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Online gambling market research june 1, 2010 (1)


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An overview of the online gambling environment around the world. Dan Enright

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Online gambling market research june 1, 2010 (1)

  1. 1. Online Gambling Market Research 2010 June 01, 2010 Author: Dan Enright Contact: Dan Enright Consulting San Francisco, CA 94107 Email: Phone: 415-282-6792 1
  2. 2. Table of Contents I. Purpose II. Methodology III. Executive Summary IV. Internet Usage Charts V. UK and Europe VI. Australia/N.Z and Asia VII. Global Online Gambling Legal Matrix by Country VIII. Reference Section 2
  3. 3. I. Purpose. Research current worldwide online gambling trends and legal status by country. Conduct primary research for online gambling in the UK, Australia/N.Z. and Singapore. Provide statistical data through secondary research on relevant regional world markets. II. Methodology. Primary research was conducted through an online survey to residents of the UK, Australia/New Zealand and Singapore. Secondary market research consisting of user generated internet content was used to investigate, correlate and bring insights forward on market facts, issues and trends. III. Executive Summary Online gambling was initially greeted with great enthusiasm in 1996 starting in Canada and moving across the globe as governments sought a new revenue channel through the internet. Within years, social pressure and unregulated controls brought many governments to question their online gambling practices. Beginning in 2002, social ills and loss of legal/financial controls brought the scrutiny of many governments who elected to restrict or ban the practice. Today, with the global financial collapse, many governments are reviewing their online gambling laws. Billions in revenue are being transferred to other economies and governments are in need of new revenue streams. Once again, online gambling laws are expected to be relaxed or eliminated throughout the world in 2010 and 2011. In spite of the current global financial crises, the world's gambling market is set to grow from US$345bn in 2007 to US$433bn by 2012 according to a new report published by Global Betting & Gaming Consultants (GBGC)1 . Global gambling revenue is estimated to pass $144 billion in 2012 after growing at an annually compounded rate of 6.5 percent per year, according to a PricewaterhouseCoopers LLP report2 . By 2012, it is estimated that the online gambling industry will generate over $24.4US billion in revenue worldwide 3. In terms of primary research insights, women are more apt to influence and or control the purchasing decision for online shopping/auctioning. More women play games online (video games excluded) while more males tend to gamble on online. When users go online they tend to use the popular portals to view content or shop online including but not limited the internet powerhouses Yahoo, Google, eBay, uBid, Amazon, and others. This could be in part due to their product offerings, content, customer experience and search features. World internet users today are dominated by Asia, Europe and North America regions of the world mirroring the developed nations of the world (Chart A3). For the first time in 2009, China has surpassed the United States as having the most internet users now topping 298 million (ChartA1). Given the fact that English is a top global language both as a primary and secondary language, it remains the most often used language on the internet followed by Chinese, Spanish and Japanese (Chart A2). Online Gambling Market Research 2010 – con’t 1 Global Betting and Gaming consultants, Oct, 2008 Global Gaming Report. 3 Online casino, Nov, 2008 2 3
  4. 4. IV. Internet Usage Charts4 A1. Top 20 Countries by user Internet Top 20 Countries - Users Argentina Poland Vietnam Iran Canada Indonesia Turkey Mexico Italy Spain S. Korea Russia France UK Germany Brazil India Japan US China 20 20 21 23 24 25 26.5 27.4 28.4 28.6 36.8 38 40.9 43.8 55.2 67.5 81 94 227.2 298 Millions 4 Internet World Stats. 2009 4
  5. 5. Online Gambling Market Research 2010 – con’t A2. Top 10 Internet Languages Top 10 Internet Languages 600 500 400 300 200 100 En gl i Ch sh in e Sp s e an Ja is h pa ne s Fr e en Po rtu ch gu e G se er m an Ar ab i Ru c ss i Ko a re Al l O an th er s 0 Millions of Users A3. World Internet Users by Region World Internet Users by Region a/ Au st Ea st O ce an i M id dl e Af r ic a Eu ro pe Am er La ica t.A m /C ar ib b No rth As ia 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 5
