Online and Mobile Gambling Market Momentum
Online and Mobile Gambling Market Momentum
PartyGaming, WPT Technologies, CryptoLogic, and MGN Technologies
Continue to Innovate to Satisfy Today's Online and Mobile Poker
and Casino Player
By Ann-Marie Fleming February, 2006 As the gambling arena has
extended its reach from brick and mortar, onto mobile and online
platforms, the audience and level of worldwide participation
continues to grow. According to Juniper Research, mobile casino
services are expected to generate worldwide revenues reaching
$4.6 billion by 2009, with mobile gambling as a whole (casino,
lottery, and betting) is anticipated to generate revenues in
excess of $19 billion by the same year. This growth has occurred
despite the ongoing legislative uncertainty that has plagued the
online and mobile gambling industry, leading many to place their
bets on continued international growth driving this industry
onwards and upwards despite regulation jitters.
Key Market Drivers:
Driving the growth of the online and mobile gambling market are
several key factors that include the increase in the
availability and adoption of broadband connections and the
rising popularity and reliability of mobile Internet access.
Mark Jensen, CEO of MGN Technologies, d.b.a Mobile Gaming Now
(OTCBB: MGNLF), an online and mobile casino gaming software
developer, explains, "Broadband is a key market driver for both
online and mobile games as it allows more information to be
delivered at a faster rate. Online gaming will continue to grow
because games are easier and more fun to play with a broadband
connection. A second key market driver is the mobile wireless
Internet. More and more people are accessing the Internet on a
mobile device. The US will see 50%+ subscriber penetration of 3G
by 2011 according to Portio Research. A third key market driver
is smartphones that combine the functions of a cellular phone
and handheld computer in a single device."
Brian Wright, Business Manager, Remote Gambling Association,
associates improved Internet access, digital TV and innovative
technology in terms of software, mobile devices and available
products, as contributing to the growth of this arena. In
addition, he acknowledges that companies have helped generate
momentum through the utilization of effective marketing and the
securing of consumer confidence as major online brands are now
established, well known and trusted.
According to Nancy Chan-Palmateer, Director, Communications with
CryptoLogic Inc.(NASDAQ: CRYP), "As an industry pioneer and an
industry leader with more than a decade of Internet gaming
software experience, CryptoLogic recognized early on the
strength of trusted brands to inspire consumer confidence. This
is why we work with some of the world's most trusted online and
land-based gaming brands including InterCasino, William Hill,
Littlewoods Gaming, ukbetting and The Ritz Club London."
CryptoLogic has also introduced major consumer brands like
Marvel and Bejeweled to Internet casino software. "Not only are
we enhancing the entertainment value, but also the trust factor
for players. Players feel that if Marvel licenses its names and
reputation to us, they can trust that our games are fun and
fair," explains Chan-Palmateer.
PartyGaming, (LSE: PRTY.L), flew into the spotlight with their
highly successful IPO in the summer of 2005 making them London's
biggest IPO in five years. Richard Segal, Chief Executive of
PartyGaming, describes product growth as an important driver to
market growth, but one that finds itself second behind the power
of cross-selling a variety of games to a common customer base.
"Our belief in this dynamic is supported by the success we have
had since introducing the cross-selling of blackjack to our
poker customers since October last year. We will take
cross-selling to a new level in the first half of this year by
launching a fully-integrated, Party-branded platform that will
enable customers to move from poker to casino and vice versa
through having just one account," states Segal.
Global perspectives are important for companies in this space.
WPT Enterprises Inc. (NASDAQ: WPTE), creators of World Poker
Tour, sees the internationalization of poker right now as their
biggest driver for future growth. Todd Steele, Chief Financial
Officer explains, "Our show is now licensed to broadcast in over
120 countries and territories. Poker was relatively unknown in
many of these regions as recently as a few years ago. And
because of the success of the television show and the fact that
it gets people excited about playing, we believe that it is
going to help create new poker markets around the world."
In addition, the ability of online casinos and poker sites to
enable players to participate anonymously and with the creation
of interfaces that promote ease of use, this market has been
able to attract a large number of new players to the gambling
arena alongside experienced participants. This has contributed
to the surge in growth for both online and mobile poker and
casino games.
Legislative Environment:
Interestingly enough the rise in market share of online and
mobile gambling is occurring despite obvious legislative
uncertainty. Lawrence G. Walters, and Internet gaming attorney,
understands today's gambling environment as dictated by the
pursuit and realization of profit. "Today's main driver is the
profit incentive. In an age where many online business models
have been tried and many have failed, online gambling has
consistently produced profits and strong results and therefore
it is a model that people continue to look at as a potential
option."
"Gambling has become a part of the American culture," states
Walters. "When looking at this industry for investing or to
start a business, people tend to dismiss the legislative
uncertainty in the United States because it has been the same
political environment since 1998. At some point this consistent
uncertainty becomes like background noise."
Ironically companies operating in this space have publicly
announced their desire to have this industry regulated to end
the historical level of political and legislative uncertainty to
in fact strengthen this industry even further.
Nancy Chan-Palmateer describes, "At CryptoLogic, we've said for
years that gaming on the Internet should be regulated just as
strictly as gaming on land. This is the best solution for the
safe, secure and responsible use of this form of entertainment.
This is why CryptoLogic is one of the world's few software
providers with government approved gaming software in the most
regulated jurisdictions for Internet gaming. Government approval
will foster a transparent and credible market that will allow
the online gaming industry to reach its full potential. It will
provide the reassurance necessary to attract a broader base of
recreational players and drive market expansion."
