Is mobile a real opportunity for online gambling?

Mobile gambling refers to playing games of chance or skill for money by using a remote device such as a Tablet computer, Smartphone or a Mobile phone with a wireless Internet connection. Over a dozen mobile casinos are operating as of March 2011.

Online gambling services are now a mobile well-established sector of the global gambling market. The first online gambling offering was launched in 1995, and there are now several thousand such sites worldwide. Hence, as with other successful forms of online entertainment, there have been attempts to transfer this success into the mobile environment.

However, it is perhaps fair to say that the hurdles (social, cultural, regulatory and technological) faced by mobile gambling are more significant that with any other form of mobile entertainment.

Thus far, this year seems to be an encouraging year for a number of online gambling service providers, with many seeing total wager increasing by more than 100% y-o-y thanks to mobile. That said, the rollout of such services has been limited to a few key markets, most notably the UK: elsewhere, growth continues to be hampered by the complex national and state legislation which impacts all forms of remote gambling.

We were today in a meeting with one of these online gambling players, looking to define the best entry strategy possible in the mobile arena. It was real insightful to see the true complexity behind an apparently simple business (not really that simple mates) and how some relevant hurdles can seriously put this business at risk when entering in the mobile world.

On the contrary, the sheer scale of the opportunity for successful mobile gambling service providers has, for these guys and I guess that for many other competitors, provided a sufficient incentive to move into the sector. Indeed, backed by the high mobile penetration rates in most countries and rapidly growing penetration in others, entertainment services such as gambling have the potential to penetrate a huge section of the market.

The mobile data market is rapidly overcoming the technological constraints of low bit rates by a rising penetration of 2.5G and 3G services. As the mobile handsets become more complex and the technology makes high bit rates possible, mobile gambling has the potential to become a major generator of mobile data service revenues.

Maybe the next killer app? I don’t think so, but pulling together the figures for total wagers from mobile casino, lottery and betting, total gross wager for mobile gambling reached the $4 billion worldwide in 2009. In 2010, Gartner analysts showed the 2009 global mobile gambling revenues at $4.7 billion and forecast $5.6 billion for 2010. Such a large discrepancy between the forecast and the reality is attributed to the unexpected 2006 US prohibition of all Internet based gambling, affecting most of the experts’ projections.

The mobile gambling market, as of 2011 is still in flux. The European Union still does not have a unified mobile gambling legislative framework in place. Each European country has their own set of widely different laws, which regulate mobile gambling ranging from Finland where a government monopoly operates Internet casinos to Norway which is in favor of complete prohibition of online gambling.

According to a Juniper Research report released in September 2010 the total sum wagered on mobile casino games is expected to surpass $48 billion US dollars by 2015. The report bases this prediction on (1) the high growth rates of mobile casinos, lotteries and sports betting providers in major emerging markets and China; (2) liberalization of mobile gambling legislation in Europe; (3) United States repealing the Unlawful Internet Gambling Enforcement Act of 2006, permitting Americans to legally gamble online again.

Interesting, right?. Please find the 5 slides shared with these guys, by the way belonging to a top player in the gambling empire. Nice reading! CVA