Online Sports Betting in Russia and UK - Report Example

Market analysis: Online Sports betting in Russia and UK Table of Contents Online Sports betting industry 3 2.Legal status 4 3.Number of betters 5 4.Importance of sports betting in Russia and UK 5 5.Average spend on sports betting per day per person (approximation) 6 6.Brief overview of online sports betting market 6 7.Importance of betting sector on sports and in terms of its legal status 7 8.Competitor analysis 7 9.Number of android and iPhone users 8 10.Facebook interaction regarding sport events in UK and Russia 9 11.Differentiation strategy and growth 9 12.Ideal launch for the Russian market 9 13.Brief overview and areas of improvement 10 Reference List 11 12 1. Online Sports betting industry Russia In spite of the difficulties that prevail in the Russian economy, the online sports betting market is considerably large and is experiencing exponential growth. This growth in the online sports betting market can be attributed to the consistently expanding belt of internet audience in the country. In 2011, the number of internet audience was reported to be 53 million (The Next Web, 2014). This number increased significantly in the subsequent years and reached a staggering value of 61 million users in 2013 (Nikitin, 2013). The figure depicted below reflects Russia as the market leader in terms of internet audience in the whole Europe. The mobile market in Russia is growing at a rapid rate with 40 million users accounted for in 2012, which is an 88% growth compared to 2011 (Nikitin, 2013). Figure 1: European online audience and growth (Source: The Next Web, 2014) The growth in the number of mobile users with consistently increasing users of Android and iPhone apps has had a significant contribution in the overall development of the online betting industry in the country. According to the report published by the National Association of Bookmakers, the turnover of the sports betting market in 2012 was $2.5 billion. 35% of the bets were conducted online that contributed to about 15% of the overall turnover (Reuters, 2014). UK Despite the current economic climate in the UK, the online betting market is on an upward growth trend. The growth has been resounding, over the past few years where the value of this industry increased from £1,690 million in 2010 to £1,920 million in 2011 (Psmcguin, 2012). This trend is set to continue in the upcoming years as well with the anticipated consumer expenditure to go beyond £2 billion. Growth across the online gambling sector has been largely driven by sports book (online sports betting) with an approximated market value of more than £800 million. This business is mainly led by football and in-play betting growth (Psmcguin, 2012). Figure 2: Online gambling industry UK (Source: Psmcguin, 2012) The online sports betting industry in the UK is largely reliant on brand related lookouts and traffic. Even though a considerably well applied general search campaign facilitates brand search, it also is a factor of brand inheritance and extensive offline marketing operations (Psmcguin, 2012). 2. Legal status Russia Regulation of online sports betting and gambling in Russia lags against some of its neighbouring countries. Although betting is still considered illegal in the country, legislations are currently being prepared in order to legalize online sports betting activity. Online sport betting is restricted to zones of special administration in Russia (yStats, 2014). UK The online sports betting industry in the UK is by far legal. However, as the activity is spreading like a wildfire in the country, new legislations are being enacted. Online sports betting in the country is governed by the Gambling Bill that was passed in 2005. The bill is enforced by the Gambling Commission. The UK has adopted a new measure in order to tax the online sports netting industry based on the consumer’s place of residence. This measure will be effective onwards December 2014 (yStats, 2014). 3. Number of betters Russia High spender: 250,000 – 450,000 Average spender: 500,000 – 850,000 Low spender: 750,000 – 1,250,000 UK High spender: 100,000 – 250,000 Average spender: 150,000 – 500,000 Low spender: 300,000 – 550,000 4. Importance of sports betting in Russia and UK Sports betting in both Russia and UK have contributed significantly towards overall development of the respective economies and growth in the GDP of the countries. Not only has its served as a secondary platform of making money for internet audiences but has also played a crucial role in providing a mode of income for a number of workers. That is why, although this practice is considered illegal in Russia, legislations are being prepared in order to legalize the same. The betting houses in Russia and UK are preferred because they make best efforts to offer betters with a broad range of games on which they can bet (Sporteology, 2014). 5. Average spend on sports betting per day per person (approximation) Russia High spender: $1.5 million Average spender: $750, 000 Low spender: $225,000 UK High spender: $1.75 million Average spender: $800,000 Low spender: $175,000 6. Brief overview of online sports betting market Asia-Pacific Asia-Pacific region has proven to be a hotspot for online sports betting because of strong economic growth. In Australia, which has been known to be the leader in terms of person sports betting and gambling the industry has been achieving a consistent growth rate of over 30% annually. Singapore has been restricting online sports betting and gambling generally, however though one third of the country’s population have been found indulging in online sports betting at least once. Online sports betting are partly legal in Japan. As far as India and China are concerned, the practice of online sports betting and gambling is considered illegal and the guilty when found are prosecuted (ystats, 2014). Europe The European zone has proven to be a front runner as far as facilitating online sports betting is concerned. This practice has been legalized in most of the countries that includes Switzerland and UK. In France, online sports betting have been legal since 2010; however, many players access illegal betting websites. Italy has established the most advanced regulatory arrangements for its online sports betting and gambling sector. As far as Germany is concerned, although the legislations related to online sports betting lag some of its neighbours, progress in regulations pertaining to this sector is expected during end 2014. This is precisely because a number of operators have filed for their first online sports betting license (Danenright, 2013). Sports betting are considered illegal in Russia, Ukraine and Turkey. 