  6. 6. Online Gambling Market Research 2010 – con’t V. UK and Europe There are two main approaches that were adopted by the various countries in Europe. Traditional Western Europe which includes France, Italy, Spain, Portugal, Belgium and Germany initially aimed to restrict or even prohibit online gambling. More liberal European countries such as the UK, Scandinavia and the Netherlands attempted to establish a regulated and safe online gambling environment for their citizens. The UK today is a world leader in comprehensive online gambling regulation. See section VII for legal status of online gambling by country. European Parliament studies indicate the sector is growing by between eight percent and 17 percent a year in the EU, even as other industries shrink amid the economic downturn. Online gambling trends in Europe Europeans have always had an aversion to the American style of casino gambling. Not only are businesses smaller, but they are more protected by the government and more heavily based on what they call "good causes" and social control. Recent efforts to create a single EU-wide market for online gambling were rejected by the European Parliament earlier this year. In March 2009, the bloc's legislative body voted by a large majority against such a move, while branding the sector a risk factor in fraud and addiction. While a setback for an open style market, expect remaining restrictions or limits for online gambling to diminish in 2010 and 2011 as governments look to control the market and gain greater revenue from online entities. Primary Research Highlights: - More women then men shop and play games online. This is a trend that is similar worldwide in developed nations. Men are more apt to gamble online then women. Men have a greater propensity for risk with money. Online gambling is legal/restricted/throughout Europe except for Germany. Expect restrictions to be reduced in the coming years. Office pools or betting pools are not widely known outside of the US. Online purchases tend towards apparel items under $100.00. Online purchases are made with bank cards and to a lesser extent with credit cards. Credit cards are still not widely used in some European countries (Germany, Italy) due to cultural norms and associated costs with using credit. Popular online games are card, word and puzzle. Customer support and search are top rated site features. Product offerings, information and photos are standard features. Users tend to use sites that are familiar, easy to use, secure, and provide the necessary data in which to make decisions. Google and Yahoo are most often used portals. 6
  7. 7. Online Gambling Market Research 2010 – con’t VI. Australia/N.Z and Asia Time-honored Asian gambling has been a recreational tradition among most Asian countries since about 900AD when the Chinese first invented playing cards. Not only do the Asians love gambling in a wide variety of forms, skill games to common casino table games, but they are also one of the fastest developing markets for online gambling. See section VII for legal status of online gambling by country. The Asia Pacific region is the world’s fastest growing gambling region with new resorts in the Chinese enclave of Macau as well as Singapore and Thailand helping generate increases. For the 2008 fiscal year, Macau's gaming revenue rose by 31% year on year to a record of US$13.7 billion. Fast forward to present day and recent statistics put gaming revenues on track to surpass last year’s result. In fact, revenues generated in September 2009 were 60% above the comparable period a year ago. Current forecasts call for revenue growth to increase approximately in the 20% range in 20105. Asia is an online gambling industry hot-spot because: - Asia is the fastest growing region in the world - Asia is experiencing strong economic growth. - Asians have a strong tendency to gamble. - Middle-class Asians are emerging as a new buying market in the entertainment field. - Many legalized gambling markets remain undeveloped. - Australians are free to gamble online through offshore sites Questions of legality in Asian countries Asians have moved in and out of the online gambling industry due to the never-ending changes made to their legal systems and gambling legislations. Despite the massive appetite for gambling of all forms, as well as a permissive technical infrastructure, the legality of online gambling has been declared explicitly criminal in many Asian jurisdictions and remains entirely questionable in others. The