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Moody's Investors Service On Internet Gambling

International market could be worth Euro 42.8 billion by the end of 2018.
A new survey by Moody's Investors Service makes an optimistic assessment on the industry, saying there are good growth opportunities despite pressure from increasing taxes and regulation.
Titled "Gaming -- Europe: Online Gamblers Will Drive Growth for European Gaming Companies", the report notes that online gaming markets like online poker, casino, sports betting, bingo and lottery, have grown rapidly to Euro 36.9 billion in 2014 from approximately Euro 6.6 billion in 2003, and are expected to continue the upward trend to around Euro 42.8 billion by the end of 2018.
Moody VP and senior analyst, Donatella Maso, opines that gaming companies with a larger online presence are likely to see higher revenue and EBITDA growth over the next 12-18 months than those more focused on traditional land-based business, as the gradual shift online continues, mobile phone and tablet penetration rises, and fast-growing demand for online games increases.
She predicts that the online sector's fundamentals will remain positive for at least the next two to three years, which will support high single-digit growth rates.
Potential legalisation of online gambling or further liberalisation of the rules that already govern it in some European markets and US states offer growth opportunities for large online gaming operators, which could offset uncertainty in regulatory regimes, she observes.
The recent wave of M&A is likely to continue as operators look to become bigger and more diversified to offset rising costs and compete more effectively, she concludes, noting that operators are increasingly looking to develop proprietary technology platforms in-house in order to limit reliance on third-party providers and reduce customer acquisition and marketing costs.

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