New Frontiers for Online Sports Books
Online sports books have to date focused much of their energies in terms of marketing their offerings in countries that have either well-established betting traditions, strong horse racing industries, well-known national sporting leagues with passionate local and overseas followings or a regulatory system that enables providers to get their product to punters.
The UK is one of the world’s largest markets for all types of online gaming, in particular sports betting, but is also one of the most regulated markets in the world. All gaming providers, irrespective of the jurisdiction in which they’re licensed or where they operate from, are required to pay a point of consumption tax, called the remote gaming duty (RGD), at a rate of 15% on every wager. Provided they are licensed by the UKGC and pay the RGD, offshore operators as well as UK-based companies are able to advertise their services to players in Britain and operators cannot accept UK players if they are not authorized by the UKGC.
This increased regulatory framework has had little effect either on punters or on operators’ desire to get into the lucrative UK market. The most recent data released by the UK Gambling Commission (UKGC), the body that oversees all forms of gambling in Britain, including online sports betting and casinos, revealed that in the year up to September 2015, the total amount wagered on online sports betting in the UK was USD$12.32 billion, producing revenue of $1.94 billion (a margin of around 15.7 per cent).
In many other major jurisdictions, however, online gambling is not as regulated as it is in the UK, producing so-called ‘grey’ markets. In these countries, such as Canada, Australia, New Zealand and Germany, there may be legal, regulated and/or state-controlled sports book sites, but at the same time there are no laws that prevent offshore operators from being able to offer their services to players in that country provided they do not operate from within it nor advertise within its borders.
This produces challenges for offshore operators who, while they are free from taxation obligations, do not have the same opportunities to market their services as they have in the UK. Nevertheless, these sites still have significant market share, often because they offer a greater variety of bets on a larger number of sports than state-operated sites.
This is the case in Canada, where several provincial gaming authorities run online sports books, but single event betting is not available. However, offshore casinos offering sport books such as William Hill, Bet365 etc do allow punters to make single event bets, and this is in large part the reason why many Canadian players prefer to use these rather than state-run sites. In Australia, in-play betting is not available at sports books sites licensed to operate and advertise from within the country, but you can make these sorts of bets with offshore operators.
In Germany, the laws are currently under review and it may well be the case that an online gaming operator based in the EU will no longer be classed as offshore, andit is expected that major European operators will soon be able to market their services directly to German punters in much the same way as they do in the UK, irrespective of whether they are based in Germany or not. Currently, the German sports betting market is calculated to be worth €5.12 billion (USD$5.5 billion) annually, with the vast majority of €4.9 billion ($5.2 billion) being wagered with offshore, or ‘grey’ operators.
The online casino market
With regard to online casinos, there also exist different regulatory regimes – there are countries where casinos are licensed and regulated and therefore subject to tax (‘white’ markets) such as the UK, and others where, although it is not legal for an online casino to operate or advertise, players from that country can nevertheless play at an offshore site perfectly legally, such as Australia and New Zealand (’grey’).
There are also countries such as Canada, which is a combination of the two – there are state-controlled sites run by provincial gaming authorities and casino sites operated by the Kahnawake Gaming Commission, but at the same time there are no restrictions on Canadians playing at offshore sites (provided they have no physical presence and do not advertise within the country).
However, the regulatory regime that is in place does not seem to have any significant effect on the size or growth of a country’s online casino market. In the UK, where online casinos are licensed and regulated, the UKGC report showed that 57.5% (around £2.34 billion, or almost USD$3 billion) of all online gambling was at casino sites. In Australia, where online casinos can only be operated from offshore, the market is thought to be worth around AUD$400 million annually (USD$298.2 million) and anticipated to grow to AUD$910 million (USD$678 million) by 2020. In Canada, despite having legal, state-controlled online casino sites, around CAD $4 billion (USD$3 billion) is thought to be wagered at offshore casinos every year.
Where to next?
With such significant revenues being generated by online sports books and casinos – in both white and grey jurisdictions – operators are beginning to look for new and expanding markets.
Despite a huge presence, there is still potential for growth in developed markets like the UK, as well as Germany, Australia and Canada, depending on changes to legislation. For instance - regulated sports books sites who already operate in Australia being allowed to offer in-play betting - law changes that would enable operators who are currently offshore to offer their services in competition with state-controlled sites in Canada and New Zealand and -European-based companies being given full access to the German market are all examples of how existing developed markets still offer room for potential growth.
Meanwhile, as evidence that there are still plenty of opportunities available, All Slots online casino has established in its own online sports book called AllYouBet, while theSun, the UK’s biggest-selling newspaper is also set to launch its own sports betting site, Sun Bet.
Other developing markets are begin to expand as well; Digitain has recently launched a new online sports book in Bosnia in partnership with Xlivebet.com, Romania is now licensing offshore sports book operators, while Brazil, Peru, Chile, Colombia and Mexico are currently considering legislation to allow foreign operators in. India is also considering making changes to its laws regarding sports betting that would see it become the responsibility of states rather than central government.
Developments in technology also are a source of potential expansion for global gaming operators. For instance, the significant growth in mobile phone and hand-held device usage in developing countries undoubtedly presents an opportunity for gaming operators to grow their reach.
As an example, as recently as 2002 only one in ten people on the entire continent of Africa owned a mobile phone – by 2015, those figures were 89% in South Africa, 83% in Ghana, 82% in Kenya, 73% in Tanzania and 65% in Uganda. Combined with the increased availability of pre-paid and virtual cards in Africa, along with a general expansion of banking and financial services, this has meant that a greater number of Africans now have the ability to access online sports books and casino sites.
Therefore, while some markets worldwide might seem at saturation point, there are still plenty of scope for global growth in online sports betting and casinos, and the biggest operators are getting ready to make their presence felt.