Global Thinking for iGaming Operators

GLOBAL THINKING FOR iGAMING OPERATORS

Analysis of the Global Online Gambling Market

The global online gambling market is currently valued at around $59 billion and this amount increases rapidly. It is expected to almost double during the near future, so by 2023, the market could already be worth $90 billion.

Rapid urbanization and the increasing penetration of the internet across the globe are the two key factors driving the growth of the market. Legalization and cultural approval of online activities are also critical factors. Countries that have managed to fully legalize the market, and properly harness its opportunities are forging ahead. So, what's happening on the world stage? Which markets are leading the way, and where do the opportunities for operators lie?

Currently, there are around 80 countries worldwide where online gambling is allowed and regulated. In these countries, iGaming websites must be licensed and there is a regulatory body overseeing the industry. These countries include the main European markets (France, the U.K., Italy, Germany, Spain, Denmark, the Netherlands, Malta, etc), Colombia, and almost half of the U.S.. These territories use the most competent approach, where every operator (whether it is local or foreign) must acquire a license that meets the rules and legal standards. Only in this case, an iGaming company has the right to legally function in the local market and take advantage of its opportunities. In around 30 of those states, any online resource that tries to circumvent the rules is blocked and/or can face penalties. In around 50 regulated countries, such as Canada, Sweden, Switzerland, Australia, New Zealand, Mexico, Singapore, and Macau, unlicensed platforms do operate although it is not legal. Blocks are not strictly enforced in these countries. A foreign operator could be licensed in another jurisdiction, or some cases, not at all.

Five countries including Norway and Turkey operate a monopoly for selected providers. Another 54 countries do not prohibit online casinos and do not license them either. Those markets include many African countries, Gibraltar and India to a large extent since iGaming is only regulated in some Indian states. Countries like China, Russia, some states in the U.S., and Israel prohibit online gambling. Other major markets, like Japan, prohibit locals from gambling and block websites of local operators but do allow foreign platforms to work freely. Countries like Brazil are in a transitional period as their markets are about to be regulated, should all legislation be approved.

The U.S. and Canada

The growth of the legal sports betting industry and concurrent boom in iGaming revenue in the U.S. has seen it emerge as the key driver of growth in the global iGaming market. Presenting operators and suppliers with perhaps their largest-ever opportunity to operate on both sides of the Atlantic, full-scale regulated online gross gaming revenue leaped by 312% in 2021 to $2.61 billion. And, like most online activities, COVID-19 lockdowns led to a huge boost as well. Going forwards, Goldman Sachs has predicted that the market could generate as much as $39 billion annually by 2033. Legislation, however, is maybe the most complex in the world. Although gambling is fully legal under U.S. federal law, there are significant restrictions on a state level, whereby each is free to regulate or prohibit the practice within its borders. Canada opened its legal market in 2021. Although it is not yet certain how legalization will play out, analysts predict Ontario's online gaming and sports betting could generate gross revenues of C$989 million, in its first year of opening. This could grow to C$1.86 billion by 2026. Most commentators agree that Canada is in a position to avoid the mistakes made by the U.S., where they are still facing significant regulatory and legislative challenges while lacking the maturity of its contemporaries.

Latin America (LatAm)

There are no official statistics that reveal the exact size of the LatAm market. Reports indicate that the region, which consists of 26 different territories and more people than Europe, will be worth anything between $2 and 7 billion. Brazil alone, region's largest market could be worth $10 billion by 2025. Analysts feel that within the next ten years, the LatAm market as a whole will be competing with Europe. Brazil, Mexico, and Colombia are the most promising markets, but Brazil still has to finalize its legislation to reach its full potential.

Mexico has a population of almost 130 million people and represents an opportunity for huge growth in both online and land-based gaming. Gambling is permitted, but the industry badly needs further reform in order to grow.

Colombia is one of the regulated market in LatAm, and it has shown albeit on a much smaller scale, what is possible in the region, reporting strong and solid growth.

Europe

Europe is, without doubt, the Old Lady and traditional home of iGaming. The continent provides a long-established gambling tradition, strong legal markets, a wealth of consumers, and is at the forefront of game development. No other part of the world can exceed Europe when it comes to size and revenue. By the end of 2022 online gaming revenue generated by European countries is expected to reach €40 billion. To put that in a global perspective, this sector accounts for nearly half of the world’s iGaming revenue.

Currently, the bulk of that revenue is generated by long-established traditional giants of the west, UK, and EU countries. But, there is no doubt that significant growth opportunities can still be found in the newer markets of Eastern and Southern Europe like Poland, the Czech Republic, and Bulgaria. Other countries, such as the Netherlands that only just legalized online gambling, also provide a variety of opportunities. However, in a few European countries, the rules and regulations for operators are so formidable that businesses have started turning away.

Asia and Africa

Asia is always a topic of interest for international iGaming operators — a region with many developed economies and home to 60% of the world population. Add to this a lightning-fast rate of digital technologies' adoption, and you will find a continent full of opportunities. According to market estimates, the Asia Pacific online gambling market will account for $50 billion by 2026.

That also includes Macau, China's sole legal gaming jurisdiction. As a result of its enormous popularity among tourists, it has developed into one of the world’s greatest iGaming markets. However, strict regulations and conservative governments make it a challenging landscape for operators to navigate.

Although Africa only accounts for 1.1% of online gambling worldwide, i- Gaming is a major industry in the region. Africa is getting increasing attention from foreign investors and casino owners as markets develop.

Presently, the continent is almost completely unregulated: there are no restrictions on gambling sites at all, plus habits, rules, and regulations vary across 54 countries making it complex to navigate. Some territories even prohibit the practice altogether. South Africa is the largest market on the continent, with gross gaming revenue projected to surpass $2.3 billion by 2023. One of the factors contributing to this is that South Africa has the third-highest GDP in Africa, and online betting is legal for licensed bookmakers.

Conclusion

While the iGaming industry has been growing significantly for years, revenue and opportunities in the industry are now increasing faster than ever. Developments, regulations, and advanced technology on a global scale have shaped a varied and opportune foundation to develop and invest in the industry. Asia-Pacific, North America, as well as Europe remain the top three areas for gambling revenue by region, with the latter two the most regulated.

The rapidly growing LatAm market may be the dark horse of the future.

To be successful in any regulated market is no mean feat, and referring to qualified industry legal and technical specialists should always be your first step. This is especially true for the likes of the U.S. and Europe, where regulations are and continue to be a matter for experts.

As more markets open their doors to sustainable development, opportunities to invest and capitalize are appearing in familiar and unfamiliar territories. For iGaming — the World, as they say, is your oyster.