reason behind this is a complete lack of comprehensive gambling laws and or reference to the remote gambling industry. In Singapore, for example, betting-houses are prohibited, yet are defined as any place used for habitual wagering on events or contingencies despite the public ability or inability to have access to it. The definition can be interpreted in a number of ways, and it is therefore risky for industry professionals to base their business on this fine line. Other hurdles blocking the expansion of the industry include cultural and political instability. Areas such as Laos and Cambodia have significant safety issues, and various religious constraints imposing restrictions in most countries aside from Macau and the Philippines. 5 Wall Street Strategies, Oct, 2009 7
  8. 8. Online Gambling Market Research 2010 – con’t Horse-racing and lotteries are the most commonly accepted forms of online and offline gambling in Asian countries. Where it is permitted, online casino gambling is popular with poker the preferred game. In some areas, the government has been keen to preserve a monopoly control over online gambling, such as the Philippines, who for several years was dominated by the state. Today's emerging Asian markets include Vietnam, Myanmar and Thailand. Online gambling trends in Asia Online gambling in Asia has developed greatly since the first Asian online casino was launched in 2000, yet still has a long way to go before becoming a fully-fledged developed market. The belief held by analysis experts and industry professionals is that the restrictive environment that has been maintained until now has only strengthened the Asians' desire to turn to online gambling in an attempt to prove their governments and legislations ineffective in trying to prohibit it. Similarly, offshore competition believes that eventually, jurisdictions will be forced to legalize it. In addition, many of today's governments are trying to adopt more flexible approaches for society, and as such Macau and the Philippines are being called the Las Vegas of Asia. With so many developments and so many expectations hanging on them, the pace of online gambling growth in Asia is not expected to slow down any time soon. As with other regions in the world, the need to control online gambling along with the need for new revenue streams will cause governments to lower or reduce online gambling restrictions in 2010 through 2011. Primary Research Highlights: - More women then men shop and play games online This is a trend that is similar worldwide in developed nations. Men are the prevalent online gamblers in this region. Men have a greater propensity for risk with money. Online gambling is restricted throughout Asia except for Macau, Philippines and Australia. Expect governments reduce restrictions in 2010 through 2011. The term pools is somewhat understood in Asia. In Singapore, people tend to play games in groups or pools. Also, another contributing factor to the awareness of the word pools is a popular gambling site called Singapore pools. Online purchases are higher in Australia than in Europe. Due to the geographic nature of the country, people expect to pay more for goods and shipping. Online purchases are made with bank cards vs. credit cards. Fees tend to be higher for purchases using credit cards than with bank cards. Popular online games are card, word and puzzle. Google and Yahoo are most often used portals. Users prefer sites that are familiar, easy to use, secure and provide the necessary data in which to make decisions. 8
  9. 9. Online Gambling Market Research 2010 – con’t VII. Global Online Gambling Legal Matrix by Country World Wide Online Gambling Legal Situation Legalized Jun 23, 2008 Interactive gaming (casino games and poker) and interactive wagering (sports betting) are legal and regulated on the islands of Antigua and Barbuda. Argentina Banned Sep 30, 2009 Argentina will be working toward legalizing and regulating online gambling over the next few months. Australia Partly Legalized May 27, 2008 According to the Australian Interactive Gambling Act 2001, it is illegal to provide online gaming services to Australian citizens but it is not an offence to actually play poker or casino games online. Sports betting is legal with many government licensed providers in operation. Austria Partly Legalized Apr 30, 2008 State monopoly, challenged and currently reevaluated under European Union pressure. Belize Partly Legalized Jun 24, 2008 Online gaming licenses may be issued to companies operating from Belize, in line with the Gaming Control