iGB North America magazine IGBNA Aug/Sep | Page 25
Feature
“As for the fears around cannibalization, this is not about
Blockbuster vs Netflix and online eating the land-based
industry’s lunch. They are quite different markets and reflect
different needs being met in different ways. This is more TV
vs cinema or liquor store vs bar.”
the land-based industry’s lunch, they are
quite different markets and reflect different
needs being met in different ways. This is
more TV vs cinema or liquor store vs bar.
These markets do operate in harmony with
each other, as they provide different things
to different users at different times. By not
offering both offline and online, an operator
is simply missing a complementary piece of
the pie and of course missing the emerging
demographic of adult players who are the
digital generation.
standpoint, I believe more states will join the
online space. Certainly, lots of challenges
to come; but as with other entertainment
sectors, demographically the move is
inevitable. This macro trend will drive both
European and US markets.
If you were talking to online
bears, such as Sheldon Adelson,
what would you say in response
to his hostility?
I would say I understand his position and
his concerns regarding access to gaming
content for at-risk individuals and minors,
but I don’t think those concerns are founded
in the reality of the controls that actually do
exist for online, and indeed I would say that
online is safer than offline.
As for the fears around cannibalization,
for me this reflects a misunderstanding
of the real situation. This is not about
Blockbuster vs Netflix and online eating
Are there more deals to come?
Yes. We see a highly fragmented market in
the online gaming space; and we intend to
participate in the consolidation that we feel
is inevitable (see Figure 2).
Are you worried about the spiraling
levels of debt needed to finance this
industry consolidation?
In the last 18 months of deals we have
seen around the sector, I think the level
of debt used seems more sensible than
what we saw in 2005-6. These days the
businesses that take on debt are highly
cash generative and can finance their debt
needs. So I am not too worried.
So, is online still worth getting
excited about?
Yes, because as a whole the market is
growing on average 20% a year, and there
are not many sectors like that (see Figure
3). Two out of the top 15 public companies
have seen negative or zero growth but the
other 13 are growing quite nicely. Online
worldwide is still sub 20% of the landbased market, so we feel that there is every
chance this will double in the next decade
or two as it has in other industries (see
Figure 4). So there are plenty of reasons to
be optimistic!
Figure 4: Global gambling market by gross win, showing land-based/interactive split
(€billions, data as of October 2014)
Land-Based Gambling
195.0
2003
214.6
229.6
2004
2005
Interactive Gambling
321.8
271.4
275.3
309.5
247.1
262.1
290.4
333.8
2006
2007
2008
2009
2010
2011
2012
2013p
361.0
373.5
388.0
400.8
348.5
2014e
2015e
2016e
2017e
2018e
Source: H2 Gambling Capital
iGamingBusiness North America | Issue 20 | August/September 2015 | 25