C OV E R S T O RY / W H AT ’ S N E X T F O R E G A M I N G ?
02
w AN INCREASINGLY FRACTURED MARKET
THROWS UP MORE CHALLENGES THAN
OPPORTUNITIES
There are few ways of achieving real step-change revenue
growth, and entering newly regulated or re-regulated markets
with access to mainstream marketing remains one of the most
likely options for the short to mid-term revenue hikes. With
little sign of regulatory progress in the US market, beyond the
three states that have regulated to date, re-regulating markets
across Europe remain the principle targets.
Nordic-focused operators have begun expanding across
Western and Central Europe, and now a growing number
of UK-based firms have sought to broaden their horizons to
offset the 15% hit to their bottom lines caused by the new
licensing regime at home. But operators will need to look
beyond Italy and Spain for the next phase of egaming.
Regulus Partners’ Paul Leyland recently said he expects the
number of point of consumption taxation regimes similar to
that of the UK to increase. And despite the sometimes onerous
tax demands, they will have no shortage of operators lining up
to apply for licences, with regulated markets representing an
q
RE G UL AT E D
E U RO P E
investor-friendly, clean and reliable source of revenues.
But the hard-won lessons of Italy, France and Spain have
taught us it’s never going to be a simple route to profit,
and newly re-regulating European markets are widely
expected to be something of a bloodbath. There is now
every expectation that the Dutch market, set to open its
doors late next year or early 2016, will be a congested
and expensive loss leader for many firms in its opening
exchanges. The country’s prospective tax rate for online
gambling has been set at 20% of gross profit, lower than
the 29% rate at which it taxes land-based gambling, but
calls for more operator-friendly conditions in the country
have so far fallen on deaf ears.
What is of more concern is how competitive the market
looks set to be. Dutch Gaming Authority chief executive
Marja Appelman has said she expects as many as 60 licence
applications in anticipation for the market opening up, yet
the market is not expected to be of a remarkable size with
GBGC forecasting it to be worth around €388m in total
gross gaming revenues by 2017. Local brands are expected
to capture a considerable proportion of those revenues and
with the likes of Unibet and Betsson already maintaining a
strong customer base in the country, the majority of new
entrants could be left fighting for scraps.
The scenario is no clearer elsewhere in Europe. Germany’s
online sports betting market, while of undoubted potential,
seems no closer to opening after a slew of legal proceedings
caused authorities in the country to halt the process for an
indeterminate amount of time. With GBGC forecasting the
online regulated sports betting market alone to be worth as
much as €460m per annum by 2017, a regulated Germany
would mean a market of huge potential for operators in
receipt of a licence. But lack of regulated gaming creates more
problems than sports betting licences solve.
Potential might just lie in markets elsewhere. The emergence
of regulation in Bulgaria and the Czech Republic, and to a lesser
extent Poland, may see some of the bigger names in egaming
make a return to the once promised land of Eastern Europe.
Tax rates, however, will be key to any investment in the region.
But perhaps a lack of regulation should not deter
operators from particular markets and revenues from
dot.com sites are still critical to many online gambling
companies. GVC is a key example of an operator with an
appetite for grey markets and investors have benefited from
both increased dividends and a soaring share price in 2014.
There is still considerable upside in the dot.com market for
those who are willing to put aside some investor concerns, and
with the rise of GVC it will be interesting to see who blinks first
in 2015. There is no doubting the potential exists, but it’s a risk
not everyone will be prepared to take.
M A RKET PR OJE CTI O NS
GERMANY
(SPORTS BETTING ONLY)
€49.33M (OFFSHORE: €117.55M)
2014
2014-2017
(SOURCE: GBGC)
NETHERLANDS
(ALL VERTICALS)
€5.29M (OFFSHORE: €259.65M)
2014
€258.72M (OFFSHORE: €83.36M)
€358.9M (OFFSHORE: €87.11M)
2015
2015
€332.62M (OFFSHORE: €60.07M)
€413.99M (OFFSHORE: €84.79M)
2016
2016
€388.09M (OFFSHORE: €42.07M)
€459.2M (OFFSHORE: €78.79M)
2017
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2017
W W W. E G R M A G A Z I N E . C O M