7. Importance of betting sector on sports and in terms of its legal status As far as the importance of betting sector on sports and in terms of its legal status is concerned, a majority of people will argue regarding whether at all there is any importance of its sector in sports. This is precisely because due to this activity a number of athletes have been found indulging in wrongful practices due to the influences that high spenders have on these players. This deteriorates the integrity of the overall sports. If viewed from another perspective, the only contribution of this sector is that it has dragged a considerable proportion of audiences into watching and loving the sports, however earning money is their only motivation. 8. Competitor analysis Paddy Power Revenue (as of 2013): €745.2 million (Paddy Power, 2014) Strength: Extensive domestic presence; reduced labour cost Weakness: Small business units Figure 3: Online betting – aggregated click share (Source: Psmcguin, 2012) Ladbrokes Revenue (as of 2013): £1,111.2 million (Ladbrokes, 2013) Strength: Extensive international presence; robust sales and distribution network Weakness: highly competitive market; high loan rates. 9. Number of android and iPhone users Russia: iPhone – 500,000; Android – 14 million (Khrennikov, 2014) UK: 36.9% of Smartphone users use an android enabled phone whereas 28.5% use an iPhone (Gavaghan, 2012). The numbers given above are staggering and therefore the mobile markets in these two countries are perfect platforms for launching a new online sports betting business. 10. Facebook interaction regarding sport events in UK and Russia Given the fact that residents of both UK and Russia are big fans of football, they are seen engaging in social media publications of the same over the last few years. The number of Facebook users is growing exponentially and with that the interactions regarding sport events between friends have also increased. Users are seen analysing a particular game before it commences and after it finishes. In addition they also create groups where discussion forums as well as debates are held regarding a particular sport event or an athlete. Therefore Facebook serves as a huge platform whereby a new online sport betting business can be promoted in front of a large base of users. 11. Differentiation strategy and growth As far as the differentiation strategy is concerned, the new online sport betting services will be made available to both Android and iPhone users whereby they can bet on their favourite game from a remote location. A training package will be available for users who are new to this industry. Two betting houses will be set up whereby users can bet between and against each other. This will enable two friends to bet on the outcome of their favourite game. A loan facility will also be made available to creditworthy users in case of immediate financial requirements. With all these services included within the online sports betting business’s profile, the website is expected to realize revenue growth of 5% annually for the first three to four years and 7% thereafter. 12. Ideal launch for the Russian market The ideal launch would be during the Christmas in 2014 precisely because this is a festive season and majority of residents in Russia are likely to access online betting websites. The website needs to be promoted extensively through Facebook. The betting houses should be inaugurated during the same time period and the guest list should consist of multimillionaires from the country. 13. Brief overview and areas of improvement The online sports betting market is growing at the speed of light. With the increasing number of internet audiences a large base of users are seen responding positively towards online betting. This provides an opportunity for the establishment of a new online sports betting website. Bearing that in mind the new online shopping website caters to bring about a lot of improvement in this sector in order to differentiate itself from the already established competitors in the industry. The improvements include 24*7 betting portals provided to the users both in mobile as well as PC platforms, betting warehouses for a large pool of users whereby betting can be conducted over multiple games as well as between users, training facility for novices and loan facilities for creditworthy borrowers. Reference List Danenright, 2013. Online gambling market research. [online] Available at: [Accessed 18 August 2014]. Gavaghan, J., 2012. Android leaps over iPhone in UK with 2.5million more users as majority now own a smartphone. [online] Available at: [Accessed 18 August 2014]. Khrennikov, I., 2014. The Google of Russia Escalates Its War on Android. [online] Available at: [Accessed 18 August 2014]. Ladbrokes, 2013. Annual Report and Accounts 2013. [online] Available at: [Accessed 18 August 2014]. Nikitin, I., 2013. Russian Online Betting Market. [online] Available at: [Accessed 18 August 2014]. Paddy Power, 2014. Financial summary and KPI performance. [online] Available at: [Accessed 18 August 2014]. Psmcguin, 2012. UK Online Gambling – Market Intelligence Report. [online] Available at: [Accessed 18 August 2014]. Reuters, 2014. Research and Markets: Research Report - Global Online Gambling & Betting Market 2014. [online] Available at: [Accessed 18 August 2014]. Sporteology, 2014. An Overview on Online Sports Betting. [online] Available at: [Accessed 18 August 2014]. The Next Web, 2014. Already Europe’s largest Internet market and still growing astoundingly fast: Russia by the numbers. [online] Available at: [Accessed 18 August 2014]. yStats, 2014. Global Online Gambling & Betting Market 2014. [online] Available at: [Accessed 18 August 2014]. Read More