- How big is the online gambling industry?
- Which is the major market geographically?
- How increasing internet penetration and mobile users are contributing to the growth?
Historically, gambling has been a means of entertainment, wherein people gambled at casinos, poker rooms, game parlours, bookmakers and in the contemporary world gambling has moved online.
The heightened use of mobile phones and devices, growing penetration of the internet and recently relaxed regulations on gambling and betting are driving the growth of the global gambling industry. Online gambling is a relatively newer leisure pursuit as compared to land-based gambling and is one of the growing industries in the European Union and in other parts of the world. This refers to a form of gambling game played through remote devices such as computer or mobile via the internet.
Lately, the global online gambling market has exhibited a steady growth with a dynamic and rapidly changing business environment. According to the H2 Gambling Capital report, the global online gambling market is set to grow at a CAGR of 9.6% (2016-20) and will aggregate to £48.1 billion (2020).
The annual revenue generation of the gambling industry is measured by the GGR (Gross Gambling Revenues=total amount wagered) or the GGY (Gross Gambling Yield=total amount wagered less prize won). Europe holds the largest market share for online gambling and contributes almost half to the world market. Its global market share increased from ~45% (2012) to ~48% (2015) in terms of the GGY and grew at a CAGR of 12.3% (2012-15).
There are several reasons for a continuous growth in the online gambling market. This includes increasing use of mobile phones, growing internet penetration and mobile gaming, changing gambling habits, market consolidation, technology and relaxed regulations on online gambling as stated above.
Presently, more than 60% of the people around the cosmos use mobile phones and it is estimated that more than half the global population will use internet by 2019. According to the eMarketer’s report 2015, a faster mobile uptake is expected to drive the total internet usage. Furthermore, mobiles overtook desktops in terms of the internet use with nearly one in every three individuals accessing the internet on a mobile phone (2015), which is estimated to reach ~83% (2019). This rise in mobile phones, especially smartphones and tablets has contributed to the growth of gambling. According to the Juniper Research, the number of people using mobile devices to gamble is estimated to reach 164 million (2018) from 64 million (2013).
Mobile phones as driver of growth in online gambling
The share of global mobile gambling from all interactive online gambling market is projected to be 45% (2021). The ongoing growth in the smartphone and tablet penetration is the key driver for the journey from 10% (2009) to roughly 45% of the market share. According to the study by H2 Gambling Capital, ~5% of the total gambling and betting revenue will be generated via mobile devices (2021).
Televisory researched leading Europe based online gambling companies and examined the role of mobile in propelling the growth of revenue. The companies which were analysed are Paddy Power Betfair plc (Paddy); Ireland, William Hills Plc (William); the United Kingdom, Kindred Plc (Kindred, formerly Unibet Group Plc); Malta, 888 Holdings; Gibraltar, Betsson AB (Betsson); Sweden and Mr Green & Co AB (Mr Green); Malta.
*William Hills Plc, 888 Holdings launched mobile-based gambling in 2013, Mr Green & Co AB started online gambling business in 2013, Betsson AB’s data not available for 2011 and 2012
In Europe, the gambling revenue from mobile devices has already crossed 50% of the share in the total online gambling revenue for the leading companies. Additionally, the market leaders have been merging in order to increase their market share through economies of scale. This can be seen by revenue spikes in the above chart at Paddy Power Betfair Plc and Kindred Plc, these recently did mergers and acquisitions.
1. Market share estimated on online gambling revenue of the companies and excluding land-based gambling.
2. Market share of Ladbrokes and Gala Coral Group calculated via pro forma revenue.
Ease of betting due to change in technology
The technological revolution has offered new platforms for the industry players, it has also provided an ease of access while at the same time changing the industry dynamics. Hence, operators are now able to provide better online casino games, online slots, poker, etc. with improved access to sophisticated mobile casinos or betting entertainment along adapted mobile compatibility. In addition, the current availability of the internet, even in the remotest parts of the world offer the convenience of live admittance in a casino game and sports event for betting. The secure payment gateways provided by the banking system is also instrumental in the growth of the mobile gambling.
Frequent online gambling, particularly on mobile devices
The online gambling frequency doubled than the land-based gambling as per the study by Gainsbury, Parke and Suhonen (2013). The research revealed that 43% of the internet gamblers gamble four or more times per week, whereas this is mere 19.3% of the land-based gamblers. According to the Gambling Commission report (2016), 43% of the online gamblers used mobile phones or tablets in Great Britain. This was an increase of 10% from the preceding year (2015). It can be stated that the convenience of mobile, user-friendly interface and accurate live statistics keeps gamblers engaged with much frequency than the land-based or traditional desktop gambling. Moreover, as per a study by the Optimove, mobile gamers convert 1.9x faster than web players. While mobile gamers make their first payment in 30 days, web gamers conversion period goes up to 52 days after their initial session (Source: Optimove). Further, seamless switching between mobile gambling and other activities also provide gamblers with an ease of access.
The global gambling market is anticipated to witness a CAGR of 5.7% (2016-22) and will aggregate £495** billion [2022 (Source: Research and Markets: Worldwide Gambling Market 2016-22)]. The increasing share of online gambling in the total gambling market is driven by mobile devices and better internet penetration. Hence, mobile betting and gambling will continue to be a significant growth area for the online gambling industry with more customers betting or gambling regardless of their locations. Presently, almost a third of bettors and gamblers have used their smartphones to gamble online (Source: Mintel; Deloitte-future of British remote betting and gaming). This is a major reason for most online gambling companies to start mobile gambling platform or develop mobile gambling applications. Further, virtual currencies are gaining popularity among online casino gamblers due to the ease and speed of transactions, and are also benefiting this industry. The changing technology, consumer behaviours and other trends have a massive impact on the online gambling industry. Thus, to stay profitable and highly competitive it will be necessary for online gambling operators to adapt to the fast-changing market dynamics and meet the demands of consumers opting for mobile gambling.
**$635b converted into current conversion rate dated 22nd Nov. 2017