Gambling industry’s top companies discuss threats and opportunities
9/16/09 – A packed audience turned out for the first panel discussion of Day 2 of the European i-Gaming Congress in Copenhagen's Bella Centre this morning to listen to seven of the industry's most successful chief executives address a range of issues affecting the future of the industry.
Without exception, the gambling chiefs were bullish about the future potential of the industry, with 888.com CEO Gigi Levy pointing out that a world gambling market of some $350 billion still comprised only 8 percent online gambling, leaving ample room for expansion.
The panel comprised Levy, Unibet’s Petter Nylander, Bwin chief Norbert Teufelberger, Betfair boss David Yu, the md of Ladbrokes eGaming, Ed Andrewes, Party Gaming CEO Jim Ryan and William Hill Online's Henry Birch, all of whom expressed the wish to enter the world's markets legally and "through the front door".
The consensus appeared to be that legal and regulatory developments were the main concerns. Levy commented on the recent ECJ ruling in favour of state monopolies under certain circumstances in the Bwin case .
"Regulation, and in particular the recent ECJ verdict, is the big thing facing us," said Levy. "It is the one thing that could change the industry altogether on the European side.”
Taking up the subject, Bwin boss Norbert Teufelberger remarked that although at face value the ECJ ruling was not favourable to his company, he remained optimistic about European regulation, and felt that markets would open up in two to three years. "This will benefit local operators too, and will create a very tough time for the pirates,” he said.
Teufelberger went on to defend online gambling on one element of the court's finding – that e-gaming was possibly dangerous. Describing this as completely wrong, he opined that protecting monopolies can attract pirate operators, giving as an example Holland.
Petter Nylander of Unibet weighed in, saying that experience showed that the customers do not want monopolised state gambling as is evidenced by continually growing demand despite restrictions. "Consumers have created the markets already," he said. "Now the [various] governments have been left to catch up."
The situation in America was discussed, and it was clear that if legal obstacles could be overcome this remained the biggest market and was attractive to most companies.
Levy was outspoken in his view that the attempts by US enforcement to stop online gambling were ineffective, with American online gambling continuing to grow – he put numbers to his statement, claiming that online gambling has grown 50 percent in the United States since the UIGEA was passed in 2006. Like other members of the panel, Levi seemed to hold the view that ultimately the US market would be regulated, presenting great opportujnities but the danger of a protectionist system in a commercial sense.
Interestingly, Levy revealed that 888.com had had to undergo stringent scrutiny and approval processes before being chosen recently as Harrah's Interactive's software partner in Europe.
Jim Ryan of Party Gaming observed that the Harrah's deal would not be the last in the American context, and in the wake of his company's exemption from prosecution deal regarding pre-UIGEA activities, he appeared confident that Party Gaming would be back in the USA through one form of deal or another in the future.
William Hill Online's Henry Birch said the US market was appealing , perhaps through partnership deals, but that he was cautious regarding the possibility of a protectionist and discriminatory approach to licensing.
Betfair has already secured a footprint in the USA through its deal with horseracing group TVG, said David Yu, emphasising that his company had a conservative approach to legal issues. He said that the demand from consumers was clearly there.
Ed Andrewes said that Ladbrokes focus remained on the UK market, but that it would not ignore partnerships that might open up the possibility of US business.
Teufelberger addressed questions on the Asian market, revealing that his company was making a multi-million dollar, three year effort in the region and was trying to persuade governments to regulate online gambling. Ryan appeared to hold a different view, saying that his company was shifting effort and investment to the potential US market.
Levy said that online gamespend in the USA was probably of the order of 15 to 20 percent, leaving room for further development. Younger generations now coming into the market had fewer moral reservations about gambling, and had a more positive view of the industry especially in the poker and bingo sectors. "We need to keep building – the potential is there", he said.
The panel also discussed consolidation and the impact of major media companies entering the industry, which elicited differing opinions. Levy favoured trhe idea of integrated betting, Ryan felt that a media strategy was critical over the next five years, and Birch and Yu acknowledged the possibilities but felt that online players had a strong affinity for known brands in the business.
The point was made that existing online gambling companies have had to develop strong anti-money laundering and problem and underage gambling systems and were probably stronger in this field that most ecommerce or media companies.
The dynamism, insistence on professionalism and legality and generally positive approach to industry issues was again clearly present among the panel members, providing the audience with stimulating discussion and hope for the future.