Lottery operators in Member States of the EU are more extensive in their offerings and typically more aggressive in their strategic positioning than is the case for lottery organizations in the United States. American lotteries are all operated under a state lottery ownership structure (with government appointed lottery commissions and civil service employees,) where many of the operational details (instant ticket printing, on-line systems operations, game design, etc.) are contracted out to private sector companies. Furthermore, most of the lottery services sold are in the form of traditional Lotto tickets, instant tickets, or variants of these services. Only a few states (i.e. Oregon, South Dakota) permit electronic gaming devices (Video Lottery Terminals or VLTs) operated under the auspices of the state lottery at widespread locations throughout their states. A handful of other states permit relatively large numbers of VLTs to be placed at pari-mutuel racetrack (racino) locations (Delaware, Rhode Island, West Virginia, New York). In these latter cases the lottery operator does not own the pari-mutuel racing-casino gaming facilities but rather regulates the VLTs with the racetrack-casino operators acting as lottery agents.
In contrast, in some EU Member States, such as Sweden, France and Germany, lottery operators have moved into other gambling sectors, such as bookmaking, casinos,5 operation of gaming devices (Video Lottery Terminals) in convenience locations, and remote gambling operations. Many EU lotteries have recently involved themselves in remote or internet strategies for the sales of their services or the development of new games or wagering options.
Nonetheless, the total amount of Aggregate Personal Income spent on gambling services by residents of the European Union and the United States are similar. Total gaming spend as a percentage of Gross Domestic Product for all EU Member States was estimated to be approximately 0.52% in 2003. For the United States, the comparable figure was 0.65%. By way of comparison, the ratio of Gross Gaming Revenues to Gross Domestic Product in Australia in 2003 was approximately 1.93%, and New Zealand was 1.45%.6 In Canada the ratio of Gross Gaming Revenues to Gross Domestic Product was 1.11% in 2003.7 In all of these jurisdictions, there is a considerably greater availability and accessibility of many gambling services, especially gaming machines, than is the case in either the US or the EU. Furthermore, gaming machines that are readily available have more popular features than, say, the limited prize Amusement with Prize (AWP) style machines that can be found outside casinos in many Member States. This suggests that the demand for gambling services in general is highly elastic with respect to a variety of measurable factors, including availability of specific gaming services and services, quality of gaming offerings, accessibility, convenience, and price. This issue is discussed at greater length later in this report.
Figure 1 presents the ratio of Gross Gaming Revenues to GDP for the 25 Member States for the year 2003. It is noteworthy that the ratio remains under one percent for all Member States except for Malta, which has a disproportionate amount of remote gaming services within its Betting Services sector; and Cyprus and Slovenia, both of which have casino industries that attract a significant portion of their GGRs from cross-border custom or international tourism.
FIGURE 1 Gross Gaming Revenues as percentage of GDP, 2003
5 Casino Cosmopol is a subsidiary to Svenska Spel, the government owned company that operates the lottery and other gaming in Sweden. Casino Cosmopol opened its first casino in 2001, and presently offers four casinos in Sweden.
6 Queensland Government 2005, Australian Gaming Statistics 2005; New Zealand Department of Internal Affairs, Gambling Expenditure Statistics, 1981-2005
7 Canadian Partnership for Responsible Gambling, Canadian Gambling Digest 2003-2004