Good news for internet gambling

Good news for internet gambling

November 9, 2009.

The weekend's most inspiring editorial content came from the revered UK newspaper The Financial Times, which opined that Online Gambling companies are preparing for consolidation over the next two years amid cautious optimism that the pace of broadband penetration and more open policies by several governments will herald a period of sustained growth.

The op-ed piece can be found here: http:/­/ww­w.f­t.c­om/­cms­/s/­0/9­924­e97­6-c­ca3­-11­de-­8e3­0-0­014­4fe­abd­c0.html and reports that top execs in the industry are now more optimistic following a tough period of political and enforcement interference which has improved to a more stable environment recently, where regulated markets are starting to open up.

The article explains the restrained but more open attitude which will see the curtailment of French monopolistic policies in 2010, and the increasing pace of liberalisation in the Italian market, along with positive developments in Denmark, Belgium and Sweden, and the first significant cracks in the three-year-old anti-gambling treaty among German states.

Interviewed by the FT, Ralph Topping, chief executive of William Hill plc, says: "We have seen huge changes in Europe and huge growth. We are extremely confident about the next two to three years in Europe."

The FT points out that: "Even 18 months ago, such optimism would have sounded completely out of place. Industry executives risked arrest if they set foot in countries such as France, Turkey and the US, where authorities went after companies they accused of flouting their anti-gambling laws.

"Banks and financial advisers, pressed by US enforcement officers to reveal how they helped online gambling companies come to market, steered clear of the industry. Only the UK appeared to offer a haven.

"Battered, particularly by the US clampdown on online gambling three years ago, companies regrouped around Europe and talked about consolidation as their means of survival. It did not happen, partly because their lawyers worried about the US liabilities held by some companies.

"Now, with the regulatory landscape brighter - in Europe, at least - merger talk is back on the agenda, although at present that is all it is."

Restrictions on land gambling companies, and economic recession and its impact on travel have all helped online gambling to grow, but increased business has also been achieved by new products and technologies such as in-running betting and the attraction of sports betting, the piece opines, although it has not all been smooth sailing.

"Operators have been set back by the impact of unemployment, rising taxes and tighter controls by credit card issuers," it reports.

Warwick Bartlett, chief executive of Global Betting and Gaming Consultants, told the FT that online poker yields and sports betting margins have been hurt by the recession.

But, he said, overall the internet gambling market had shown it was resilient. Warwick's consultancy predicts that the continued roll-out of broadband and the projected growth of e-gaming on a range of technologies, such as mobile phones, will produce growth of almost 10 percent in gross yield from the global online gambling industry this (2009) year, followed by double-digit rises in each of the next three years.

"In particular, Brazil, Argentina and Mexico are three countries whose markets will grow as broadband penetration increases," Bartlett said.

The FT article characterises the US and Chinese markets as the difficult sectors to penetrate successfully, pointing out that European operators were burnt by the clampdown in the US in 2006, giving up millions of dollars in revenues from what was a prime market. Reports of an imminent legalisation of online gambling were therefore being treated with caution.

The piece sums up the industry optimism by noting that try as some countries might, the online gambling industry is unstoppable.

"In Las Vegas, where land-based casinos have long seen online operations as a threat, Harrah's signed a joint venture with UK-listed 888 to provide it with software. If a stalwart of Las Vegas is starting to embrace online gambling, the industry is looking like a decent bet," it concludes.

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