Global Markets - Overview

The Internet is altering the method by which gambling occurs, and this transformation is probably having the greatest effect in relation to retailers of lottery tickets and keno drawings. On-line games do not need any traditional retailers, and retailing does not offer anything that Internet cannot provide, except that the consumer can physically see and feel the product.  With many online games, the customer’s experience only differs by his surroundings as the play of the game is an exact replica of games in the casino’s and in retail outlets.

According to the Survey Institute, European Information Technology Observatory (EITO), the number of Internet users in the world in 1999 amounted to 185 million and the number is now put at almost 600 million for January 2004. In conjunction with Internet connections increasing and becoming more rapid, technology has increased making games more life-like. While online computer games have not replaced the opulence of the brick and mortar casino, but they have been an excellent substitute for the casula and hard-core gambler alike.

Internet generally and on-line gaming in particular create opportunities to eliminate a couple of phases in the distribution chain and provide entertainment from the safety of home.  The entertainment industry is proceeding towards a more clear integration of computer games, music, video and Internet. With the total integration of the entertainment branch, computer gambling will obtain a greater acceptance and reach a larger public, by the side of so-called ”hardcore gamblers“ according to Datamonitor.

This has principally been the result of the high level of Internet penetration, exposure on popular television shows, high discretionary spending of US adults and the general popularity of gaming in the United States. It is estimated that online gaming revenues of $2.2 billion, $1.3 billion and $0.6 billion were generated from Europe, Asia and the rest of the world, respectively, in 2004.

These revenues represented approximately 27 per cent, 15 per cent and seven per cent of the global online gaming market, respectively.

While Europe is currently at 27 percent, it will rise to 33 percent in a bigger market by 2010. But the real growth looks as if it will take place in the Asia and Middle East regions – currently 15  percent but set to grow to 25 percent in the same time frame

Central and South America is likely to stay at 2 percent, with the rest being divided in small percentages in Africa and Oceania.

Improved economic conditions and a rapid growth in online gaming will stimulate interest in playing poker and other games on-site at casinos, helping worldwide casino gaming revenues reach $100.3 billion in 2009 at a 7.9% compound annual growth rate (CAGR), according  to Pricewaterhouse Coopers'  "Global Entertainment and Media Outlook: 2005-2009."

In the U.S., the true impact on the casino gaming market from Hurricane Katrina remains uncertain. Still, at the time of the report (before Katrina), regional casinos defined as destinations to which people travel from other states rather than internationally to visit, and not including Atlantic City or tribal casinos (such as riverboat and gulf-side casinos in Louisiana and Mississippi)  were expected to grow to $16 billion in 2009 at a 3.6% CAGR.

In EMEA, Western Europe is the dominant area, accounting for 88% of the total in 2004 and nearly the same in 2009. The area is expected to climb to $12.5 billion in 2009 at a 7.7% CAGR. The United Kingdom will be EMEA's fastest-growing market, thanks in large part to the new Gambling Act 2005, which eliminates or relaxes some of the current restrictions against casino gaming. As a result, revenues in the U.K. will rise to $2.7 billion at a 16.6% CAGR. Excluding the U.K., growth in casino gaming in the remaining EMEA countries averages only a 6.4% CAGR.

France had the largest casino gaming market in EMEA in 2004, at $3 billion, followed by Germany and the U.K., at $1.2 billion each. The U.K.'s total of $2.7 billion in 2009 will make it clearly the region's second largest nation. Germany, at $1.6 billion in 2009, will be the region's fourth largest market, after South Africa at nearly $1.8 billion.

South Africa is currently the only country in Middle East/Africa with licensed casino gaming, though the report expects legal casino gaming in Israel starting in 2007. While South Africa has expanded rapidly in recent years, and is predicted to achieve a 9.3% CAGR for the forecast period, the market is approaching saturation, with no new licenses expected to be issued. The availability of data for Central and Eastern Europe is limited to the Czech Republic, which generated $1 million in 2004.

In Asia/Pacific, Macao now part of the People's Republic of China (PRC) is by far the gaming capital of the region, with its total of $4.9 billion representing 56% of the market in 2004. Foreign investment and the construction of new casinos in Macao will propel it to $13.2 billion in 2009 at a 21.8% CAGR, constituting 72% of the region's casino gaming market. Excluding Macao, growth in the region will average 6% CAGR. (It is important to note that, although the report includes Macao in its PRC totals, gaming is prohibited in mainland PRC.)

Australia and South Korea are the region's next-largest markets, at $2 billion and $956 million, respectively, followed by Malaysia, at $642 million. The Australian market is expected to benefit from an improved economy, although growth will be limited by initiatives aimed at curbing problem gambling. South Korea, meanwhile, is expected to recover from an economic downturn by 2006 and start showing healthy growth during 2008-09. Only one casino in South Korea admits local citizens, with the remaining 13 open only to foreigners; the domestic casino generates more revenues than the other 13 combined.

While Japan, Singapore, Taiwan, Thailand and Pakistan do not offer legalized casino gaming, the report expects the first four nations to do so within the next five years. In the meantime, casino activity is limited in the region's other markets: Hong Kong allows casino gaming on ships docked offshore; India has six small casinos, with five of those devoted solely to slot machines; Indonesia offers gaming on Batam Island which, being 30 miles from Singapore, attracts a mostly Singaporean crowd. The Philippines currently has 15 casinos, but a proposed $15 billion facility in Manila Bay that would include casinos as anchor attractions would expand that market.

In Latin America, Chile is by far the dominant market, with its $67 million in casino gaming revenues representing 81% of the region's 2004 total. Brazil and Mexico, which constitute the majority of spending in most other entertainment and media segments, do not allow casino gaming: Brazil does allow betting parlors for horse-race bettors but prohibits casinos and slot machines, while in Mexico casinos have been illegal for 70 years. Nevertheless, a new Federal Gambling and Raffles Law is expected to reverse that ban, with Mexican casinos anticipated to open in 2006. By 2009, Mexico is forecast to generate $27 million in casino revenues, constituting 18% of the region.

Argentina is currently the next-largest market, at $15 million down from $40 million in 2000 while Venezuela has a single casino that generates $1 million annually, down from $2 million during 2000-02. Still, the region's market rebounded in 2004 with a 2.5% increase, following four years of decline caused by the collapse of the Argentine economy; continued growth in Chile and Argentina, along with Mexico's emerging market, will help bolster the region.