shift toward Justice—to mean that all forms of Asia Pacific and toward electronic online gambling are illegal. However, delivery of gaming services—with US District Courts have ruled to the the ultimate challenge being the contrary, while the US Fifth Circuit industry’s ability to keep providing Court of Appeals has ruled that a compelling, energizing experience the Wire Act applies only to sports that the target consumers will value betting and not other types of online above the expanding array of other gambling. And the Supreme Court entertainment choices available to has yet to rule on the meaning of the them. Federal Wire Act as it relates to online gaming. There is also ambiguity about Regulation calls the shots whether tribal casinos can operate Across the world, the legitimate online sites, with some tribal casinos existence, growth and competitive leading the campaign to legalize online dynamics of the online gaming market poker in the US. are primarily shaped by the prevailing regulation, which varies widely …leading to raids, confusion, or between countries and even between a “blind eye” different states or regions within Similar ambiguities exist across the countries. The regulations in force also world, leaving consumers uncertain differ markedly between the various whether what they are doing is forms of online and mobile gaming, actually legal, and providers listening which can be broadly categorized nervously for a knock on the door from into six disciplines: poker; casino the authorities. On April 15, 2011, that gaming; betting on horse races; betting knock came, when the US Department on other sports, such as soccer and of Justice seized the domains and baseball; online bingo; and, online bank accounts of PokerStars, Full lotteries. Tilt, and Absolute Poker. Even afterPart II: Online gaming Global Gaming Outlook 25
    • Protecting consumers while boosting the tax take Today’s widespread legal uncertainty springs largely from the slow and halting response of legislators and regulators across the world when the raids, US consumers continued bookmakers: the only certainty is that online gaming first emerged in the to comprise half or more of the there is a lot of it. early 2000s. This approach reflected world’s poker market—with private a view in many countries that online offshore operators, unafraid of the US Even in jurisdictions where online gaming simply could not be regulated authorities, continuing to take bets gaming is legalized and regulated, effectively. Aside from a handful of while public companies stay away for there are “grey areas” of doubt and territories such as the UK, which fear of indictment. uncertainty. In Europe, online gaming legalized many forms of online is legal in many countries, but often gaming in the 2005 Gambling Act, In contrast to the US Department as a monopoly offering from a single most national and state governments of Justice, the law enforcement government-approved provider—an across the world were initially wary authorities in some other parts of approach that is being challenged of legalizing online gaming within the world are turning a blind eye by the European Commission their territories. However, with the to unlawful online gaming. In Asia under European Union law on fair onset of the global financial crisis Pacific, online gaming is outlawed in competition. In France, Internet service and its resulting negative impact on the PRC and India, but there has been providers (ISPs) are opposing the public sector finances, there has been a little attempt to tackle the usage by government’s attempts to block access significant change in attitude. people in these countries of gaming to gaming sites based in countries such sites based in the Philippines, where as Costa Rica. In the Czech Republic, With governments now facing it is legal. It is unclear whether the the requirement for online gaming severe fiscal constraints and eager to bulk of the money being bet online is users to subscribe in person at a shop replenish their coffers, their attention going through Macau, direct through means “pure” Internet providers are has been caught by the potential of offshore sites, or through illegal technically illegal—yet they operate legalized and licensed online gaming and promote themselves openly. services as a valuable source of tax revenues. There is also a strong argument that, since consumers will engage in illegal online gaming With governments now facing severe fiscal constraints and anyway, it is better to license and eager to replenish their coffers, their attention has been tax it than to allow the revenues to go to unlicensed operators. Also, far caught by the potential of legalized and licensed online more effective technologies are now gaming services as a valuable source of tax revenues. There available than a few years ago to maintain online security and verify the is also a strong argument that, since consumers will engage location and age of people taking part in illegal online gaming anyway, it is better to license in online gaming. These developments and tax it than to allow the revenues to go to unlicensed are all encouraging different national and state governments to introduce operators. their own licensing regimes. Yet, the cross-border nature of online gaming means attempts to regulate purely within borders may prove ultimately unsustainable. What is clear is that the elephant in the room is not going to go away. Governments and regulators have an absolute need to create certainty and consumer protection around online gaming, while ensuring this activity is fairly taxed. This may take years, but it must eventually happen.26 PwC
    • Regulating within However, like the efforts in the early 2000s by some ISPs to create ring- fenced areas of the Internet for theirborders: an interim subscribers, we believe this is an interim stage of development that will ultimately be superseded by a morestep open and collaborative approach. By its nature, one of the main benefits of Internet delivery in terms of both The twin requirements to protect efficiency and effectiveness lies in the consumers and generate dollars economies of scale from operating from online gaming have seen many cross-border. This is especially the governments across the world adopt case for online poker, where the a regulatory approach, focused on critical mass of players and money controlling and taxing it within their that comes from pooling liquidity own borders. Under this strategy, across, for example US state borders, a particular territory—whether at is a prerequisite for a viable business the state or national level—seeks model and exciting user experience. to license, regulate, and tax online Given these pressures, our view is that gaming between providers and the regulatory trend will increasingly players within their frontiers, without shift toward the licensing of inter- allowing cross-border activity. country and interstate online gaming This involves the regulatory services, where liquidity is pooled authorities introducing a regime that and tax shared on an agreed basis legalizes the provision of specific types between different tax authorities. of online gaming services in their own The European Commission is pushing territory, so long as these are provided actively in this direction through its by operators licensed within the actions against in-country monopolies, country, or state, and only to people while in the US the indecision with resident there. Companies that are states and the federal government licensed locally are also required to pay is impeding progress. Also, it seems tax locally on their revenues. The move unlikely that countries and states will toward this type of regulation has been fully harmonize what forms of online prevalent to date, both in Europe (on a gaming are permitted across their national basis) and the US (at both the borders; however, poker and sports state and national level). betting look to be the best candidates for an open and shared approach.Part II: Online gaming Global Gaming Outlook 27
