The impact of Black Friday etc ( H2 gambling analysis)

[rainmaker]

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As always, interesting info from H2. H2 Gambling Capital is the gambling industry's leading consulting, market intelligence and data team.

(My own underlines in the text)



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16-Jun-2011

After analysing the first five months sector data, updating our regulatory database and incorporating the constant sector news flow H2 have revised our eGaming sector forecasts for 2011 to €23.66bn, which equate to a headline YoY increase of 4.4% the lowest increase the sector has seen since H2 commenced tracking it in 1998.



The good news for the majority of the commercial eGaming sector is that underlying growth remains strong at 12.0% (2010 9.2%). H2’s revision is mainly due to two key factors, though continued economic headwinds and slower than expected re-regulation are also playing their part.



Black Friday (and subsequent actions) occurring in the US that has decimated the scale of the Internet poker industry in that market. At this stage we have calculated that the impact will equate to as much as €765m of lost market value this year and a further €100m loss next.



The other key reason for the downgrading of our forecasts has been the impact of the earthquake on the Japanese Racing Association’s (JRA) interactive business. The JRA remains by far the largest interactive operator in the world by following the earthquake all aspects of their business were down and particularly mobile betting as people freed up the networks for emergency use.



Global eGaming Market Gross Win 2004 to 2015e (€bn)

Source: H2 Gambling Capital, June 2011



Activity levels are still a long way from being back to normal at this time and so it is expected that the JRA’s interactive business will be down approximately 13% YoY in 2011. Despite this the betting product vertical is still expected to lead the way in 2011 accounting for 38.4% of the global market. Casino is expected to account for 26.2% with poker at just 13.5% compared to 17.2% in 2006 prior to UIGEA. State lotteries continue to see strong growth, on the other hand, and are expected to account for 8.5% this year as opposed to 5.0% in 2006.



At this point in time H2’s forecasts still reflect the start of cash poker and casino activity in Italy in the middle part of this year with regulated activity in Greece, Belgium and Spain expected to commence at some point in 2012. Events in Germany have had little impact on H2’s forecasts as we assume little activity will transfer onshore under the proposed scheme.



Europe is expected to continue to grow its share of the global eGaming market in 2011 with 47.2% up from 31.5% in 2006. On the other hand North America has seen its share of interactive gambling fall from 30.5% in 2006 to an expected 16.7% in the current year. Despite the earthquake in Japan Asia/the Middle East is expected to account for 27.7% of the market this year though this is 4.5% lower than the region’s share of the market five years ago.