Posted on 27 March 2013
While most industries continue to suffer from the financial crisis in the UK there is one sector that is doing very well. The nation’s online gambling industry is thriving and in 2012 it brought in an estimated £2 billion. The figure represents an impressive increase from industry earnings of £1.27 billion generated in 2008. The figures point to an 80% increase in the revenues generated by the online gaming industry. Bookmaker William Hill has the largest market share at 15%followed by Ladbrokes, Paddy Powers, Betfair and Bet365 having 11% each.
The largest sector of the British online gaming industry is sports betting which represents 44% of all wagers placed in the UK. Sportsbetting has grown by 102% since 2008 and is now worth £1 billion. Online casinos are up by 79% since 2008 and have a 23% market share. Online bingo is up a whopping 150% and has a 17% market share. Poker came in last and has only grown by 8% to 15% of the online gaming market. Although the figures may seem impressive the UK government estimates that it has lost about £2.1 billion in revenues since it imposed a 15% tax for operators in the UK.
Because of heavy taxation in the UK today there are about 2,500 online companies operating from jurisdictions like Gibraltar, Malta and the Channel Islands where taxes are much lower. To lure these companies back to the UK the government is considering lowering the tax rate on internet gambling to 10%. Despite the proposal many online gaming companies, including William Hill, have said they would not return to the UK because of taxes and regulations that would cost them money. The UK plans to require all operators doing business in the UK to obtain a UK gaming license and all transactions would be taxed at the point of consumption.
Hugh Robertson, the Minister for Sport & Tourism, said the new policies are about consumer protection. Robertson told reporters “These proposals will ensure that British consumers enjoy consistent standards of protection, regardless of where a gambling business is based.” Not everyone is happy about the prospect of offshore gaming companies returning to the UK. Anti-gambling activists are also not happy about the impressive growth figures and say that some of that growth was financed by gambling ‘addicts.’ They say that evidence shows that there are 150,000 problem gamblers in the UK and that each problem gambler has an average debt of £17,500.
Posted on 10 March 2013
In late February game developer Zynga announced the company was cutting about 30 jobs and is closing or consolidating offices in New York, Texas and Baltimore. Zynga will focus on social games that can be profitable. Zynga Chief Operations Officer David Ko stated “While these decisions are always difficult, these steps will affect approximately 1 percent of our workforce and enable us to focus our resources on the most significant growth opportunities.”
In the meantime Zynga’s stock prices gained after Nevada announced the approval of online gambling regulations even though the company must clear many hurdles before Zynga can cash in on the legalization of online gaming in the US. Zynga’s attempts to enter the real money online gaming sector may be held back by US laws and regulations that favor existing casinos. In New Jersey Atlantic City casinos will control online gaming in the state. This could create big problems for Zynga which is trying to reduce its dependence on its current business model.
Currently Zynga offers ‘free to play’ games on Facebook that allow players to play the games for free but gives them the option to spend real money on virtual products and other in-game advantages. In-game transactions are commonly referred to as “micro-transactions.” Zynga generates a large portion of its revenues from micro transactions. Investors became skittish after the company showed signs that the company had reached its growth potential limit with its free to play business model.
Last October Zynga announced plans to enter the online gambling industry. At the time Zynga seemed well positioned to take advantage of the opportunities offered by online gaming but the rules regulating the United States online gambling market may cause big problems for the company. Last August Zynga launched real money games in the UK on Facebook. Even though the move was successful Zynga is still cutting back. Currently Zynga employs about 3,000 people and is closing down two Texas offices and will relocate employees to offices in Dallas and North Austin. The company is also consolidating two offices in New York.
Last December Zynga filed a “preliminary finding of suitability” with the Nevada Gaming Control Board which is only the first step in obtaining a Nevada interactive gaming license. Zynga may face a difficult uphill battle since Las Vegas casinos have already partnered with European gaming firms to launch their online gaming operations. Casinos have also been given preference in the licensing process.
Posted on 10 January 2013
Another year has gone by without any action from the federal government regarding online gaming. Senate Majority Leader Harry Reid, a Democrat from Nevada, and Sen. Jon Kyl, an Arizona Republican, worked on federal legislation that would regulate and legalize online poker. Unfortunately online bingo players would be left out because the bill would only legalize poker and all other forms of gambling would remain illegal. Because of the inaction of the federal government several states want to offer online casino games to residents. In most cases online gambling would be regulated and licensed by lottery officials and in other states state lotteries would run all online gambling operations. Several states want to offer a variety of games such as online bingo, keno, roulette and other casino games.
This could put state governments and the feds on a collision course. Last summer Reid and Kyl told attorney general Eric Holder that they opposed state efforts to legalize online gambling. The senators even oppose the sale of lottery tickets on the internet. In a letter the senators asked the Justice Department to “consult with Congress before finalizing a new position that would open the floodgates to Internet gambling.” The Department of Justice has taken the position that states are not won’t be violating federal laws if they set up their own intrastate online gambling operations.