    • Regulatory (WTO), which ruled in 2005 that because the US permits online horse trends in the US betting for operators authorized by state governments, it cannot There is a popular misconception discriminate against foreign online that all forms of online gaming are gaming operators. The US UIGEA law outlawed in the US. This is not the was challenged on these grounds at case. In fact, the prohibition is on the WTO by Antigua and Barbuda, and interstate gaming, and the legal then by the EU. The WTO ruled in favor position within states varies widely of Antigua and Barbuda and the EU, but between the five disciplines of casino, the compensation provided by the US horse betting, other sports betting, involved sectors other than gaming. poker, and lottery. The impact of varying interpretations The US’s UIEGA: targeting the For example, online betting on horse of the Wire Act was highlighted on payments processors racing is legal in several states at Friday, April 15, 2011, when the US the intrastate level (but not across Department of Justice used it as the In October 2006, the US Unlawful Internet state borders). Federal legislation to Gambling Enforcement Act (UIGEA) made basis for legal action against a number legalize and regulate online poker has of online poker sites. Known in the it illegal for banks and other institutions been discussed for many years, and online gaming world as Black Friday, to transfer funds to offshore gaming sites, causing visits to offshore gaming Web sites is expected to reach the statute book this was the day when a federal grand by US citizens to plunge. within the foreseeable future. jury in New York indicted PokerStars, Full Tilt Poker, and Absolute Poker / However, it was not actually individuals While there is no federal US legislation Ultimate Bet (collectively these latter using offshore gaming sites who were that explicitly addresses the legality of two are known as “Absolute Poker) liable under the Act, but the credit card online gaming, there are two main Acts companies and online payment companies for processing payments that were that impact it. The Federal Wire Act of processing their deposits or withdrawals alleged to involve bank fraud, money 1961 (commonly known as the Wire for use on the sites. laundering, and illegal gambling. Act) makes the placing of sports bets The law made it illegal to process payments over the telephone illegal. Given its At the same time, the Department for such transactions, but it contains no age, it is hardly surprising that the Wire of Justice filed a civil suit for the sanctions against players gambling online, Act does not explicitly refer to online forfeiture of the Internet domain unless they are connected in some way gaming. Also, as discussed earlier, names used by the indicted companies, with the casino, or the money exchange this legislation is open to multiple and funds held by bettors in those company. In fact, to date no player has interpretations, with the effect of accounts were frozen. Online gaming ever been prosecuted in the US for online increasing the general uncertainty. gaming. activity from the US fell sharply, and international online gaming The other key piece of legislation sites suffered declines in traffic. The is the Unlawful Internet Gambling government subsequently reached an Enforcement Act (UIGEA) of 2006 (see agreement to allow the companies information panel), which makes it to use their Web sites to enable US illegal for banks and other institutions players to withdraw their funds to transfer funds to offshore gaming held in accounts with them. The sites in support of illegal online companies were also permitted to use gaming. Crucially, UIGEA—which their domain names to offer poker to eventually came fully into force in June non-US citizens, with an independent 2010—does not define illegal online monitor verifying their compliance. gaming, and the Act does not apply to online gaming that is conducted within The interconnected nature of the the boundaries of a state or a tribe. global online gaming market was underlined by events elsewhere. In The UIGEA’s specific targeting of sites Europe, the share prices of the indicted based outside the US puts it at odds companies’ main rivals, including with the World Trade Organization28 PwC
    • Party Poker, soared in response, and The impact of varying interpretations of the Wire ActEuropean online poker providersintensified their marketing to pick was highlighted on Friday, April 15, 2011, when theup players worried by the US action. US Department of Justice used it as the basis for legalSignificantly, Party Poker was one ofthe sites that took the approach of action against a number of online poker sites. Knownbanning US players when UIGEA was in the online gaming world as Black Friday, this waspassed in 2006. At that time Party the day when a federal grand jury in New York indictedPoker was the US’s biggest onlinepoker provider in terms of customers— PokerStars, Full Tilt Poker, and Absolute Poker /and Black Friday appeared to vindicate Ultimate Bet (collectively these latter two are knownthe painful decision it took to shed itsUS customer base. as “Absolute Poker) for processing payments that were alleged to involve bank fraud, money laundering, andGiven the shockwaves from eventssuch as Black Friday, it is not surprising illegal gambling.that pressure in the US for clarificationof the legal position of online gaming The Black Friday swoop and subsequent settlementsis continuing. In September 2011, are widely seen as having “cleared the decks” forthe American Gaming Associationstepped up its campaign for legalization and regulation.legalization and regulation of onlinepoker, by launching an online videoentitled Online Poker: The Wild West.It accompanied the video with astatement urging Congress to approvelegislation allowing states to license In 2010, Senator Harry Reid drafted a Senator Reid expressed confidenceand regulate online poker, “so the proposal into a tax bill to allow casino that online poker regulation “will getmillions of Americans who play companies to set up their own online done.” Meanwhile, the