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Remote Gambling Market Channels in European Union

Remote gambling channels at a global level are estimated by GBGC to have GGR of €4.8 billion in 2003, broken down as follows:

  • Channel: 2003 2012 Projected increase
  • Internet: €4.8 €7.32 152.5%
  • Mobile phones/other: €0.78 €3.51 450.0%
  • iTV €0.32 €1.33 415.6%

According to GBGC projections, greatest growth is expected in the fields of interactive television and “mobile phones/other”, “other” being a reference to PDAs and other hand held devices. These predictions must be regarded with considerable caution. Certainly, the internet is the most developed interactive medium, and mobile phones are most advanced in terms of ownership penetration in Asia. The quality of services offered by operators, in terms of entertainment, security and branding, will have an important bearing on the take-up of interactive gambling opportunities.

a. Internet

Access to the internet varies across the EU, as is shown in the table reproduced below from the Eurostat Yearbook 2004. The lead taken by the northern and western Member States is striking, some of which exceed the comparable figures for the US. Since online casino gaming relies heavily on the internet rather than iTV or mobile phones [although some games are now available on Java based mobiles] the level of internet access will be a major determinant of the potential for online casino gaming in particular Member States.

EU-Market-1

The general growth of internet access in the EU allows a reasonable prediction to be made in the growth of online gaming in the future. Given the low current internet access in the southern and eastern regions of the EU, we would expect future growth to be strongest in those regions, as they gradually catch up with the rest of the EU. Since these regions generally have less developed land-based gambling services, especially in the sports betting sector, than the northern and western regions, we should expect the take-up to be faster than that predicted just by enhanced access to the internet.

State surveys in The Netherlands interviewed 7,670 internet users between the ages of 18 and 55 years. Of this sample, 5.3% stated that they participated in paid interactive internet gaming. Applying this to the country’s population, this suggests around 487,000 Dutch citizens between the ages 18 and 55 years participated in paid interactive internet gaming. The growth of e-gaming was most apparent among young men with low incomes. On average, participants spend €35 per month on this type of gaming. Yearly expenditures in the Dutch internet gaming market are estimated at €144 million. Interactive internet games are played infrequently on a weekly or monthly basis, and playing time does not usually exceed half an hour. A quarter of participants were seen to be at risk of problematic behaviour. However, actual problematic behaviour was identified in only 4% of the participants.

b. Interactive Television

GBGC state that “iTV is perhaps the ideal remote betting and gaming interface as it permits the punter/player to watch a live event with all the quality of digital TV whilst being able to sit back and relax”. According to Mark Balestra, writing on IGamingNews.com in March of 2004, European countries are leading in this technology. He quotes Forrester Research findings that iTV revenue in Europe grew from €1,600 million in 2002 to €3,480 million in 2003 and was projected to reach €6,600 million in 2004. Most of those revenues came from betting. England and Ireland are closely followed by France with over €117 million annually in race betting.

The market leader in iTV is BSkyB, which has launched a gambling channel called “Sky Vegas Live”. Viewers can play interactive Super Keno and computerized horseracing and greyhound racing. During 2003, approximately €238 million of BSkyB’s total iTV turnover of €399 million was generated from gambling.

France’s Pari Mutuel Urbain horseracing monopoly has tied up with the country’s two leading iTV services, CanalSatellite and Télévision Par Satellite to launch the Equidia channel. Spain is expected to be a strong iTV gambling market particularly as sports betting is just becoming legal in municipalities around that country.

c. Mobile phones

A table has been produced by Eurostat to show the penetration of mobile phone subscriptions and land line ownership across the EU and is reproduced below. The number of mobile subscriptions rose by 8.6% in the among the Member States in 2003 compared to 2002. All Member States registered increases, ranging from around 5% in Malta, Finland, Austria and Italy to more than 30% in Latvia, Cyprus and Lithuania. The growth can be expected to slow down in those Member States having the highest subscription density.

EU-Market-2

The above table does not tell the whole story since it ignores the quality of mobile phones. Java, WAP and internet enabled devices can be expected to replace more basic mobile phones in those Member States with highest mobile penetration, as mobile phone suppliers raise the quality offered in order to maintain sales. The table below focuses on Java enabled handsets, and reveals the high penetration of these products in the Far East. The growth rate of ownership was obviously high from 2003 to 2004 showing a market in the growth stage of its product life cycle and leading us to expect further growth though by lesser rates in future.

EU-Market-3

State surveys in The Netherlands found that 37% of the respondents have participated in SMS or telephone gaming in the past year (about 3.4 million people). These games are mostly played by women with a low income and little education. Most participants (53%) stated they had been playing in the past two months, and 30% of participants had been playing these games for two years or longer. They spent about €36 million on telephone gaming per year. The survey found that 76% of the participants knew beforehand what these games would cost them. Only 6% were unaware of the costs. The study estimated that 17% could be at risk of problematic behaviour, but only 3% of the participants could be characterized as currently engaged in problematic behaviour. These characterizations should be viewed in the light that a problematic player on average would not spend more than €50 a year on such games. These levels of expenditure cannot really be evidence of excessive gambling.

The future is of course uncertain. In July 2004, Juniper Research estimated that the mobile gambling market could be worth in excess of €14. 5 billion by 2008, of which over €5.7 billion would be derived from lotteries, which exceeds GBGC’s estimate for GGR of €2 billion. Uncertainty, as ever, allows excitement to be generated. Many sections of the trade press see mobile gambling, or “m-gaming” as it is often described, as ‘the next big thing’. Currently there are technical issues about screen size, the cost of transferring data, age verification and payment systems. Victor Chandler is developing a mobile sports betting application that permits existing customers to simply press a few buttons in order to pay for bets from their accounts fed by registered credit or debit cards. They avoided reverse billing because of technical difficulties and the likely high percentage payments to mobile phone operators.

Mobile phones can be seen as delivery systems for existing products, especially betting and lotteries, and (with some difficulty) also casino games. Paddy Power, the Irish sportsbook operator, launched a Java based sports betting application followed by virtual horseracing and bingo games. Alternatively they can be used for new gambling products and skill games. Million-2-1, a UK m-gaming operator, has developed ‘how-lo’ reverse auctions where punters pay to bid for a lot, with the lot sold to the lowest unique bidder. In 2004 BetandWin launched a range of soft games for mobiles. Blue Square, a UK based sportsbook owned by Rank, has launched a fixed odds mobile game, Aces High. Svenska Spel, the Swedish lottery operator, has scratch cards and three soft games for mobiles.

© European Union

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