At stake is the future of the online gambling industry in the United States. The industry is swiftly evolving as states plan their own operations. Nevada has already licensed several online poker operators. The New Jersey legislature approved an internet gambling bill but Governor Christie has been stalling on the issue for almost two years. Given the massive damage done by Hurricane Sandy in New Jersey the state could use every dollar it can raise and online gambling could easily generate millions. The legislation proposed by Reid and Kyl has rattled several statehouses although few actual details of the bill have been made public.
The Reid Kyl bill would set up a federal system for online poker. Many believe the legislation is likely to prohibit states from offering other forms of gambling such as online bingo and casino games. Many backing the federal bill want to stop state lotteries from providing instant win games, slots and traditional casino games online. Maryland Gov. Martin O’Malley wrote “Historically, states have had the right to make their own decisions about whether to offer gambling and how to regulate the industry.” O Malley also said that the proposed federal law “would strip states of those rights.” So far the White House has not weighed in on the legislation.
Posted on 13 December 2012
The social gaming sector is heating up. Recently San Francisco game developed filed licensing papers with the Nevada Gaming Commission and announced plans to offer real money gaming. Zynga plans to launch the games in the UK early next year. Zynga will face some stiff competition. Facebook has partnered with 888 Holdings to offer real money gambling in the site. Facebook has about 900 million active users around the world to the potential can easily be seen. Facebook chose the UK for the launch of real money gaming because the country has a mature and regulated online gambling industry.
Facebook users 18 and over in the UK will be able to play games and cash out their winnings. 888 Holdings is a publicly traded company and the announcement of the deal with Facebook gave the company’s stock a nice boost. 888 already offers games on Facebook but the games are free. 888 plans on offering online bingo, casino, and slot games. No mention of poker raised some eyebrows and some experts believe that Zynga’s first real money game will be poker. Earlier Facebook had partnered with another gambling firm, Gamesys. Gamesys was the first company to use Facebook apps for real money gaming. In August Gamesys offered 90 bingo and slot games on Facebook.
For Facebook real money gaming is a great opportunity. Currently Facebook offers thousands of games on its network. Some gaming companies are worried that real money gaming on Facebook will take some revenues away from British online gaming companies. Facebook will be watching for the result of Zynga’s entry into the Nevada online gaming market. If the move is successful most experts say that Facebook will follow. Facebook and Zynga have been partners for years and Zynga’s entry into real money gaming has put a strain on the relationship between the two companies.
Not everyone in Britain is thrilled with Facebook’s game launch. Critics say that Facebook is “tempting the young to gamble.” Anti-gambling activists are worried that the games could be accessed by those under 18. They also believe that Facebook games will make gambling seem more acceptable to the young. They also believe that insufficient safeguards are in place to deter underage gambling. Facebook contends that adequate safeguards are already in place. Itai Frieberger, chief operating officer of 888, told reporters “Our Facebook play for fun offerings have found a significant audience, and we are very excited by the opportunity real money gaming on Facebook provides.” Frieberger also said his company will take steps to prevent underage gambling.
Posted on 13 November 2012
The online gambling market is growing in Europe and currently the UK has the largest online gaming market. Gaming research firm H2 Gambling Capital said that figures point to rapid growth in Italy, France and Spain that could put the UK in second or even third place. In the UK online bingo has been one of the largest and fastest growing sectors of Britain’s online gaming industry. Currently over 400 websites are competing for online bingo players in the UK.
The UK has one of the oldest and longest established legal online gambling market in the world. The online gambling industry got a boost after the passage of the Gambling Act of 2005. The act came into force in September of 2007 and since then UK residents have enjoyed one of the most open gaming markets in Europe. UK consumers have benefitted from the highly regulated market and enjoy a level of consumer protections not found in other online gaming markets. Regulation has also created a highly competitive and active online gaming market that provides billions in tax revenues annually.
The UK’s liberal stance on internet gaming has seen player numbers increase and has made the UK a frontrunner in terms of gaming generated revenue. In 2009 only 5.6% of the UK population engaged in online gambling but by 2010 the figure had risen by 32%. To provide some contrast the number of Britons taking part in social networking grew by 4.5% during the same period. Consumer spending on internet gambling in the UK is now about £1.7 billion a year accounting for about 18% of all UK gambling revenues. This year experts expect the revenues to be about £2 billion.
Gambling market forecasts have been affected by legislation and analysts are paying close attention to tighten regulations on the online gaming industry. Experts are also paying attention to the EU Parliament’s announcement calling for a harmonious approach to regulation among member states. No matter what country takes the lead the overall picture is crystal clear; online gambling around the globe is set to grow steadily. Currently the market is valued at EUR24.6 billion and experts say that figure will increase to EUR 32 billion by 2015.