Black Fridayonline poker can do so safely with poker sites, exempt from UIGEA, for swoop and subsequent settlementsresponsible, law-abiding operators.” their customers to use. In January are widely seen as having “cleared the 2011, Senate Republicans John Kyl decks” for legalization and regulation.For state governments and gaming and Spencer Bachus—both of whomcompanies alike, the prospect of oppose the expansion of online In comparison with the wranglingregulated online gaming being freely gambling on moral grounds—were at the federal level, there has beenavailable as a legal and taxable activity instrumental in blocking the measure. somewhat more progress at the stateis a major attraction. Last year, we level, with a number of initiatives toexpected to see significant progress However, there have been growing legalize online gaming proposed. Theat both state and federal level toward indications that the logjam may District of Columbia, for example,legalization of interstate poker during be broken fairly soon, with new legalized online gaming within its2011. Progress has been more limited proposed regulation now on the table. jurisdiction in April 2011. But true tothan anticipated, for three main In April 2011, Senator Kyl publicly the entire online gaming debate, itreasons. The first is the contrasting and softened his stance against online was recently announced that a newsometimes conflicting agendas at the poker. Two months later, Rep. Joe hearing for online gaming in DC hasstate level, where the desire to retain Barton introduced a bill to legalize been called. Concern was expressedtax revenues within state boundaries and license online poker, with the that the online gaming bill, whichcan conflict with the need to build provision that licensees prove they can was attached to a supplementarycritical mass and liquidity across state prevent minors from playing and that budget bill, was approved withoutborders. The second is the embedded the games are fair and do not create proper consideration. More updatesopposition in many quarters to online opportunities for money laundering. on this particular issue are expectedgaming as a social evil. The third is the Individual states would have the before year end. In Nevada, Assemblydifficulty of getting legislation onto the opportunity to either opt out or Bill 258 passed the legislature andbooks at the federal level. prohibit online poker. In August 2011, was signed by the governor andPart II: Online gaming Global Gaming Outlook 29
    • made effective on June 10, 2011. AB 258 requires the Nevada Gaming Regulatory gaming activities if the purpose was to combat fraud or protect consumers. Commission to establish certain provisions authorizing the licensing trends in EMEA However, member countries that and operation of interactive gaming Most of the legal online gaming in thought this would allow them to under certain circumstances, which the world occurs in the EMEA region, regulate online gaming by approving are: the passage of federal legislation which includes the world’s largest a single state monopoly provider authorizing interactive gaming, or legal online gaming market—the UK. and banning foreign operators the United States Department of A growing number of countries within are now finding themselves the Justice notifying the Nevada Gaming the European Union (EU) are moving target of action from the European Commission or the State Gaming to set up regulatory regimes for online Commission. Currently, about nine Control Board that interactive gaming gaming, especially poker and betting countries are in this position. As a is permissible under federal law. on horse racing and/or other sports. result, the European Commission is Through the passage of AB 258, it is becoming a driving force toward cross- However, governments are generally border online gaming and pooling clear that Nevada is taking preemptive finding that this takes much longer of liquidity—creating a degree of steps to prepare for the eventuality of and is more complex than they pressure that is missing in markets online gaming. expected. One of the key reasons is such as the US, where the political and Bills have also been introduced in that national regimes in the EU need fiscal complexities of the federal/state Massachusetts and California to to be consistent with EU law, which relationship are acting as a drag on legalize online gaming, and Iowa requires unrestricted movement of regulatory reform. and Florida are considering similar services across the Member States. In legislation. In New Jersey, the this context, the past year has seen A related issue is the potential for legislature approved online gaming a regulatory clarification, with the cooperation between different within the state, but Governor Christie European Commission mounting legal national regulators to recognize each vetoed the bill. In November, there will action to force several Member States other’s licensing regimes—as in the be a referendum in New Jersey that to open up their new—and often UK’s “white list”—or even to support will amend the state constitution and closely protected—online gaming pooling of liquidity to grow their permit sports betting. markets to operators based EU-wide. respective markets. The French and Italian regulators have reportedly been The chances of these moves helping This drive by the European discussing some form of cooperation, to trigger genuine and coordinated Commission to open up national online but it is not yet clear what the basis of progress at the state and federal level gaming markets effectively counteracts it might be. have been boosted by the gaming a 2010 ruling by the European Court industry managing to find a more of Justice (ECJ), which said EU In terms of regulatory developments in united voice in 2011. In May, the countries could ban online gaming specific countries, the UK remains the American Gaming Association made its sites, operating from offshore. This largest online gaming market globally, clearest call to date for the legalization ruling, backing an approach known having legalized it in 2005. UK of Internet poker, and commercial as “cross-border blocking,” said it was citizens can legally place bets on Web as well as Tribal casinos continue permissible to ban cross-border online sites licensed in territories that are to vocally consider the revenue opportunities that online gaming may provide. In August 2011, the California In terms of regulatory developments in specific countries, Online Poker Association—whose members include the Morongo the UK remains the largest online gaming market globally, and San Manuel bands of mission having legalized it in 2005. UK citizens can legally place Indians—began airing radio and TV advertisements urging lawmakers bets on Web sites licensed in territories that are included on to act on association-sponsored a “white list” of approved jurisdictions. As a result, most legislation to legalize online poker. online gaming activity in the UK is conducted through Overall, the message on the regulation offshore sites. of online gaming—especially poker— in the US is “watch this space.” We expect to have much more to report in next year’s study.30 PwC
