Online Sport Gambling Sector - Case Study Example

MARKET ANALYSIS ON THE ONLINE SPORT GAMBLING SECTOR By of School and The online gambling business has drastically moved into the global market adopting variable modes of practice in different geographical settings. At the same time, the business has gradually changed the model of the gambling business with many customers turning on their internet in order to bet on sports, play cards, or gamble on slots (Xuan and Shaffer, 2009). In spite of the possible legislative and political restrictions in different world countries, the gambling market, which has since grown into producing large sums of money in revenue, looks potentially ready to grow further with the opening up of new geographical regions as well as the recent move by many countries to become receptive towards the Internet-based gaming. In the UK, for instance, the online gaming market had an approximated worth of £1.71bn in 2011, and this reflects that sports-betting contributes the most of the general net gambling revenue (Hand and Singh, 2014). Among the prominent attractions in the online gambling market is the relatively high growth rate. The market for online gaming is constituted by several types of games with each one of them having a different business model and technology (Xuan and Shaffer, 2009). Sports betting are one of these and it involves betting on the various events of sporting like horse races, games, and dog races among others. A benchmark of Russia and UK The UK is seen as a big player within the gambling business in the world and many of the big names in the business are the UK industries. The gambling practices in the UK are regulated by the UK Gambling Commission, that ensures good practices and standards are maintained n the industry (Griffiths, Wood and Parke, 2009). On the other hand, the voice of this body is prominent throughout Europe, especially following the meteoric invention of sports betting and the online casino UK markets. Sports betting, especially football, has realized an exponential growth in the UK in the recent years, with many observers suggesting that the football betting has greatly captured the imagination of the UK. Gambling constitutes a significantly large part of the economy of the UK. The industry value is calculated at around £6.2bn, according to the Gambling Commission, and it is predicted that the average annual growth of the business will be 4.6 percent until 2017, compared to the UK GDP as a whole that stands at 1 percent (Hand and Singh, 2014). The gambling sector in the UK is seen as being among the most open and fiercely competitive markets globally, with relatively few restrictions in majority of the key areas like the types of permitted activities, number of licenses, as well as the abilities of the companies to carry out advertisements (Griffiths, Wood and Parke, 2009). Additionally, the costs involved in setting up operations as well as running the same are lower compared to other traditional outlets. Even with the difficulties in administration experienced in the country, the Russian betting market is relatively big and experiences its potential growth effectively. According to the 2013 report, the internet audience in Russia was at 61 million, representing the largest audience in Europe (Parke, Rigbye and Parke, 2008). The mobile market in the country is growing at a fast rate. The National Association of Bookmarkers recorded a turnover within the sports betting market at $2.5 billion in 2012. According to this, 35 percent of the bets were done online and they comprised of 15 percent of total turnover. In Russia, cash deposited through cash-in terminals, Skrill, bank cards, and Webmoney represent the most popular method for online payments of betting deposits (Griffiths, Wardle, Sproston and Erens, 2011). The majority of the new users of the internet in Russia are the middle-aged population which hardly understands other foreign languages. This means it is of great importance that the online betting business setup localized WebPages as well as support for the purpose of enhancing business success. Regional variations in legislation and acceptance of online gambling and betting Europe has been earmarked as the leader in the adoption of regulations related to online gambling. However, with the spread of the activity, there has been the enactment of new measures (Gainsbury and Wood, 2011). In order to curb tax losses from betting and gambling due to the turning to offshore websites by its gamblers, among which is the operators in Gibraltar, the UK has moved to adopt an online gambling tax rule that is based on the place of residence of the consumer, which are to be put in place from December 2014. In 2013, the UK remote betting turnover hit a medium double-digit figure of billions of Euros. It was also evident that the percentage of male online gamblers was relatively higher compared to the small percentage of females who took part in the online gamble. The use of desktop and laptop computers remain the leading for use in online gambling, although