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Effects of Remote Gambling on Land Based Gambling in European Union

Market

Remote gambling was not predicted to rise beyond 5% of the total EU gambling market by 2012. In those Member States which have poorly developed land-based gaming sectors, remote gambling could rise beyond that. It should be noted that DeSIA, the German casino association, claimed that in the German casino market, remote gambling is already 20% and expected to increase to 25-30% by 2012. Even if remote gambling with overseas firms was prohibited within a Member State, consumers would likely still find a way to indulge their passion – as the USA has found.

Firms that offer land-based as well as remote gambling services will pursue the remote business to extend their sales in total, even though some of it will undoubtedly substitute for their land-based sales. Relative taxation levels will be an important factor in determining the relative extent of remote versus land-based gambling. If remote gambling, due to its situational mobility, were able to induce governments to offer it lower tax rates on income than is paid by land-based businesses, that might be particularly conducive to growth. Low tax rates on remote gambling could, however, be counterweighted by the lower profit margins that may emerge if indeed it turns out to be more competitive than land-based gambling, due to easier entry into the market and depending on the ultimate resolution of legal challenges with respect to the right to offer remote gambling services in various Member States.

Although the above discussion and estimates probably reflect a set of reasonable speculations that would be forthcoming from remote gambling industry professionals and analysts, we conclude this discussion with some words of caution.

First, although we agree that remote gambling is unlikely to replace land-based gambling, we think that the two forms of gambling are increasingly likely to merge, for example in branding and marketing, and it retail outlets such as internet sports cafes where it is possible to gamble on remote sites.

Secondly, new forms of gambling are likely to emerge which particularly suit delivery by remote means and which secure a very large share of the market very quickly. This has already occurred with poker – a game of skill where consumers endeavour to play with others of approximately the same skill levels and similar tolerance for losses; the internet makes organizing such games easier than in traditional physical settings. Lottery and bingo games may prove to be especially suitable for provision by remote means, for different reasons such as the easy access of the billing system. It also seems plausible that people will find ways of betting on the games they currently play on play stations and this might further extend the remote market. In general then, much of what will happen with remote gambling over the next decade may not be able to be anticipated today.

© European Union

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