    • included on a “white list” of approved In contrast with the UK, Italy has introduced a newjurisdictions. As a result, most onlinegaming activity in the UK is conducted licensing system that says online sites must be licensedthrough offshore sites. within Italy—and uses filters to block Italians fromThe main current regulatory accessing sites not licensed within the country.development in the UK is aroundtaxation. Currently, operators licensedin the UK pay a gross profits tax(GPT) of 15 percent, while operatorsbased offshore pay tax where they As we highlighted earlier, Italy is just However, in Germany, 16 of the 17are licensed with regards to the UK, one of several EU countries to have had local states that control gaming votedso those based in jurisdictions such their online gaming rules challenged. for a stake tax of 16.7 percent, raisingas Gibraltar and Malta pay much less In Greece, the European Commission fears that most users will continue tothan 15 percent. The UK government rejected the 2011 legislation regarding use the “grey market” of unlicensedhas announced that it is looking at online gambling, principally offshore operators. These concernschanging the licensing regime so that because of the requirement that all reflect the experience of France, whichcompanies offering online gaming will international gambling operations also opted for a high stake tax whenneed to be licensed in the UK, and will be incorporated in Greece and that introducing licenses for online gamingpay tax on revenues from UK consumers they have a financial guarantee from in 2010, and found that take-up ofat 15 percent GPT, or whatever the a Greek bank. The law also required regulated services was much lowerprevailing rate is at the time. that all transactions be processed by than expected. The French regulator Greek banks. It is expected that these has said publicly that the tax regimeDespite the UK’s early lead, Italy is issues will be resolved and that online does not work well. In general, levyingsoon expected to overtake the UK as gambling will become available in GPT on operators appears to be thethe largest legal online market. Online Greece in 2012. more sustainable approach.wagering in Italy was legalized in2007, online skill games (primarily In Germany, online gaming was Alongside the taxation challenges,tournament poker) were permitted banned in 2008, but new legislation France is another market in whichin 2008, and cash poker and online was introduced to reinstate it. The access to foreign sites is a contentiouscasinos began to be licensed in 2011. current draft, however, appears to be issue. The French government isWe expect cash poker and online inconsistent with EU law in favoring looking to block access to foreigncasinos to quickly dominate the online local sites and making it difficult to sites that are not licensed in France,market in Italy, overtaking online access foreign sites. In July 2011, particularly sites located in Costa Rica.sports betting, which will however still the European Commission said the ISPs are resisting these efforts.be significant. law— which Germany wants to adopt In the Netherlands, the government in January—must take account of has now approved online gaming andIn contrast with the UK, Italy has the legal requirement for greaterintroduced a new licensing system is planning to establish a regulatory openness. At this point, online gaming body to govern it. As a result, regulatedthat says online sites must be licensed is still illegal in Germany.within Italy—and uses filters to block and legal online gaming is expectedItalians from accessing sites not An equally contentious issue in the to be available from 2013. Regulationlicensed within the country. Current German regulatory landscape is how of the online sector may have anonline operators of skill games, online gaming will be taxed. There are impact on the way the physical sectorlotteries, or fixed odds games must two main approaches to taxing online is structured. This is because, onceupgrade their licenses to offer cash competition is allowed in the online gaming activities: a tax on stakes,poker or online casinos, or may apply segment, it is likely to have an effect levied directly on consumers whenfor a new license. In late 2010, the on the current monopoly in the placing bets, which tends to discourageEuropean Commission ruled that the land-based segment, which is not consumers from participating; andItalian restrictions on foreign operators sustainable under EU law. a gross profit tax (GPT) levied onwere not consistent with EU rules on operators’ winnings. Most countries In Spain, a new law passed in Mayfree access, and that Italy can only are opting for the GPT option, as being 2011 means online gaming is nowlicense and regulate gaming activity as more likely to boost growth in the regulated in the country for the firstlong as foreign companies are not at a regulated market and thereby help the time. The legislation regulates gamingdisadvantage in obtaining a license. tax take. services offered to Spanish citizens,Part II: Online gaming Global Gaming Outlook 31
    • and imposes gaming duties and levies on Spanish gaming activities on a national basis. Taxes are also levied on overseas wagers for gaming activities offered by Spanish-based operators. Gaming duties are calculated on gross gaming revenue—wagers minus prizes—or on gross wagers, depending on the type of game, at rates ranging mainly from 15 percent to 25 percent. Both Spanish-based operators and those based elsewhere in the European Economic Area (EEA: EU plus Iceland, Norway, and Liechtenstein) are allowed to apply for general and specific licenses, under a licensing process (Spain-wide lotteries are however defined as a reserved activity) that is expected to close before the end of 2011, although it cannot be ruled out that such process might be postponed, considering the political environment (particularly due to November 2011 elections). Big online operators as well as local off-line to foreign online gaming sites and to based companies are able to provide operators are expected to apply. block banks from processing financial online gaming, as customers have Other countries in Europe are at transactions with foreign sites. In to register in a shop before they various stages in a general move Sweden, online gaming is currently can use these services. This means toward permitting and regulating operated through Svenska Spel, the “pure” Internet players are in theory online gaming. In Switzerland, online national monopoly. operating illegally. However, the gambling is still banned, but a revision Czech government makes little effort The regulatory approaches to online of the country’s Gambling Act is to enforce this restriction, as reflected gaming in Central and Eastern currently under way to legalize online by the prominent football team Europe vary widely. Russia prohibited gambling and allow for a small number sponsorships and banner adverts for online gaming