Regulations of 2004. Sites licensed in Belize, however, are not permitted to accept wagers from Belize residents. Bulgaria Undetermined May 01, 2008 In the process of legalizing and regulating online gambling in the country. Canada Undetermined May 08, 2008 While online gambling is not yet legal in Canada, many Canadians play at websites located at jurisdictions other than Canada, and even at Kahnawake-based online casino sites, hosted by the Mohawk First Nations of Canada. China Banned Apr 30, 2008 Online gambling is banned in China, as is casino gambling, save the mightily successful region of Macau, where there is talk that Internet gambling may be introduced next. Costa Rica Partly Legalized May 12, 2008 It is against the law to accept bets on gambling games in Costa Rica, but the industry has designed ways around it. As for games, some are legal, some not, and the legal status of the rest is undetermined. Cyprus Legalized Jun 23, 2008 Online lotteries, betting exchanges, casino gaming and sports betting are all legal in Cyprus. The government has proposed a stricter online gambling law that has yet to become law. Denmark Partly Legalized Apr 30, 2008 State monopoly online gambling, reconsidered by Danish government in light of European Union criticism. Dominica Legalized Jul 01, 2008 Dominica offers licenses to online casinos and sportsbooks. There is no tax on profits or income of non-permanent residents. The company must maintain a physical presence in Dominica. Antigua & Barbuda 9
  10. 10. Dominican Republic Partly Legalized Jul 02, 2008 The Dominican Republic licenses online sportsbooks. No new license, however, has been granted to a sportsbook operating primarily from outside the Dominican Republic since 1996. Finland Legalized May 11, 2008 Online gambling is popular in Finland, but the country is trying to curb the casino sites through such propositions as allowing gamblers to recoup their losses. France Partly Legalized Sep 30, 2009 The French Parliament will vote on a bill that will open up the local online gambling market to foreign companies in addition to its current state run monopoly. Germany Undetermined Nov 05, 2008 All 16 German state legislatures have voted to ban online gambling, which makes it illegal, only the case is challenged by the industry at the European Union Court. Gibraltar Legalized May 01, 2008 Gibraltar has been a major online casino center for years, and maintains a steady position as such. Hong Kong Partly Legalized Jun 29, 2008 Only the Hong Kong Jockey Club is authorized to offer betting on lotteries, horseracing and football online. Offshore providers are not permitted to offer online gambling services in Hong Kong. India Undetermined Sep 15, 2008 There are no laws that address online gambling in India. There are casinos in Goa hotels, while gambling is prohibited elsewhere, but the status of its Internet form of gambling is not determined. Ireland Legalized May 26, 2008 Online gambling is legal in Ireland. Gambling winnings in Ireland are tax-free. Israel Banned May 01, 2008 Online gambling is banned in Israel, and its parliament has even considered censoring the Internet to prevent access to online casino sites. Italy Legalized Sep 18, 2008 Online gambling has been legalized in Italy in September 2008, in stages, as the government attempts to limit the hours people play online and control the market generally speaking. Jamaica Legalized Jun 30, 2008 All forms of gambling in Jamaica are regulated by the Betting, Gaming and Lotteries Commission (BGLC). Japan Banned Mar 19, 2009 Today only horse and motor racing are legal to gamble on in Japan, while the Lottery, Pachinko, and Mahjong are classified as amusements, thus legal. The government has started debating legalizing online casinos in Japan. Korea South Banned Jun 10, 2008 The law in South Korea makes it illegal for players to gamble online. Liechtenstein Partly Legalized Jun 29, 2008 Only the government-controlled lottery, PlusLOTTO, is permitted to offer gambling services over the internet. Macau Undetermined Jun 30, 2008 The Macau Jockey Club and the Sociedade de Loterias e Apostas Mutuas de Maceau are authorized to offer online sports betting. There is currently no regulatory framework for foreign providers wishing to operate remote services from Macau. Malaysia Banned May 12, 2008 Though football sports betting is popular in Malaysia, online gambling is illegal. 10
