Market Dynamics

In 2008, the online gaming segment outside the US (the relevant metric for the Group following the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) is estimated to have been worth approximately $11.7 billion versus $8.9 billion in the previous year, an annual increase of 31%.

Over the next few years, online gaming outside the US is expected to continue to be one of the fastest growing segments of the overall gaming market, reaching $19.8 billion by 2012, implying a CAGR of approximately 14%.

The enactment of the UIGEA did result in a structural shift in the online poker market with market share passing to privately-owned companies that chose to continue to take bets from customers located in the US. However, despite this change to the pecking order, the major companies operating in the global online gaming market have not really changed for several years.

Despite the enactment of the UIGEA in 2006, the US remains one of the world’s largest online gaming markets.  In 2006, the US was estimated to have represented approximately 48% of global online gaming revenues (including poker, casino, sports betting and bingo but excluding skill games and lotteries) with gross gaming yield of approximately $5.8 billion. Having fallen to approximately $4 billion in 2007 following the enactment of the UIGEA, it is estimated that this had risen in 2008 to $4.8 billion.  Whilst the new US administration is yet to announce a position regarding online gaming in the US, H2GC continues to believe that the US will eventually move to a regulated and licensed regime within the next few years and that this would provide a further and significant stimulus for the growth in the global online gaming market.

Footnote: Statistics sourced from H2 Gambling Capital, January 2009