The Markets Explored – Gambling and iGaming Across the Globe

Posted by Harry Kane on Monday, September 9, 2019

The iGaming market in the UK remains one of the fastest-growing entities in the world, having peaked at an impressive £5.6 billion in the year ending September 2018. This lucrative niche now accounts for 39% of the overall gambling industry in the UK, which generated a GGY of £14.5 billion as last year drew to a close.

This growth is built largely on a progressive regulatory outlook, which is also evident throughout Europe and several EU member states. However, not every jurisdiction views iGaming or traditional gambling in a favourable light, whilst some struggle to regulate activities and safeguard the interests of players.

In this post, we’ll explore some of the world’s most prominent gambling markets, whilst asking how they’re evolving in the digital age:

The UK and Europe – Blazing a Trail for All Other Markets to Follow

Whilst the UK may be home to an incredibly profitable and well-regulated market, it’s by no means the largest of its type in Europe.

In fact, Italy remains the gambling capital in Europe, with the overall market generating a healthy GGY of €18 billion as recently as 2015. When converted into the single currency, the UK’s gross gambling revenues have peaked at €17.9 billion, meaning that the region trails narrowly behind its continental rivals.

The UK isn’t even the fastest-growing gambling markets in Europe, with Spain having recently recorded outstanding year-on-year growth of 29.9% during the third quarter of 2018.

The region’s iGaming market is also expanding rapidly, with appealing enclaves like Cueta being afforded the autonomy to offer incredibly low rates of income and corporation tax for online gambling hubs.

Make no mistake; all three of these countries have seen their gambling industries thrive amid deregulation and low-taxation strategies, although it’s fair to say that the UK is beginning to adopt a more stringent approach in the current climate.

This reflects the relatively relaxed and laid-back approach of regulators throughout Europe, who have combined to popularise gambling across the continent and create an increasingly competitive (and not to mention interconnected marketplace).

Sweden is one of the latest European nations to open up its market to private operators from different nations, rather than adopting the previously popular regulatory method of implementing centralised government control.

This has enabled Sweden’s overall gambling industry to generated SEK 6.0 billion in the first quarter of 2019, whilst creating another jurisdiction in which European operators can market and sell their products.

Elsewhere, several other European countries have opted to legalise gambling over the course of the last decade or so, whilst some have begun to relax their regulations and open up the national market to private operators.

Romania, Serbia, Bulgaria and Austria are all included in this list, whilst even nations with historically stringent guidelines like Poland have moved to make iGaming more accessible to its subjects and brands from overseas.

It’s also important to note that whilst a few European nations continue to restrict online (and in some instances, offline) gambling, the vast majority of laws don’t make provisions for gambling via foreign websites and operators.

As a result, most gamblers in Europe can wager online regardless of where they live, so long as they have a viable Internet connection and a laptop, smartphone or tablet.

Whilst this is typical of Europe’s largely relaxed and progressive approach to gambling (which undoubtedly has cultural roots in nations such as Italy), it’s fair to say that this continent faces some challenges in terms of further growth and regulations.

The fact that each European nation and EU member state offers variable gambling laws poses a potential threat to both operators and players alike, for example, particularly when it comes to understanding the relevant legislation and adhering to it.

This has encouraged some to call for the EU to introduce a common rulebook for all member states to abide by, which will in turn create a universal set of safeguards and a greater level of transparency for all interested parties.

Then there’s the issue of Brexit, which is continuing to threaten economic stability within the EU and undermine a number of different markets and industries. This instability to likely to have a particularly adverse impact on the UK, with a survey commissioned by industry group Ukie suggesting that up to 40% of British operators could relocate in the event of a so-called ‘no-deal’ or disorderly Brexit.

The loss of access to talent and sustained funding were cited as the main stumbling blocks post-Brexit, and there’s no doubt that this could have a seismic impact on the iGaming market in the UK.

Make no mistake; countries such as Spain are ideally-placed to offer sanctuary to UK firms in the wake of Brexit, particularly with Britain poised to increase the rate of Remote Gaming Duty (RGD) that it charges operators to 21% in October of this year.

To put this into perspective, the corresponding rate of tax charged by Spain is just 20%, even before we consider the concessions offered by aforementioned enclaves like Cueta.

From a European viewpoint, Brexit may also prevent operators based on the continent from entering into potentially lucrative liquidity sharing agreements with their counterparts in the UK.

After all, the EU removed some of the digital barriers separating major European poker markets at the beginning of 2017, before France, Italy, Spain and Portugal signed a ground-breaking liquidity pact on July 6th..

Whilst this accord, which was signed by the regulators of each country and paved the way for similar agreements across all online casino verticals, will continue to allow licensed operators in the EU to combine player pools and resources, the UK would most likely be excluded from this without an amicable withdrawal deal.

This will be immediately damaging for the UK, of course, but it will also prevent European operators from tapping into a highly lucrative market and signing deals with interested British firms.

It has yet to be seen how these challenges play out in the near-term, whilst the introduction of a common rulebook for all EU member states could help to introduce greater certainty and transparency into the European marketplace.

Regardless, Europe remains a trail-blazing gambling hub, and one that others can only aspire to as they look to grow in the digital age.

The North American Market – The Holy Grail for iGaming Operators?

Few markets boast the heritage or future potential of North America, with the state of Nevada considered to be the global capital of traditional gambling.