Brian Wright explains, "In the past it was wrongly argued that
online gambling could not be regulated due to the nature of the
games and there was a widespread misconception that consumers
could not be protected and criminal infiltration would be the
end result. In truth the industry welcomes regulation to ensure
that the appropriate protections are guaranteed. It will
underline the credibility of the industry and promote its
long-term health."
Many companies have made efforts to protect themselves from this
legislative insecurity by maintaining operations outside of the
United States and in many cases have gone to great lengthens to
ensure that wagers are not accepted from problematic regions.
MGN doesn't accept US bets today because the US Department of
Justice says it's illegal. The Company also restricts
registration through geo-location software so US residents can't
create a player account.
WPT's Todd Steele describes, "Since all of the activity in the
US is currently occurring in an unregulated and untaxed
environment, our hope is that legislation changes in the future
to address this void. However, it is likely to be some time
before this happens,therefore we continue to focus from a
company perspective on the non-problematic international
markets."
According to Nancy Chan-Palmateer, "We don't expect the
legislative uncertainty in the US to resolve any time soon,
which is why CryptoLogic has focused on a global strategy in
those major markets that embrace online gaming. We have grown a
geographically-diversified business with more than 65% of our
customers' revenue derived from international (non-North
American) players. In particular, it's exciting to see that the
UK -- one of our key markets -- is leading the way to regulate
Internet gaming for the first time in that jurisdiction."
Legislative progress, however has been made evident as a result
of the UK's moves towards regulation. As Wright describes, "the
British Gambling Commission, set up to regulate the new gambling
regime introduced by the Gambling Act 2005, has the opportunity
to develop a regulatory system that could set the standard for
the world. There are bound to be some sticking points, but so
far the new Gambling Commission is adopting a pragmatic and
collaborative approach. At the moment we are optimistic that the
balance we are searching for will be found."
Chan-Palmateer believes, "Brand name operators and games along
with increasing government regulation such as we're seeing in
the UK will be key drivers to foster a credible marketplace and
spur further market growth of online gaming into mainstream
online entertainment."
Going Mobile:
Considering that total worldwide mobile subscribers worldwide
increased in 2005 to over 2 billion, with expectations that this
total will grow to approximately 4 billion worldwide subscribers
by the end of 2011, according to Portio Research, it is not
surprising that many are turning to mobile games for their
entertainment choices.
Many companies that have established themselves as an online
casino or poker presence are extending their position to take
advantage of the growing adoption of mobile technology and
portable entertainment. "A number of companies involved in
traditional methods of gambling such as betting and casino
gaming also operate remote platforms, as the membership of the
Remote Gambling Association (RGA) illustrates. The onset of new
technologies allows operators to develop compelling
muti-platform experiences that are engaging to the experienced
gambler as well as the interested newcomer. Therefore in terms
of market growth for the gaming/gambling industry as a whole,
the 24 hour global accessibility those remote gambling mediums
provide will ensure continued growth for years to come,"
explains Wright.
Mobile Gaming Now's products and services focus on interactive
casino-based games for online and mobile gamers, as well as the
casino patron, enabling both single and tournament play
opportunities. "We offer free games, games for prizes and games
for gambling. People can risk it, play casually or simply play
for fun. We also offer integrated play for the online gamer or
the mobile player. Players compete head-to-head on a PC or a
mobile phone. Our players can play at home or anywhere a mobile
phone goes," describes Jensen.
Maintaining the Competitive Edge:
With the rapid growth experience by the online and mobile casino
gaming industry there are a variety of differentiators that have
helped participating companies stay competitive. "In casino,
it's about being smarter and delivering more market-targeted,
sophisticated innovations to enhance player's entertainment
value in order to grab market share. CryptoLogic is breaking new
ground by bringing the latest innovation and entertainment
concepts to Internet gaming to meet the demands of sophisticated
gamers playing more frequently in an online environment. Our
software is research-driven. It's about delivering games that
players want to play, and games that translate into incremental
revenue for our customers," states Nancy Chan-Palmateer.
MGN describes their strength as stemming from the platform
behind the games. "We choose to release traditional games such
as poker and black jack because people know them. Our gaming
platform has to outperform our competitors with the same games.
We have to create a better user experience on the platform. Key
performance factors are an easy-to-use interface that make the
games fun to play, feedback to give players information about
their performance and, most importantly, speed. Players need to
play seamlessly and the speed of the game is a critical factor,"
explains Jensen.
According to Segal, PartyGaming's overall success and advantage
is due to their business model, which is based on systems,
marketing and customer service that has generated attractive
financial returns and, in particular, strong cash flow. "As many
new entrants to the market have realised, the bottom line in the
world of online gaming is that scale is of fundamental
importance to achieving success. The future at PartyGaming is
all about cross-selling a wide variety of gaming products to
customers. We are focused on increasing the average spend by
customers by providing them with additional games they want to
play," adds Segal.
Looking Ahead:
Despite the ongoing legislative uncertainty, many insiders
anticipate the growth momentum of online and mobile gambling to
continue as technology improves, mobile gaming expands, players
establish trust with operators and companies continue to attract
new and experienced players to their offerings.
As Chan-Palmateer explains, "The online casino industry has
grown into a multi-billion-dollar global market and is now
entering its second decade. Internet casino gaming is here to
stay and has yet to expand broadly into mainstream
entertainment. There remains vast market potential, although
Internet casino gaming is more developed after ten years and
increasing in competition."
Ann-Marie Fleming Ann-Marie Fleming completed her MBA in the
United States, where she attended Webster University. She also
holds an Honors B.A from the University of Toronto. She has over
fifteen years of experience within the financial industry to
include retail banking and brokerage, investment banking, and
mortgage brokerage within the United States and Canada, with a
firm background in corporate research.
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