Posted on 13 August 2012
Recently Facebook launched its first real money gambling app. Bingo Friendzy offers players online bingo games and slots. The game was launched in the UK which has a well regulated and monitored online gaming industry and market. Not everyone is happy with Facebook’s latest business decision. Some groups contend that Facebook games are ‘setting children up as gamblers.’ The groups say that Facebook could turn children into future problem gamblers by allowing them to play Las Vegas style casino games on the popular social networking site.
Many Facebook games allow players to use ‘virtual money’ to play gambling games on their home computers and mobile phones. Facebook members who must be over 13 can play a wide variety of games associated with gambling such as roulette, slot machines and card games. Some so called ‘experts’ believe that the games could lead children to become habitual gamers or “problem” gamblers. They say that the games will lead children to believe that gambling is harmless fun and could make betting with real money seem more acceptable.
Dr Carolyn Downs, of the University of Salford, told reporters that her 13 year old daughter was upset over losing virtual money playing a game called ‘Fluff Friends.’ Downs told reporters “It’s well-established that the younger the children start gambling, the more likely it is they will become habitual gamblers and also problem gamblers. It’s a long-term, life-long risk. What we’re doing is setting up these kids to be problem gamblers as they go through life.” A spokeswoman for GamCare which helps problem gamblers said her organization wants the UK Gambling Commission to research and investigate social gaming.
Mandy Barrie, GamCare’s policy and development director, told reporters “This is a really rapidly-moving area. We need to think through very carefully any risks that it presents particularly for young people. There is a link between early exposure to gambling and developing a problem in adulthood.” A Facebook spokesman countered and said ‘In addition to complying with local law, all applications on Facebook are required to operate within the bounds of our developer guidelines.’ In the UK the legal age for gambling is 18. Facebook users must certify that they are 13 years old. Currently Facebook has over 3 million users under 17 years old.
Posted on 22 April 2012
European Union regulations mandate a uniform flow of services and good throughout member states. Many believe that the mandate should include a legal and regulated online gaming industry in the EU but unfortunately this is not the case. The European Commission has been trying to establish an online gaming regime among member nations but has not had much success. At the present time individual EU nations have their own positions on internet gaming. In 2005 the United Kingdom was the first country to establish a taxed and regulated internet gaming industry. The UK Gambling Commission was established to regulate online gambling and so far the move has been a big success.
Shortly after the establishment of the Gambling Commission the UK created a ‘white list’ of online gambling jurisdictions. Up to now online bingo sites and casinos located in these licensing jurisdictions have been allowed to advertise their services in the UK and solicit business from British players. These offshore operators pay lower tax rates but this is about to change. Recently the Chancellor of the Exchequer announced that the UK government will implement a ‘point of consumption’ tax. This means that every online gambling transaction that takes place in the UK will be subject to taxation. The government hopes to level the playing field for gaming sites licensed and located in the UK.
In 2009 Italy became the first European mainland country to establish a legal and regulated online gambling regime. The first games introduced were online bingo, poker tournaments, skill games and fixed odds sports betting. The move was a success and in 2011 the Italian government introduced cash online poker games and online casino gambling. Industry observers expect the turnover of internet gambling to double in 2012. Italy only permits operators that have been licensed by the country’s regulatory body AAMS. The Italian government is also trying to block unlicensed offshore gaming sites.
In 2010 France established the country’s first online gaming regulations. Private operators were allowed to offer games after getting a license from ARJEL, France’s regulatory body. For now online gaming in France is limited to sports betting, horse racing and poker. Spain was the next country to legalize online gambling. Currently Spanish online gaming companies are trying to keep foreign competition out. Online bingo has been a big hit in some parts of Spain. For now it looks like the European Commission will have its hands full trying to establish an EU wide regulatory regime for online gambling.
Posted on 02 March 2012
It is no secret that women are largely responsible for the success of the online bingo industry in the United Kingdom. Gambling statistics show that a large majority of online bingo players are female. Online bingo has attracted a much younger demographic than land based bingo halls. In land based bingo halls older players and pensioners dominate the games although many of the younger generation have developed a taste for live bingo games. A new survey commissioned by an online casino company in the UK highlights just how important female gamblers are to the industry.
The survey was commissioned by the Belle Rock casino group and was conducted by Hitwise, a firm specializing in online consumer search and behavior intelligence. The survey was conducted across all online casinos in the UK and compared industry figures from 2007 to those of today. The survey showed that the number of female online gamblers quadrupled from 2007 to 2010. The number of women playing at online casinos is almost as high as men. A press release by Belle Rock Entertainment showed that in 2007 48.38% of players in 2011 were female and 51.62% were male. The report also speculated on the reasons for the large increase. Online casinos can be easily accessed by women who want to gamble online. In addition they provide a less intimidating atmosphere for female players and make them feel safe from the prying eyes and derisive looks they may receive at land based casinos.