Its relationship with online gambling remains a source of frustration for operators, however, with the burgeoning iGaming market having experienced significant legislative setbacks over the course of the last 20 years or so.

Even the most recent legislative updates have borne this out, starting with the Supreme Court’s decision to overturn the Professional and Amateur Sports Protection Act of 1992 in May of last year.

This law previously prohibited all forms of sports betting at federal level, which in turn meant that this type of wagering was only legally permitted in the aforementioned state of Nevada.

Whilst this decision empowered states nationwide to legalise sports betting, however, operators were subsequently hit by the Department of Justice’s (DOJs) announcement that it would revise in 2011 opinion on the controversial Wire Act.

This act initially declared that all forms of gambling were to be prohibited across state lines, but the 2011 amendment meant that the 1961 law only applied to sports betting.

However, this January saw the DoJ reinstate the initial interpretation of the Wire Act, forcing some casino operators to shelve potential mergers and any plans to invest in interstate growth opportunities.

These developments perfectly embody the type of fragmented and volatile nature of gambling in the U.S., whilst continuing to restrict the growth of iGaming and online sports betting nationwide.

Still, there are signs of growth and progression in this market, which has the potential to become the biggest of its type in the world if it achieves the type of deregulation seen in Europe and the UK.

The states of Nevada, New Jersey, Delaware and Pennsylvania currently boast the most relaxed regulations in the U.S., particularly with regards to iGaming. Of these entities, New Jersey is currently dominating in terms of its online gambling GGY, with takings of $294 million (or £259.8 million to you and me) recorded during March of this year alone.

This highlights the huge money-making potential of iGaming in North America, whilst it also sets a template for how state governments can monetise online gambling to create a lucrative source of tax revenue.

The market has also seen a number of states legalise offline sports betting since the PASPA was stuck down last spring by the Supreme Court, with Delaware, New Jersey, Mississippi, West Virginia, New Mexico, Pennsylvania, Rhode Island, Arkansas and New York having joined Nevada over the course of the last 13 months.

A number of these states are also pressing ahead with plans to regulate and monetise mobile and online sports betting, although a broader bill to achieve this objective was struck down in New York last month (this is part of an ongoing struggle that pro-gambling lawmakers in the U.S. are experiencing as they attempt to legalise all forms of iGaming).

Unlike the European market, it’s interesting to note that a large number of international online casinos and sportsbooks categorise the U.S. as a restricted country. This is further restricting growth stateside, although this is likely to change in the near-term due to a growing number of partnerships between American operators and those in the UK.

This could well be key to the immediate future of the U.S. market, with established UK brands like William Hill and Paddy Power now gaining a foothold in the states.

This, coupled with the rise of sports betting stateside and growing support for online casino gameplay in a number of different states, could well tip the balance and enable virtual gambling to realise its full potential in North America.

The Rest of the World – From Australia to South America

In terms of the rest of the world, Australia stands out as one of the most potent gambling markets.

In 2014, for example, the amount gambled per capita in Australia peaked at a global high of $916, with Singapore trailing narrowly behind at $891.16.

This level of demand has driven a lucrative and fast-growing gambling sector in the land down under, whilst Australia also remains a trail-blazer in terms of technology and regulatory excellence.

This rule applies to both off and online gambling, with pokies (or slot machines) integral to the success of both channels. Although this type of gambling is not the most popular amongst Aussies, it’s undoubtedly the most profitable to operators as it currently accounts for a staggering 62% of the market’s total GGY .

Sports betting is also incredibly popular in Australia, from prominent markets such as cricket and Aussie Rules football to soccer and Rugby Union. We’d argue that the sports betting sector in Australia is one of the most mature in the world, with the offline market having laid the foundations for considerable growth online.

Overall, total sports betting expenditure in Australia increased from $921 million to $1,062 billion in the year ending 2017, marking an impressive increase of 15.3% during this period.

This reflects the relatively relaxed regulations that define the Aussie market, with gambling permitted almost universally so long as you target fully licensed operators either on or offline.

The same type of approach is also prevalent in New Zealand and other areas in Australasia, although it’s fair to say that Australia is the market leader in this region when it comes to iGaming.

Elsewhere, there’s a surprisingly vibrant gambling market in South America, with nations such as Argentina, Panama, Costa Rica, Peru and the Dominican Republic having all legalised, regulated and monetised wagering through a number of different channels.

The authorities in Chile and Brazil adopt a slightly more stringent approach, as whilst subjects aren’t allowed to gamble with domestic operators they can wager through a foreign website or casino. Conversely, all forms of gambling are prohibited in Ecuador, so be sure to take care when visiting this country.

Africa is another market that’s surprisingly well-regulated, with a grand total of 30 countries (from a possible 54) currently allowing both on and offline gambling.

South Africa alone is home to 40 individual casinos, whilst Botswana, Ghana, Egypt, Cameroon, Kenya, Namibia and Uganda also operate fast-growing markets.

There remain some regulatory grey areas in Africa, however, many of which revolve around licensing. The primary issue is the number of unlicensed casinos operating both on and offline, as players who are caught gambling through an unaccredited platform could face a fine and considerable jail time.

Any winnings may also be confiscated in this instance, so you’re better off avoiding casino gameplay in Africa unless you have some in-depth knowledge of the marketplace!