in 2006. In Hungary, of online licenses within the next two online gaming operators. Interestingly, Szerencsejatek Zrt, the state-run to three years. monopoly, is the sole operator of a public debate on gaming is soon set online gaming, but this situation may to begin in the Czech Republic. This Denmark is another market where may be driven by the highly political change as the Gambling Commission progress has been slowed by debates situation at the lottery company is moving to license private operators over the tax regime. A recent ECJ Sazka, which has been facing financial and allow competition from foreign ruling supports the proposed tax rate difficulties, and has historically operators, although the system would for online gaming in Denmark, so the favor domestic companies. In Poland, provided a lot of charity funding. new legislative framework is expected new laws were enacted in 2011, which to come into place on January 1, 2012. In South Africa, the National Gambling forbid online gambling except for online Belgium is also considering licensing Amendment Act of 2008 provided sports books that are hosted in Poland, and regulating private online gaming for the legalization and regulation use a Polish domain name, and process operators. Online gaming is therefore of online casino gaming. As recently transactions through Polish banks. expected to be available legally in both as 2009, South Africa had planned Denmark and Belgium in 2012. In In the Czech Republic, the Ministry on issuing ten online casino gaming Finland, RAY is the monopoly provider of Finance is currently working on a licenses. In 2010, a ruling by Northern of both land-based and online gaming, new law that would regulate online Gauteng High Court found that even which was introduced in 2010. The gaming. Currently, the practical if an online site operates through a government is looking to restrict access reality is that only Czech Republic- server located in another country,32 PwC
    • Regulatory trends Regulatory trends in Asia Pacific in Canada Although widespread, online gaming Until 2009, online gaming sites were is illegal in nearly all countries in not permitted to operate in Canada, Asia Pacific, and there has been little although Canadians did place bets change to regulation in the region with offshore sites. In 2010, British in 2010 or 2011. The culture of legal Columbia opened an online casino, gambling in the region is very much and subsequently introduced online focused on destination resorts such poker in early 2011. Loto-Quebec as Macau, and now Singapore. And shares the online poker network with while a great deal of gaming takes British Columbia and that network place online “under the radar,” the is available in Quebec. The British authorities in countries such as the Columbia Lottery Corporation, which PRC and India do not appear to be operates online gaming in British overly concerned about it. Columbia, is now looking to introduce mobile gaming as well. Looking across the region, the Philippines is the only country Ontario has announced it will offer where online and mobile gaming is online casinos and online poker, permitted. In the Philippines, online most likely in 2012, and Quebec and gaming was legalized in 2000, with Nova Scotia are also expected to PAGCOR as the sole operator. PAGCOR launch online services. There are no operates an online casino as well as restrictions to online gaming in theaccess occurs through Internet online poker games in partnership Kahnawake Mohawk Territory. Theconnections located in South Africa. with Philweb. Online gaming also Kahnawake Gaming CommissionConsequently, the online gaming takes place in the Cagayan province, issues online gaming licenses andactivity is deemed to occur in South which operates under the jurisdiction online gaming sites are hosted in thatAfrica, so the laws that currently of the Cagayan Export Zone. Like land- territory.prohibit online gaming taking place based gambling in that area, onlinein South Africa apply. The ruling was gambling is open only to foreigners. Online sports betting is permitted. Regulatory trendsappealed in August 2011, and onOctober 3, the Appeal Court rejected In Australia, the Interactive Gambling in Latin Americathe appeal and upheld the original Act of 2001 prohibited the opening Argentina and Chile are the onlydecision. As a result, the Piggs Peak of new online casinos. At the time of countries in Latin America withCasino in Swaziland, which was writing, this Act is currently under legal online gaming markets. Onlineoffering online gaming to South Africa, review by the government, but there gaming was legalized and licensedis now complying with the law. Sports is no expectation that online gaming in Argentina in 2010. Online poker isbets can be placed online in South will be legalised. Online sports betting popular in Argentina as is online bingoAfrica through licensed operators, and through licensed services is permitted. and online sports betting. Bwin hasonline lottery sales are also allowed. a license from Provincia de MisionesWhile it is currently not permissible to In India, new information technology and 888 operates in partnership withvisit an online casino, the Minister of rules were approved in 2011 that, Tower Torneos. In Chile, there areTrade and Industry has indicated that in effect, make online gaming more than 50 online casinos with newhearings into the recommendation illegal by preventing Internet users entries expected. Poker is the mostof the Gambling Review Report will from displaying or transmitting popular online gaming activity.be held before the end of 2011, and any information relating to, orthe report finalized. The report favors encouraging, gambling. In Newregulating online gaming, but much Zealand, online lottery sales weredebate is once again anticipated. In introduced in 2011, but online casinosthe meanwhile, operators have been remain illegal.warned that online gambling is illegal.Part II: Online gaming Global Gaming Outlook 33
    • Emerging change drivers As we have described, the global online gaming market as it currently exists is made up of fragmented pockets of legal and illegal spending, whose size it is often impossible to track or measure accurately. This situation is unsustainable, and further change is both inevitable and already under way. Last year, we highlighted four key change drivers that we believe will shape the industry over the coming years. These are still valid, and we revisit them here in the light of recent developments. We will then set out our view of what the online gaming markets in the US, EMEA, Asia Pacific, Latin America, and Canada will look like in five years’ time. 1. Harnessing cross-border within each jurisdiction, and whether liquidity this is sufficient to sustain a viable The trend toward national or state- and growing market. In Italy, with a based regulation of online gaming population of 60 million, or even in seen to date both in EMEA (especially California with 37 million, even the Western Europe) and the US will most demanding poker player should continue to evolve. In