tablets and smartphone usage have equally acquired significant popularity in the recent days. Online gambling and betting in France has been legal beginning from 2010 although many gamblers in the country have often turned to illegal gambling sites (Hand and Singh, 2014). Reports by Parke, Rigbye and Parke (2008) suggest that at least a quarter of the poker players opt for unregulated betting networks, with the apparent reason for this being the relatively high taxes imposed on the regulated gambling sites in the country (Gainsbury and Wood, 2011). In this respect, the sites have limited budgets at their disposal for the promotion of their services. Italy boast of among the world’s most advanced regulations and arrangements for the online betting activities. Recently, the total revenue accrued from gambling hit a record high in hundreds of millions of Euros (Griffiths, Wardle, Sproston and Erens, 2011). The online betting and gambling regulations in Russia and Germany are behind those set by some of their neighbors. However, Germany is poised for online betting regulation progress in 2014, as indicated by the large number of operators who have applied for first-time licenses for online sport betting (Braverman, LaBrie and Shaffer, 2011). Upon the acquisition of the licenses, the segment under regulation is expected to generate some hundreds of million Euros by 2017, whereas the non-regulated markets in the country are expected to surpass the one-digit number million Euro billion worth of revenue. In Russia, there is a current preparation of legislation to legalize online betting. In the current state, for example, gambling and betting remain confined to special administrated Russia zones, whereas online gambling is not legal country (Gainsbury and Wood, 2011). The Asia-Pacific region is gradually embracing online betting and gambling. In Australia, for instance, which is the leading globally in terms of person gambling the online sport gambling and betting has been realizing an approximated 30 percent growth annually, whereas the growth of total gambling market is less than 5 percent (Hand and Singh, 2014). Gambling is restricted in Singapore, and there are considerations by the government to impose measures that will restrict online gambling, although a third of Singapore’s internet users have gambled remotely at least once. There is a legal online site for betting held by the Japanese lottery operator. In 2013, there was a bill submitted to the country’s parliament that was means to make casinos legal, and the outcome of this is expected in the course of this year (Braverman, LaBrie and Shaffer, 2011). China does not allow online betting and gambling and any illegally operated gambling business through the Chinese mainland sites are legible for prosecution. However, the specially administered territories of Macau are at liberty to carry out the business, and there are hopes among many operators that the practice will soon be legalized in other regions (Gainsbury and Wood, 2011). Competitors The online-only competitors identified include the Betfair, in which the gambling data estimates is characterized by clear leadership in betting commanding 23 % of the market in total. In poker, it is less surprising that the PokerStars are dominant with an approximate market share of 40 percent. Another surprising fact is that the mentioned single-product operator equally holds a top ten position in the general market table, where it commands a 6 percent market share. Emerging markets Even though gaming in Europe is of significance importance especially with the resolution of the legal barriers that existed before, there still exist other markets for the practice in the UK and Russia that have all demonstrated potent (Department for Culture, Media & Sport, 2003). The presence of a solid broadband connectivity of the internet, the ease with which people access the mobile applications, together with the secure and safe payments through native systems of banking are among the three important factors supporting growth. Characteristics Total Population 18+ Total Gamblers (last 12 months) Gamble but not online Interactive Gamblers (online or phone) Online Gamblers (Wagering and Gaming) Online Gaming* Online Wagerers Sample size 4,916 3,850 4,080 998 836 77* 791 Population (000) 2,393 2,214 1,915 548 478 56 453 Average no. of bets placed in last 3 months 12.04 (+/- 0.83) 12.82 (+/- 0.97) 8.92 (+/- 0.73) 24.02 (+/- 2.48) 24.53 (+/- 2.72) 26.78 (+/- 9.33) 24.87 (+/- 2.81) 3 times or more per week 11.0% 12.1% 6.2% 29.7% 30.2% 29.9% 31.1% Approx. 