  11. 11. Malta Legalized May 01, 2008 Mauritius Legalized Jul 01, 2008 Mexico Legalized May 11, 2008 Several online casinos operate in Mexico since 2002, when the government granted licenses for these gambling operations. Netherlands Partly Legalized Apr 30, 2008 State monopoly under fire by European Union members for stifling free and fair competition. New Zealand Partly Legalized Jun 10, 2008 TAB and the New Zealand Lotteries Commission are authorized to offer lottery products and sports betting over the internet. Other online gambling providers, however, are prohibited from entering the market although is not illegal for New Zealanders to gamble with offshore providers. Norway Partly Legalized Dec 17, 2008 The government banned online gambling in December 2008, a ban that will come into force by the end of 2009. The ban, challenged by the EU, means only state-owned gambling services will remain legal. Panama Legalized Jun 24, 2008 Panama began to regulate electronic games of chance and wagering activities in 2002. Internet gaming providers can essentially operate tax-free when accepting foreign wagers. Philippines Legalized May 26, 2008 Few companies allowed to issue licenses to online casinos based in the Philippines. Poland Banned Apr 24, 2008 Internet gambling is unregulated, but government officials announced that will change in the second half of 2008. Portugal Partly Legalized Sep 30, 2009 The EU Court of Justice has ruled that the Portugal state-run monopoly, banning external online gambling providers from catering to the Portuguese players, is legal as long as it is justified in combating crime and fraud. Romania Undetermined Mar 19, 2009 Casinos, the kind you find in hotels and resorts, are legal in the country. Online gambling, however, is not addressed by the law in any way. Banned Jul 02, 2009 Online gambling is banned, along with all forms of casino gambling, in all but 4 regions in Russia, starting July 1, 2009. Seychelles Legalized Jul 01, 2008 Seychelles offers licenses to online gaming providers under the Interactive Gaming Act of 2003. Companies need not be based in the Seychelles but must have a company representative living on the island. Singapore Undetermined Aug 14, 2008 Singapore laws strictly prohibit online gambling and the advertising or promotion of gambling venues. South Africa Legalized Jul 27, 2008 The National Gambling Amendment Bill was approved by the President in July 2008 and caters for the legalization and regulation of the South African online gaming industry. Spain Legalized May 04, 2008 Gambling online is legal in Spain, where regions have the liberty to set their own rules regarding the issue. Swaziland Partly Legalized Jun 29, 2008 Swaziland-based sites are banned from accepting Russian Federation Malta is a central location for online casino companies. Mauritius has been offering licenses to online gaming operators based in the country since 1996. 11
  12. 12. wagers from South African residents. Piggs Peak Casino, however, is authorized to offer online Rand gambling to Swaziland, South Africa, Namibia and Lesotho. Sweden Legalized May 11, 2008 Online casino gambling is legal in Sweden, under European Union rules and regulations, but a ban on advertising is currently in place, though challenged. Taiwan Undetermined Mar 19, 2009 A gambling ban was lifted by the government in January, 2009 and the government has since began formulating a plan for the future of casinos in the country. Are online casinos next to be favorably addressed? Tanzania Legalized Jun 30, 2008 In December 1999 the Gaming Control Act was amended, legalizing online gambling in Tasmania and providing a licensing system for fixed-odds wagering, sports betting, simulated games and lotteries. Thailand Banned May 04, 2008 Thailand forbids any sort of gambling on the Internet. Turkey Partly Legalized May 26, 2008 A law was passed in 2007 outlawing online gambling in Turkey, although the partially stateowned sports betting company, IDDAA, remains unaffected. UK Legalized Apr 24, 2008 Legalized and regulated under the Gambling Act 2005. Ukraine Banned Jul 02, 2009 Online gambling, along with casinos across the country, are banned. USA Banned Apr 24, 2008 Banned under the Unlawful Internet Gambling Enforcement Act, Title VIII of the Safe Port Act, with exceptions of fantasy sports, online lotteries, and horse racing. Vietnam Undetermined May 04, 2008 Currently, all forms of gambling save the state lottery are illegal in Vietnam, but the country is considering regulating an online gambling industry. 12
  13. 13. Online Gambling Market Research 2010 – con’t VIII. Reference section Gambling/Gaming Sites Other 13
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