the US, there be able to find enough people to play are already tensions between the against. In smaller territories there geographical basis of the intrastate is a distinct possibility that there will regulation that states are trying to not be enough players within the local set up, and the inherently location- jurisdiction to sustain the growth of independent nature of Internet regulated services. services. In Europe, while the creation Given these dynamics, the best long- of ring-fenced national markets term solution to support growth in for services such as poker may be revenues and tax receipts is to allow practicable in larger countries, these cross-border gaming and liquidity will come under growing pressure to flows between different territories. interconnect and share liquidity once This has already happened with countries with smaller populations lotteries such as the EuroMillions start to implement legalized and lottery in 11 European countries, and licensed online gaming. Ongoing legal the “Powerball” multistate lottery in action from the European Commission the US. While this does not sit easily to allow citizens to access cross-border with the current state-level approach services from elsewhere in the EU will to regulating online gaming, the cross- intensify this pressure. border flows of liquidity, revenues, In both the EU and the US, the key and profit could create significant issue for providers is the critical mass operational, financial, and taxation of the number of available players challenges, both for operators and governments.34 PwC
    • 2. Setting realistic taxation 3. Varying approaches to 4. Combining online gaming and levels different online gaming social networking The opportunity to generate tax disciplines Going forward, social networking will revenues is clearly a key attraction for The variety of approaches being be an important driver of activity and governments to legalize and licence adopted to the different forms growth in online gaming worldwide. online gaming services. However, in of gambling will shape both the An early sign of this potential was the setting the levels of taxation both of regulation and growth of various explosion in gaming on the Second operators and customers, they need to forms of online gaming in different Life social networking and virtual be keenly aware of the need to balance markets. For example, poker’s status as reality site, which for a while played tax receipts and market growth. As a skill-based game deeply embedded host to hundreds of virtual casinos, we have already pointed out, gross in American cultural life and history lottery games, and other forms of profit tax on operators appears to be means that US society regards it as gambling, using in-game currency that a more viable approach than a stake the most socially acceptable of the could be exchanged for real money. tax levied on individual players. In various online gaming services with While the site banned virtual gambling France, despite the legalization of the mass appeal. Partly for this reason, we in 2007 to avoid regulatory action, it online poker market and the entry of believe that online poker providers will had already highlighted the potential several well-established operators, the be allowed to operate on an interstate for combining online gaming and levels of taxation have contributed to basis in the US within the next few social networking. disappointing levels of profitability. years. This regulatory change will Given the current proposals in represent a watershed for legalized Social networking’s role in driving Germany, there is a risk that the same cross-border online gaming, marking online gaming services could be will happen there. the start of a new era. especially significant because of its high levels of mobile usage. Skill-based There is a widespread view that some Online betting on horse racing— games and “fantasy” sports leagues— governments may be deliberately already thriving at the state level— where fans select teams of players using high taxation as a form of will also grow strongly, albeit at a from different teams and then collect prohibition to make products and gentler pace than poker. US lotteries points based on those individuals’ services less attractive, as they do will continue to spread across state performances—could be especially in the tobacco market. Whatever borders, fueled by advances such as attractive on social networking the intention, the effect is to limit nationwide online sales of tickets, platforms. A significant development the growth in the legalized market more sweepstakes, and online scratch in 2011 was Chilipoker’s launch of and restrict the tax receipts. If and cards. In contrast, given their complete Chiliconnect, a social media interface when the online gaming market absence of skill, online table games enabling players to share the results becomes truly cross-border, high have little chance of being legalized in of their online poker games on social taxation in some jurisdictions could the US in the foreseeable future. networks. Users can boast about how see liquidity migrate, stunting the much they have just won and make market’s development in the higher- One segment where different side bets with their friends. tax territories—and seeing those territories are likely to diverge most governments miss out on the fiscal strongly is sports betting. Already, benefits. European markets such as the UK have buoyant markets in online betting on major sports including soccer and cricket. However, in the US, the concerns felt by sports bodies such as the NFL means betting on sports results is unlikely to make much headway in the online environment.Part II: Online gaming Global Gaming Outlook 35
    • The global online gaming market in 2015 Here is a summary of what we think the online gaming industry will look like in each region in 2015: Region by region United States The expected federal legalization of interstate online poker games has taken longer than hoped, with a degree of political “foot-dragging” seen Throughout the forecast period, we believe that in the past year. However, with Black Friday having cleared the decks and regulation will continue to evolve in many parts opposition to online poker appearing of the world, as governments seek to reap tax to soften, we believe the logjam has now been broken. This could lead to revenues from online gaming while protecting their legalization of interstate online poker consumers. By 2013–2014, we believe there will be from around 2013—a move that will serve to legitimize the online gaming growing momentum behind moves in both the US market in general, boost usage, and act as a catalyst for developments in and the EU to pool online gaming liquidity and align other online gaming disciplines. As regulation across borders, especially in skill-based different states’ regulatory regimes for poker start to integrate and games such as poker. These trends will take much standardize, online betting on horse longer to emerge in Asia Pacific and Latin America. racing will also start to expand beyond the states where it is currently legal. Together, these trends will encourage new onshore and offshore entrants, including the US’s major “bricks-and- mortar” casino operators, which are already readying their plans for the online market. As noted above, social networking sites will be a key distribution platform for online gaming services, resulting in collaborative partnerships between gaming brands and social networks to capitalize on this opportunity. Lotteries will also expand their reach and scale through growing interstate collaboration and online pooling, combined with new online offerings. However, online table games will remain outlawed throughout the forecast period, and sports betting will continue to be dominated by the sports leagues themselves.36 PwC