2 times a week 7.6% 8.2% 6.4% 13.0% 12.4% 15.8% 12.1% Approx. once a week 17.5% 17.7% 16.0% 24.1% 23.5% 14.8% 23.8% Approx. twice a month 3.3% 3.7% 3.2% 3.7% 3.9% 9.0% 3.8% Approx. once a month 5.7% 5.4% 5.5% 6.4% 6.7% 4.3% 6.9% Less than once a month 49.5% 47.5% 56.6% 21.0% 21.0% 24.5% 20.1% Can’t say 5.4% 5.4% 6.2% 2.2% 2.4% 1.6% 2.3% Table of Target customer demographics (Hand and Singh, 2014) Characteristics Total Population 18+ Total Gamblers (last 12 months) Gamble but not online Interactive Gamblers (online or phone) Online Gamblers (Wagering and Gaming) Online Gaming* Online Wagerers Sample size 4,916 3,850 4,080 998 836 77* 791 Population (000) 2,393 2,214 1,915 548 478 56 453 Average total spend on bets placed in the last 3 months 366.7 (+/- 56.04) 389.04 (+/- 65.40) 240.78 (+/- 41.09) 857.16 (+/- 204.87) 871.66 (+/- 227.87) 1,486.97 (+/- 1648.65) 894.5 (+/- 239.51) $500 or more 0.3% 0.3% 0.2% 0.7% 0.6% - 0.6% $200 to $499.99 0.8% 0.7% 0.5% 1.5% 1.8% 5.6% 1.8% $100 to $199.99 2.7% 2.7% 2.1% 5.1% 5.0% 6.7% 4.9% $50 to $99.99 7.9% 8.4% 7.1% 11.5% 11.5% 10.5% 11.5% $20 to $49.99 20.4% 20.5% 19.6% 23.1% 23.4% 23.8% 23.5% $5 to $19.99 45.5% 45.4% 47.0% 40.7% 39.4% 40.8% 39.4% Less than $5 15.8% 15.2% 16.2% 13.8% 14.2% 8.6% 14.1% Can’t say 6.6% 6.7% 7.3% 3.7% 4.1% 3.9% 4.1% Table of Expenditure ranges of the population in Russia and UK (Hand and Singh, 2014) The use of Android and smart phones had grown drastically in both Rusia and UK, with the Facebook interaction regarding sport events increasing in the recent past. The business in sight is thus aimed at enhancing its competitiveness through the social media platform, through which the respective fans of the game will be fully engaged (Department for Culture, Media & Sport, 2003). In addition, the business will carry out analysis in determining the content shared in respect to the target population. For instance, there would be creation of WebPages through which the football fans could interact and bet in preference of or against certain teams (Desai, Desai and Potenza, 2007). For the purpose of public marketing of the business, significant attention will be paid on the ideal way of engaging relevant public part. During the match days, for instance, there are two different groups that the digital content seeks for engagement namely, those at the game and those missing the game (Department for Culture, Media & Sport, 2003). In order to improve the feeling of the funs in terms of their involvement, there will be need for the digital media to be effectively analyzed and this monitoring will be essential in providing the needed evidence for successful engagement. With the launch of the new business in both the UK and Russia, there is need for uptake of gaming machines that are retail-based and the remote gambling strategy. According to the IBISWorld report, the revenue within the industry is expected to fall at a compound rate of 1.4 percent annually for the next five years, hence expected to reach £6.9 billion (Hand and Singh, 2014). On the other hand, the revenue is bound to shrink by 4.1% between 2014 and 2015. Industry SWOT Analysis Chapter Considering that Betting and Gambling activity industry is at its mature phase of the evolution lifecycle, there are high expectations that the industry value adds to the overall UK economy, which is projected at 0.7 percent growth rate in the next decade, whereas the forecast for the GDP is at a compound rate of 2.1 percent annually (Hand and Singh, 2014). The business seeks to mobilize customer knowledge regarding online sport betting to lure more into the business, while ensuring transparency and honesty in order to grant customers equal chances of winning. References Braverman, J., LaBrie, R. A. and Shaffer, H. J., 2011. A Taxometric Analysis of Actual Internet Sports Gambling Behavior, Psychological Assessment March, 23(1), pp. 234-244. Department for Culture, Media & Sport 2003, The future regulation of remote gambling: A DCMS position paper, London: Author Desai, R.A., Desai, M.M. and Potenza, M.N. ,2007, Gambling, health and age: Data from the National Epidemiologic Survey on Alcohol and Related Conditions, Psychology of Addictive Behaviors, 21, 431–440. Gainsbury, S. And Wood, R., 2011, Internet gambling policy in critical comparative perspective: the effectiveness of existing regulatory frameworks, International Gambling Studies, 11(3), 309-323 Griffiths, M., Wardle, H., Orford, J., Sproston, K. and Erens, B., 2011. Internet Gambling, Health, Smoking and Alcohol Use: Findings from the 2007 British Gambling Prevalence Survey, International Journal of Mental Health and Addiction, 9(1), pp. 1-11 Griffiths, M.D, Wood,R.J. and Parke, J., 2009. Social responsibility tools in online gambling: A survey of attitudes and behavior among internet gamblers." CyberPsychology & Behavior , 12(4), pp. 413-421 Griffiths, M.D., Parke, J., Wood, R.T.A. & Rigbye, J. 2010, Online poker gambling in university students: Further findings from an online survey, International Journal of Mental Health and Addiction, 8, 82-8 Hand, C. and Singh, J., 2014. Segmenting the betting market in England. International Journal of Market Research, 56(1), pp. 111-127 Parke, J., Rigbye, J. And Parke, A., 2008. Cashless and card-based technologies in gambling: A review of the literature, Birmingham: The Gambling Commission Xuan, Z. and Shaffer, H. 2009. How Do Gamblers End Gambling: Longitudinal Analysis of Internet Gambling Behaviors Prior to Account Closure Due to Gambling Related Problems, Journal of Gambling Studies, 25(2), pp. 239-252 Read More