Online gambling poised for rapid growth


Image by Robert Scoble 

The rapid growth in the gaming industry in India and elsewhere in Asia has been predominantly fuelled by a combination of rising incomes, 3G penetration and the take-up of digital devices by a technology-hungry youth demographic. To date this pattern has been most conspicuous in the emergence of the Indian gaming industry which was – as reported on these pages – estimated to be worth in excess of INR 18 billion within the next three years.

However, as the technologies become embedded, as older, late adopters start to enter the market, and as the early adopters age, the market for online game is expected to undergo considerable changes in the years ahead. At the same time the refinement of existing technologies and the development of new ones, means that there is little prospect of the digital revolution showing any sign of a slowdown.

A key area of the online leisure industry that is set to capitalise on this confluence of social and technological maturation is the online casino industry. Given that the idea of an online casino is itself a radically 21st century idea, the fact that the industry is already estimated to be worth something like $5 billion (source online, and is expected to more than double over the next decade, is quite remarkable.

The potential for growth in this area is difficult to grasp. Internet use was estimated at 10% of the population (approx. 100 million) in 2010 but according to the Times of India the current figure is now almost treble that. Commensurate with the burgeoning middle class that means that there are, in effect, simply going to be millions more potential gamblers with ready access to those online casinos.

European investors are already manoeuvring to grab a slice of the action. Well-respected organizations such as 32Red are specifically targeting the Indian market with a keen eye on the vast potential which it represents. Although their Indian initiative is at an early stage is quite possible to play now at 32Red. The rare opportunity that the Indian market represents mans that such organizations are falling over themselves to establish a prominent market position. Other active players from the European gambling fraternity include William Hill, 888, Betfair and Ladbrokes.

Added to this heady investment climate is the suspicion that recent moves to legalise casino gambling in the state of Sikkim is simply the shape of things to come. The legal status of online gambling is not entirely straightforward, however the ephemeral nature of the internet means that it is already a de facto open market. the regulators are struggling to keep up. As things stand, the pace of technological and economic change has simply left them behind.

It has been suggested that as and when the regulators do formally open up the Indian online gambling industry it could be worth up to $5 billion in tax revenues. Whilst that revenue would undoubtedly be seen as a reason for making the move establishing a formal regulatory environment a more cynical view is that the providers will simply decamp to an offshore base and continue as they currently are – enjoying a full and rapidly growing return on their investment.

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