    • EMEA region is still some way off. WhileDevelopment of the legalized and the illegal online gaming market islicensed online gaming market in clearly buoyant, the licensed marketEMEA will continue to be led by will still be fairly small in 2015, withWestern Europe and South Africa, many governments focusing more onwith progress elsewhere restricted by enforcing existing regulations thancultural factors in the Middle East, creating new ones, and on building upand in Central and Eastern Europe by their own bricks-and-mortar casinoa combination of legal concerns and gaming destination resorts. The legalrelatively small national marketplaces. market will largely be limited to theAs smaller EU nations begin to existing markets in the Philippines,introduce their own in-country and a handful of state-level markets inlicensing and tax regimes, particularly India.for poker, operators will want to build Latin Americacritical mass to make money from newservices. The legal online games market in Latin America will still be atCombined with the action from the an embryonic stage in 2015, ledEuropean Commission to open up by Chile and Argentina. In manynational markets, these trends will countries, the restrictions on growthintensify the pressure for interstate imposed by national regulation willliquidity pooling, stimulating bilateral be compounded by low (but rising)and multilateral agreements between penetration of fixed and mobilecountries and greater regulatory broadband services. The market ininvolvement in consumer protection individual countries will be shaped byand gaming regulation at the EU local cultural factors, such as Chileans’level. However, the requirement for love for poker and Argentinians’ likingeach operator, active in a country, to for bingo.submit to local licensing and taxationwill remain. Online games of chance Canadawill remain largely unlicensed and Canada will remain somewhat aheadexcluded from the regulatory regime, of the US in joining up state-levelas in the US, but the EU market will regulations into a coherent nationaldiffer in that online sports betting regime, with interstate collaborationon sports such as soccer will become expanding more quickly than southincreasingly prevalent across borders. of the border. The growth resultingFollowing the example of the from these trends will attract newsuccessful EuroMillions lottery, online onshore and offshore providers intoaccess to inter-country lotteries will the Canadian market, which will bealso grow. seen to some extent as a test bed for offerings and models that may later beAsia Pacific applied in the US, when regulationsThe fact that online gaming is allow. Alongside indigenous Canadiancurrently illegal in almost all countries operators, the entrants to thein Asia Pacific except the Philippines Canadian online gaming market aremeans that widespread development likely to include bricks-and-mortarof legal, licensed services across the casino companies from the US. Global Gaming Outlook 37
    • Conclusion account for 43.4 percent of global spending on casino gaming in 2015. But the Global E&M Outlook forecasts Going East – and that of total consumer/end-user spending on E&M in 2015, only 26 percent will be in Asia Pacific—albeit going digital rising strongly. So casino gaming is spearheading the wider migration of entertainment spending to Asia Pacific. Markets in the West will harness digital revenues Clearly, one reason for this faster eastward shift in revenues is that our casino gaming forecasts are Leading the way in E&M’s essentially looking at off-line, non- migration to Asia Pacific digital revenues. Drawing again from The financial balance of power in the latest Global E&M Outlook, we the global casino gaming industry find that the proportion of overall will have undergone a fundamental E&M spending going into digital eastward shift by 2015, with Asia media and experiences will continue Pacific overtaking the US as the to rise throughout the forecast biggest regional market in terms period, increasing from 26.0 percent of revenues. This seismic change of spending in 2010 to 33.9 percent will be accompanied by dramatic by 2015. evolution in several aspects of the industry, as online gaming becomes In the gaming industry, the pace an increasingly regulated mainstream and scale of the migration to online activity, and as usage and revenues spending is clearly much more take off in many markets. difficult to call, given the fragmented regulatory landscape for online To put these shifts in spending and gaming, the varying speeds at which behavior in context, it is useful to regulation is changing in different compare the outlook for casino jurisdictions, and the current gaming with other segments of the uncertainty in many countries over the Entertainment & Media (E&M) boundaries between legal and illegal industry. The projections in our Global services. For these reasons, we have Entertainment and Media Outlook: not attempted to provide hard revenue 2011–20151 indicate that spending on forecasts for online gaming. E&M—both overall and specifically by consumers/end-users—will grow However, given that the move toward much faster in Asia Pacific than in regulation of online gaming is more EMEA and North America in the next advanced in the US and—more five years. However, despite being particularly—EMEA than in Asia outpaced in growth terms, those two Pacific, it seems likely that the long-established markets will still be eastward shift in spending on the significantly larger than Asia Pacific physical casino experience may be in 2015. offset in those Western markets by rising spending on online gaming. In contrast, the gaming sector will be Meanwhile, the market in Asia much more advanced in the eastward Pacific will remain dominated by the migration of spending, with Asia region’s hugely successful destination Pacific already well ahead of EMEA resorts, with little incentive to drive today, and set to overtake the US as development of regulated online the biggest market in 2013. By way gaming, which will remain largely of comparison, our projections in a “gray market” and underground this study show that Asia Pacific will activity. 1 www.pwc.com/outlook38 PwC
