Online Gambling - 15% Growth Is Just For Starters

Any industry sector that boasts consistent year-on-year growth in double digit figures needs to be taken seriously. Figures released by the European Commission at the beginning of March showed that online gambling throughout the 28 countries covered by the commission grew at an annual rate of 15% between 2011 and 2015, with 6.8 million consumers contributing to a top line industry revenue figures of €13 billion - up from €9.3 billion in 2011.

Clearly, that level of growth is testament to the public appetite for online gambling just as much as it is to the success of those companies which have identified the potential that digital technologies represent in the leisure sector. The EU commission report found that whilst individual countries were each attempting to manage their territorial interests there was a need for a coordinated approach throughout the EU to overseeing the industry as a whole

The happy fusion of developing handheld technologies and wholesale connectivity appears to have lifted the lid on a latent appetite for gambling-related services. It is not just the EU where this level of uptake has been documented. The same trend is evidenced globally wherever the legislative framework allows. Of course, mirroring the patchwork EU legislative picture, much of the US is yet to open up to this sort of commercial activity, although there continues to be considerable effort directed in that direction.

But it is in Europe where gambling markets are most mature, where disposable incomes are suitably high and where the penetration of the requisite technologies is sufficient to sustain the boom. It is no surprise therefore that many of the industry’s major players are European-based and that they are seeking to colonise the rest of the world from this power base.

At the same time, governments are increasingly aware of the potential tax revenues that can be levied from this multi-billion dollar industry. For example, in December 2014, the UK introduced a point of consumption tax of 15% on the profits generated by bets made in the UK territory, irrespective of the location of the provider. Quite how profit might be calculated at the point of purchase is a moot point, but what the move shows is the bloated state of the current market. The old line about bookmaking being a licence to print money is clearly something that UK Chancellor George Osborne has taken to heart.

That tax-raising potential, although it might appear to run counter to the interests of gambling providers - since it is effectively a tax on their profits - has its upside. With governments internationally struggling to boost their revenues, there is clearly pressure on those territories which have so far rejected online gambling (US states not least) to open up their market places in order to capture revenues from gambling activity. It means that although the established firms such as those which have had to take the hit in the form of the UK’s point of consumption tax can look forward to the prospect of new markets opening up in the near future.

As and when that happens, that 15% industry growth figure may look quite modest.

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