Casino

Online casinos were the entry point for the early pioneers in online gaming, the first of which is believed to have opened on the internet in 1996. By 2000⁵ the gross gaming yield from online casinos across the globe was estimated at $500 million, and grew by a CAGR of 31% to an estimated $4.6 billion in 2008.  Excluding the US, the estimated value of the global online casino market was $3.2 billion in 2008 and is forecast to grow at around 17% per annum to $6.1 billion⁶ by 2012.  Given the nature of the product and the hundreds of private online casino sites, no market share data is available.

Success in online casino
The major difference between online casino and online poker is that in casino customers play against ‘the house’ whereas in poker, backgammon and other ‘peer-to-peer’ games, they play against each other. In other words, in casino the house takes principal risk and earns a statistical gross margin on the amount wagered whereas in peer-to-peer games the operator simply charges a commission, often referred to as the ‘rake’.

Player liquidity
As a result, while player liquidity in casino is not such an important issue, it is helpful in generating large jackpot prizes and providing confidence to players regarding the integrity of the site and that they will receive their money if they win a large prize. With player liquidity being much less of an issue, there are many more online casino sites than any other form of online gaming site. As at January 2009 CasinoCity.com listed over 700 online casino sites, representing over a third of the total online gaming sites that it monitors.

Other success factors
Success in online casino requires similar attributes for those in poker: expertise in marketing, payments and customer service as well as having a quality product. Games in online casinos include slots, roulette, blackjack and video poker. The outcome for each of these games of chance is determined by a random number generator and in accordance with the game’s rules. Operator revenues are determined by the total amount wagered on each game, the statistical gross margin of each game and on the mix of games played. As the house is taking principal risk, it is possible to lose money in casino. However, as long as players keep playing, the house ‘edge’ means that overall the house always wins.

⁵Based on H2GC estimates of gross gaming yield for Sports Betting, Poker, Casino and Bingo – January 2009
⁶H2GC – January 2009