Online bingo sites and casinos are taking advantage of recent trends and are targeting more of their marketing efforts towards female players. The survey showed that females and males visit different types of gambling sites. Men showed a marked preference for poker and sports betting while women had a strong preference for online bingo sites and slots. Women dominate online bingo and their numbers are three times that of men. Most online bingo sites offer a selection of slots and the survey clearly showed the importance of slots to female players.
Another report by Women at NBCU showed that women are becoming more tech savvy than men especially when it comes to mobile technology. 53% of all women in the United States own smart phones and men account for about 46% of cell phones in the US. The survey showed that women are more likely to own some sort of smart phone app. It is clear that women are very important to the online casino industry and their influence is expected to grow in the coming years.
Posted on 10 February 2012
Following a very impressive performance in 2011 British gaming company 888 Holdings expects continued growth throughout 2012 despite the struggling British economy. 888 Holdings which operated several online bingo and casino operations enjoyed a 26.33% bump in revenues in 2011. Reuters reported that the company experienced a large increase in player numbers and the company is predicting strong first quarter results. Online bingo and gambling seem particularly suited to the struggling economy as players look for inexpensive home based entertainment. Because of the economy many players have seen a reduction in their disposable income and are searching for alternatives to an expensive night out at a bingo hall or casino.
There are fears that Europe’s economy may slide back into recession mode because of the Greek debt crisis which is threatening the Euro. Despite the economic fears 888 Holdings posted a $69 million increase in revenues from its online bingo and online casino operations. In 2010 888’s revenues totaled $262 million and 2011 increased to $331 million. Recently the gaming giant announced that they have about 10.6 million registered customers, an increase of 22% from the previous year. Many in the online gaming industry are optimistic about the future. In December the US Department of Justice cleared the way for legal online gambling. Recently 888 announced a partnership with Caesars Interactive Entertainment to extend the company’s British software licensing which would allow 888 to offer real money gaming in the US.
The announcement came on the heels of an agreement between Bwin party Digital Entertainment with MGM Resorts International and Boyd Gaming Corporation. Both American companies have extensive gambling holdings throughout the US and Bwin hopes to supply online gaming when it becomes legal. The internet gambling industry is optimistic about prospects in the US and industry experts are eagerly awaiting first quarter figures from the online gaming industry. 888 Holdings’ share price on the London Stock Exchange is currently 57.25 pence which is more than double the price the stock sold at in 2010. Stock analysts believe that 888 stocks will be a good long term investment for those with extra cash to invest.
888 Holdings has already made a move to enter the US online poker market. The Nevada Gaming Control Board is currently reviewing the paperwork necessary to obtain and Nevada online gaming license. 888 is trying to position itself to become one of the first Nevada license holders. 888 has extensive experience in the UK promoting the WSOP brand.
Posted on 27 January 2012
For months social gaming company Zynga said that a bingo game was in the works. On January 26th Zynga released their long awaited bingo game in beta to a small group of players. Eventually the game will be available on Facebook to millions of users. The new game is similar to other online bingo games and features great graphics and unique features. The Zynga game is a traditional 75 ball bingo game. Players can earn cards, coins and keys to move up levels and unlock other bingo rooms in the game. The bingo rooms include “Vegas Lights,” “FarmVille Bounty,” and “Pirates Paradise.” In a statement Zynga said “Right now, we’re only letting a limited number of people into the game to make sure our players are getting a primo, Zynga Bingo experience, before officially open the floodgates.”
Players can play a maximum of six cards simultaneously and there is no limit on how many people players can play against. Facebook friends can help players by giving them tiles on the “friends boost meter” and their Facebook picture will then be used as a chip on the bingo board. Other game features include real time chat, themed rooms and a Zynga Casino navigation bar that allows players to move easily from Zynga bingo to other Zynga games such as Texas HoldEm Poker or other Zynga Casino games. At a press conference a Zynga spokesman declined to discuss any future additional related to the Zynga Casino interface. Zynga bingo was created by a team led by Senior Producer Nicole Opas.
Zynga has added some features not common to typical online bingo games. The games were designed for younger players and have options and features not common at most online bingo sites. Players will be able to see what bingo rooms their Facebook friends are in. As has been mentioned the games will take place in themed bingo rooms. In the Vegas Lights room bingo balls shoot out of a classic Cadillac. The Pirate’s Paradise room features include a pirate map, golden coins, and a treasure chest. In the Farmville Bounty room players will be able to play inside scenes from Zynga’s wildly popular FarmVille.
Recently it was revealed that Zynga may enter the real money internet gambling industry. Late last year a spokesman for the company said that Zynga was not interested in real money gaming. Since Facebook has over 800 million users the potential for Zynga can easily be seen.