Optimistic numbers

[jetset]

BIG NUMBERS FROM MERRIL LYNCH

But an online gambling industry generating GBP 270 billion by 2015 may be a little optimistic!

Getting solid publicity mileage from publications like The Register this week was an article in Gamingpublic.com, a publication founded by Patrick Smyth, late of Gaming Transactions and currently CEO of CYOP Systems. In a bullish article on industry predictions from the respected analyst firm Merril Lynch, the publication suggested that the global online gambling industry could be worth up to GBP 270 billion by the year 2015.

We're not sure how Merril Lynch arrived at that figure, or the GBP 30 billion a year current assessment which Gaming Public.com attributes to them, but on the face of it this would appear to conflict with the estimates of other knowledgable organisations.

Nevertheless, the perhaps more realistic figures of other experts continue to show a growing industry...in fact arguably the fastest Internet industry growth to date. More likely figures are those presented by Gaming Public itself, which says global revenues from online gambling could reach US $16 billion in 2006, up from US$ 12 billion in 2005.

Giving another perspective on the potential of an industry that has survived dotcom crashes and legislative assaults alike, a recent independent survey commissioned by the UK government estimated that Europe's regular online gamblers presently stake nearly GBP 3.5 billion a year, an average of GBP 1 000 each.

For the five-year period from 2006 to 2010, it is estimated that revenues generated by the global online gaming market will increase to approximately $22.7 billion, representing a compound annual growth rate of approximately 22 percent.

Gaming Public concludes that although estimates as to the current size and growth rates of the global online gaming market vary considerably, the market generated revenues of approximately $10 to $12 billion in 2005, representing just over three per cent of total world gambling. In 2005, casino and bingo games represented approximately 29 percent of the online gaming market, and poker represented approximately 13 percent.

The dark horse in all these predictions is clearly the impact of the recently enacted U.S. Unlawful Internet Gambling Enforcement Act, which seeks to disrupt the financial transactions of the key American player market with companies offering online gambling services. This will likely not be fully quantifiable until all the regulations are in place, a process which U.S. authorities have 270 days to assemble, starting October 13.

Many feel that legislators in America are expecting too much in the line of practical and effective enforcement of a widely unpopular law, but only time will tell how effective the legislation is in shutting down the U.S. online gambling business.

Whilst the UIEGA ensured that a number of large public companies immediately executed a costly reverse out of the US market, many private companies continue to insist on servicing the substantial demand in the region. In the meantime, moves in the U.S. are already afoot to introduce an unbiased investigative enquiry into the pros and cons of regulation versus prohibition in that country...and several major American land gambling groups are showing a more than casual interest in the commercial possibilities of entering the online gambling sector.