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Dimensions of the legal gaming services industries in the European Union

Based on EU best estimates of the size of the commercial gaming industries among the 25 Member States of the European Union, the combined sectors of lottery, casinos, gaming machines, betting services, and bingo generated Gross Gaming Revenues (gross winnings after payment of prizes, represented in the text as GGRs) of €51.5 billion in 2003. (See Table 1.) This compares to the legal American gaming industries which in 2003 generated Gross Gaming Revenues (GGRs) of US$72.8 billion (€60.7 billion (1), (2).) Researchers were unable to find adequate data or published descriptions to establish the size and characteristics of the media games, charity gaming, and promotional games sectors among Member States of the EU. Neither published government sources nor submissions invited from stakeholders in the preparation of this report yielded information or data adequate to provide reasonable estimates of these particular sectors of Member State economies. Therefore, no comparable figures can be presented for these gambling services sectors.

Based upon a review of other studies on remote and internet gaming – as well as survey data collected as a portion of this study – our best estimate of the size of the European Union remote and internet gaming sector (that sector which offers gambling services via the internet, through mobile phone services, and through interactive television wagering) represented between €2 billion and €3 billion in GGRs from EU consumer expenditures in 2004, and growing rapidly. The global remote and internet gaming industry is forecast to grow from about US$9 billion (€7.5 billion) in 2004 to US$25 billion (€20.8 billion) in 2010. (3)

Though aggregate GGRs are similar between the US and EU as of 2003, their composition differed considerably between the European Union Member States as a group and the United States. For example, in the United States, commercial and tribal casinos generated about US$42.1billion (€35.1 billion) of the total US GGRs in 2003 (58% of the US total), whereas in the EU, casinos comprised only about €7.5 billion of GGRs, 15% of the EU total.

In the United States, gaming machines (also referred to as slot machines, Electronic Gaming Devices, or Video Lottery Terminals) outside of casinos are still relatively uncommon; in 2003, such devices generated GGRs of US$3.9 billion (€3.2 billion), 5% of the US total whereas in the European Union, gaming machines generated GGRs of €9.7 billion, 19% of the EU total. Lotteries in the United States generated GGRs of $17.4 billion (€14.5 billion) (excluding Video Lottery Terminals), 24% of US GGRs, whereas in the EU, lottery GGRs were €23.0 billion, 45% of the EU total. Betting services, including on-track and off-track betting on horses and sports, amounted to only US$3.9 billion (€3.2 billion), 5% of US GGRs, whereas in the EU, the comparable statistic was €8.9 billion, 17% of the EU total. Finally, bingo services and charitable gambling generated about US$4 billion (€3.3 billion), 5% of US GGRs, and in the EU, bingo services were also a relatively small component at €2.4 billion, or 5% of the EU total.

For example, in the United States, commercial and tribal casinos generated about US$42.1 billion (€35.1 billion) of the total US GGRs in 2003 Some of the variance in the above comparisons may be attributable to different consumer preferences between US and EU customers for games and wagers. However, most of the differences are probably due to the various restrictions, constraints, and prohibitions – as well as permitted market competitive conditions – involving gambling services in the US and EU. For example, because of the paucity of gaming machines permitted in venues outside of casinos in the United States, much of the demand for machine gaming in America takes place within casinos. That is not the case with the EU. American casinos tend to be much more accessible than those in the EU; there are, for example, virtually no casinos in the United States with entrance fees, identification requirements, or dress codes, whereas such conditions are all more or less standard for European casinos. Many American casinos have substantial provision of – and capital investment in – non-gaming facilities, such as hotels, restaurants, retail outlets, spas, convention centres, entertainment venues, and outdoor recreational facilities such as golf courses, tennis courts and swimming pools. For the most part, these amenities are still not typical in European casinos.

Another area of difference between the United States and the European Union can be found with provision of betting services. In the US, sports wagering (on events such as football games, baseball games, the Olympics, etc.) is prohibited in every state except Nevada (with a few minor exceptions, such as sports parlay cards offered by state lotteries in Oregon and Delaware.) Over 20 states permit betting shops in the form of off-track betting parlors.

However, in contrast to EU countries such as the UK, these betting shops are restricted to a limited number of licensed facilities which are permitted to take bets only on racing.

Furthermore, there are only limited legal remote and internet wagering opportunities allowed in the US, and then only on racing. (4) In the EU, many Member States allow off-track bookmakers to operate in betting shops, and have allowed remote and internet sports and race wagering to evolve in a number of ways. Subsequently, the size and economic viability of such wagering markets tend to be greater in the EU in comparison to the US.

Furthermore, there are stronger links in the EU than in the US between gaming services related to sporting events – such as wagering on horse racing and football – and a variety of other economic sectors, such as television, radio, print media, and the internet. Advertising for gaming services via the media and internet is often a major expenditure on the part of gaming services providers, as well as a major revenue source for the media outlets themselves. The availability of legal gaming and betting options on such sporting events also enhances the demand for, attendance at, and the following of sporting activities. Similar legal betting opportunities in the US are far less available than in the EU, and therefore the crossindustry linkages are weaker.

Table 1 presents Gross Gaming Revenue by sector for the 25 Member States of the EU.

Reasonably accurate data were gathered for Casinos, Lotteries, Gaming Machines (outside casinos), Betting Services, and Bingo. For the other sectors designated in this study (Charities and Non-Profits, Media Gaming Services, and Sales Promotion Services), data were not readily available. This is discussed in greater detail in the Methodology section of this Report.

TABLE 1. GROSS GAMING REVENUES FOR MEMBER STATES BY SECTOR, 2003 (€ thousands)

Table 1 presents Gross Gaming Revenue by sector for the 25 Member States of the EU.

Reasonably accurate data were gathered for Casinos, Lotteries, Gaming Machines (outside casinos), Betting Services, and Bingo. For the other sectors designated in this study (Charities and Non-Profits, Media Gaming Services, and Sales Promotion Services), data were not readily available. This is discussed in greater detail in the Methodology section of this Report.

 EU-PIB

Source: Data Provided by Stakeholders and GBGC Report (shaded entries)

*Total includes € 35,000 in “other”.

(1) Computed at an exchange rate of €1.00 = US$1.20. This exchange rate is used throughout this report.

(2) Christiansen Capital Advisors, “Gross Annual Wager of the United States 2003,” extracted from www.cca-i.com

(3) Extracted from www.cca-i.com and Deutsche Bank, “Online Gaming: Real or Surreal Returns?” 19 July 2005.

(4) In spite of internet gambling’s illegal or questionably legal status in the United States, American customers contribute nearly half of all consumer expenditures to the global remote and internet gambling sector. Deutsche Bank, op. cit., p. 5.

Credit © European Union

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