    • Online gaming: complementary A dramatic demonstration of what will spend their time and money on,—not cannibalistic is achievable is the rapid expansion amid the explosion in entertainmentThe prospect of ongoing growth of Singapore in the past two years. choices available to them.in online gaming revenues raises There is clear scope in Europe for a major new resort destination of the Gaming’s intense balance of risk andthe question of whether these will type being proposed in Spain. In Asia reward gives it a special appeal forbe additional to existing off-line Pacific, several countries—Japan many people. To turn this sentimentrevenues, or will cannibalize them. included—have the opportunity to into profits, operators need to ensureOur expectation is that much online emulate at least some of the success they keep pace with consumers’spending will be incremental to the generated by Singapore. changing tastes, needs, and lifestylephysical gaming industry rather behaviors. The rise of online gamingthan substitutional—a tendency Economic factors in markets such as the UK and Italy,that will be helped by the ongoing Alongside these changing competitive and Singapore’s rapid emergence as adrive by physical gaming locations to dynamics, the key imponderable gaming destination, are cases in point.enhance their offer by building moreattractive casino facilities with better factor is the global economic cycle. The main challenge facing the industryaccommodation and a wider range of Currently, there are widespread fears during the next five years is knowingleisure choices. In doing so, they are in the US and Europe of a double- who its consumers are, understandingfurther differentiating the experience dip recession. In line with this, the their changing needs and behaviors,of physical gaming from its online indicators in markets such as Las Vegas and staying close to them, therebycounterpart. remain largely positive, but still mixed, ensuring the experience they provide suggesting that recovery is ongoing is sufficiently compelling to overrideIt is currently not possible to reach but fragile. Nobody is forgetting that in other potential choices. This needan accurate assessment of how big 2009 the economic downturn caused applies in all segments and countries,online gaming revenues will grow, as casino gaming spending in EMEA to and at all levels of spending, fromservices become increasingly cross- slump by 12 percent, and to decline by occasional online gamblers to avidborder and mainstream. Experience 3.5 percent in the US. In the same year, social networkers to casino-loving highto date suggests they will mainly be growth in Asia Pacific bottomed out at rollers.complementary to bricks-and-mortar a positive 7.1 percent.revenues. For example, after Black As we have seen, the regulated bricks-Friday in the US, a flood of people A renewed onset of economic and-mortar casino gaming industry ismoved from online poker to card difficulties could trigger a similarly leading the wider eastward migrationclubs—suggesting online gaming negative impact on confidence and of entertainment revenues. The lackmay even play a role in positively spending in some markets, especially of hard information on overall onlineattracting former non-players to try given the plans for deep cuts in public gaming revenues makes it difficultout the physical gaming experience. spending in many countries. If a to assess whether it is leading theIn our view, the impact of rising online double-dip recession in Europe and migration to digital as well. Thegaming spending may well be felt the US were to come about, the impact ongoing advance in regulation, alongmore keenly among alternative leisure could well be to see the balance of with the online gaming revenuechoices such as video-on-demand than global spending shift more rapidly to opportunity, is clearly growing rapidlyamong physical casinos. Asia Pacific by 2015—and possibly in many markets. accelerate the migration to onlineNew powerhouses will emerge gaming services in the West. The Simply stated, the next five years willWith online gaming being Global E&M Outlook confirms that one see rapid and pervasive change incomplementary to bricks-and-mortar impact of the downturn has been to every segment of the casino gamingrevenues, this means there will be speed up the move to digital media in industry. Now is the time for allmore than enough room in the market, other entertainment segments. participants to plan for this change—both for online and physical gaming and to stake out the right positioning Evolving consumer behavior: theservices, provided they each provide in the new landscape of 2015. biggest challengea compelling experience in their ownway. The continued opportunities for Across all segments and formats, thephysical casinos will be underscored ultimate determinant of the casinoby the rise of new gaming destinations gaming industry’s future growthto challenge the established centers, as through 2015 will be its ability tomore governments seek to capitalize continue to engage and excite its targeton gaming’s potential to generate tax consumers. This means producingrevenues and tourism dollars. offerings and experiences that people Global Gaming Outlook 39
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    • EditorialcontributorsGlobal Editor-in-ChiefMarcel Fenez Mary Lynn PalenikGlobal leader, Entertainment & Media Director, Gaming Research & Analysismarcel.fenez@hk.pwc.com mary.lynn.palenik@us.pwc.comAustralia Mexico United KingdomMegan Brownlow Luis Garcia-Martinez David Trunkfieldmegan.brownlow@au.pwc.com luis.garcia-martinez@mx.pwc.com david.trunkfield@uk.pwc.comCarol Sweeney Roberto Lopez John M Waterscarol.sweeney@au.pwc.com roberto.lopez@mx.pwc.com john.m.waters@uk.pwc.comDavid Wiadrowski Singapore United Statesdavid.wiadrowski@au.pwc.com Charlotte Hsu Jim Brewer charlotte.hsu@sg.pwc.com james.f.brewer@us.pwc.comCanadaTracey Jennings Greg Unsworth Marco Carduccitracey.jennings@ca.pwc.com greg.unsworth@sg.pwc.com marco.carducci@us.pwc.comPaul Van Eyk South Africa Michael G Frenchpaul.van.eyk@ca.pwc.com Pietro Calicchio michael.g.french@us.pwc.com pietro.calicchio@za.pwc.comCzech Republic Fred HipwellDaniel Cappelletti Nikki Forster frederick.hipwell@us.pwc.comdaniel.cappelletti@cz.pwc.com nikki.forster@za.pwc.com Sharon LewisGreece Sunet Liebenberg sharon.lewis@us.pwc.comGeorge Nikas sunet.liebenberg@za.pwc.com John B Pagegeorge.nikas@gr.pwc.com john.b.page@us.pwc.com SpainMacau Patricia Manca Diaz Charles RussellDilys Cheng patricia.manca.diaz@es.pwc.com charles.russell@us.pwc.comdilys.cheng@hk.pwc.com Alvaro Sanchez-Herrero Kirk A Thorell alvaro.sanchez-herrero@es.pwc.com kirk.a.thorell@us.pwc.com Switzerland Patrick Schwendener patrick.schwendener@ch.pwc.com© 2011 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member firms of PricewaterhouseCoopersInternational Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not actas agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of itsmember firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions ofany other member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way.HB-2011-10-31-1305-CG
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