Social Gambling_click here to play_Morgan Stanley Blue Paper_nov 14_2012
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Social gambling is a surprisingly large and high-growth industry. Convergence between online (real money) and social (virtual currency) gambling is the hottest topic in the gambling industry. We see ...
Social gambling is a surprisingly large and high-growth industry. Convergence between online (real money) and social (virtual currency) gambling is the hottest topic in the gambling industry. We see social gambling growing from $1.7bn today to $2.5bn by 2015, and see it as a rich source of customers that could boost growth rates for real money gambling. This reports looks at the drivers of growth, the key uncertainties, and what this could mean for the leading operators. How fast will it grow? The 170 million social gambling player base is over triple that of online gambling, and is opening up gambling to a new pool of customers. Conversion to online gambling would drive growth, but the different motivations of social and real money gamblers mean this is not guaranteed. Our optimistic scenario models market growth to $7bn by 2015; our bearish scenario is a market of $1.8bn, with our central case at $2.5bn. How will it evolve? Social gambling is unregulated and so thrives where online gambling is restricted. Regulation of real online gambling in currently unregulated jurisdictions could drive higher conversion rates and boost industry growth, allowing social and real money gambling to converge. We examine how this might develop and the impact on operators. Which companies will benefit? Online gambling companies and social gambling companies enjoy complementary advantages, so consolidation looks likely. Winners will be defined by scale, strong balance sheets, technology, marketing and regulatory skills. Zynga, bwin.party, 888 and IGT all have exposure to growth in social gambling, and are well positioned for ongoing convergence, we think. Other potential winners include Betfair, Paddy Power and WMS.
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