A majority of industry experts anticipate significant near-term growth of the online gambling sector, both in the U.S. and abroad, according to results of the 10th annual G2E Future Watch survey released today at Global Gaming Expo in Las Vegas.
Whether or not there is federal legislation passed to legalize and regulate online poker in the U.S.—and only 6 percent of the experts surveyed think the U.S. Congress is likely to do so within the next year—a solid majority (61 percent) envision the U.S. market growing to $10 billion or more over the next several years. Americans are estimated to have spent nearly $4 billion wagering online in 2011. A similar percentage of the experts surveyed also think that online gambling worldwide—which totaled $30 billion in revenue in 2011—will grow by 50 percent or more over the next five years. Over half (56 percent) of experts think this revenue could reach between $45 billion and $60 billion by 2017.
These are just some of several key findings from the 10th edition of the G2E Future Watch Series, an original research product that highlights current and forthcoming trends within the gaming industry. The annual Future Watch survey polls a select but high-level group of industry leaders. In this year’s installment, leading gaming executives, regulators and analysts shared their thoughts on online gambling—one of the fastest growing and most hotly debated sectors within the broader gaming industry.
“Online gambling continues to be the most talked about issue in the industry,” said Frank Fahrenkopf, president and CEO of the American Gaming Association (AGA). “With that in mind, this year’s survey results hone in on online gambling’s prospects for growth, its regulatory hurdles, responsible gaming in an online environment and what the U.S. market in particular might look like in the coming years.”
When asked about responsible gaming in an online environment, confidence is relatively high that effective safeguards can be put in place to combat fraud (both by players and operators), money laundering, underage and compulsive gambling, and players falsifying their location. In each of these aspects, over half of the experts were either “very” or “somewhat” confident about the safeguards.
Looking abroad to highly regulated jurisdictions such as the United Kingdom, the vast majority of respondents think technology has done “very well” or “somewhat well” to prevent underage and problem gambling, money laundering and cheating. A majority of experts (61 percent) think the proven track records of these highly regulated jurisdictions make U.S. elected officials somewhat more likely to legalize online wagering in the U.S., while one-third thinks experiences in other jurisdictions will have no impact at all on U.S. lawmakers’ views.
Despite only 6 percent believing U.S. legislation is likely within the next year, a significantly larger portion of the experts foresee it eventually happening in the future. Nearly two in five respondents (39 percent) think Congress will enact some form of legislation in the next one to two years, while another 28 percent forecast this taking place within a three-to-five-year window. Experts are evenly divided over whether online sports betting would be legalized in the U.S. within the next five to 10 years, but are nearly unanimous in their opinion that online lotteries will either “definitely” (39 percent) or “probably” (56 percent) be operational on an interstate basis in the U.S. within three to five years. They are nearly as hopeful about interstate online poker, with 78 percent saying it will “definitely” or “probably” be up and running within the same time frame. The experts are less optimistic about interstate online casino games operating within the same period, with 28 percent calling it doubtful and only 6 percent seeing it as something that will “definitely” happen.
Regardless of whether it is regulated on a federal or state-by-state basis, a majority of the experts say that the legalization of online gambling in the U.S. will complement, rather than cannibalize, existing bricks-and-mortar operators. While one in four think it will hurt existing operations, 55 percent think online gambling would “very much” (11 percent) or “somewhat help grow” (44 percent) existing business.
With respect to the December 2011 opinion issued by the U.S. Department of Justice (DOJ) reinterpreting the Interstate Wire Act of 1961, the vast majority of respondents agree with the notion that “there is now nothing to stop states from entering into compacts for online gambling with other states or even foreign nations.” Among the online gambling experts, there is broad agreement (47 percent “very much agree” and 41 percent “somewhat agree”) that the DOJ opinion has left the U.S. Congress with essentially two options—either enact some type of legislation at the federal level, or watch as a patchwork quilt of approaches to legalization and regulation get approved on a state-by-state basis.
Lastly, the experts weighed in on emerging technologies within online gambling. More than three-quarters (83 percent) of respondents say that partnerships between gaming brands and social networks—like Facebook’s recently introduced gaming app in the U.K. that permits users to play with real money—will be important to the overall growth of the online gambling industry. But, by far, mobile gaming—chosen two-to-one over social networking—is seen as the emerging technology most likely to affect the online gambling sector.
G2E is the leading trade show and conference event for the international gaming entertainment community, attended by approximately 25,000 industry professionals from around the world. For more information on G2E 2012, visit www.globalgamingexpo.com.
A total of 18 respondents – all top executives in the field – participated in this year’s Future Watch survey.