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Online Gaming and Betting - UK - October 2013

“Sportsbook and smartphone gambling remain the main drivers of the online gaming and betting market, but the rapid pace of growth seen in each segment means the industry is already having to think about where they go in the long term. This may mean questioning the platform neutrality that has helped establish mobile.”

- David Walmsley, Senior Leisure Analyst

Some questions answered in this report include:

  • Is the smartphone’s market dominance inevitable?
  • Can the tablet carve out its own share of the market?
  • Will marketing take a hit under point-of-consumption regulation?
  • How can online gaming and betting attract more female players?
  • Why can the market no longer take young people for granted?

The UK online gaming and betting market has enjoyed another period of impressive value growth during 2013, driven primarily by continued rising interest in sports betting and smartphone use.

Both those segments still have plenty of headroom in which to expand further over the short to medium term, and social media sits on the horizon as a potential source of significant future business.

However, the industry also has a number of issues to address along the way, ranging from the potential risks of smartphones remaining a second-choice screen to concerns about promoting gambling to underage social media users and the long-term impact on the market’s shape and promotional focus of the forthcoming move to PoC (point-of-consumption) regulation and taxation.

This report assesses current trends in participation in gaming and betting online, examines the factors influencing present and potential future patterns of play and identifies ways in which remote gambling operators can respond to the opportunities and challenges ahead.

Definition

This report examines the market for online gaming and betting in the UK, whether conducted via a PC (personal computer) or laptop computer, through mobile devices such as smartphones and tablets or using games consoles and smart or interactive TV.

Market size data in this report refer specifically to revenues from sportsbook, casino, bingo and poker. However, in the context of the consumer research carried out for this report, the following activities are included and are discussed in a broader context throughout the report where relevant:

sports betting
casino games
online slots/instant win games
bingo
poker
betting on non-sports events
National Lottery draw games
football pools.

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: Consumer expenditure on online gaming and betting, 2008-18
            • Major players drive market upwards
              • Growth to continue down same road – subject to impact of regime change
                • Market drivers
                  • Technology trends create new opportunities, but stronger competition
                    • Social media still one for the long term
                      • Segment performance
                        • Figure 2: Online gaming and betting – estimated market size, by segment (£m), 2013
                      • Sportsbook jumps ahead without a major event springboard
                        • New content and cross-promotion help casino growth
                          • The consumer
                            • Figure 3: Experience of online gaming and betting (%), July 2013
                          • Lack of potentials puts pressure on core player base
                            • Laptops make gambling more accessible to women
                              • Figure 4: Attitudes towards smartphone gambling, July 2013
                            • Smartphones a second choice for many
                              • What we think
                              • Issues in the Market

                                  • Is the smartphone’s market dominance inevitable?
                                    • Can the tablet carve out its own share of the market?
                                      • Will marketing take a hit under point-of-consumption regulation?
                                        • How can online gaming and betting attract more female players?
                                          • Why can the market no longer take young people for granted?
                                            • Is social gaming any closer to take-off?
                                            • Trend Application

                                                • Trend: Click and Connect
                                                  • Trend: Influentials
                                                    • Mintel futures: Old Gold
                                                    • Market Drivers

                                                      • Key points
                                                        • Faster broadband: Better experiences but more competition
                                                          • Figure 5: UK residential broadband connections, by headline speed, November 2008-November 2012
                                                        • Will maturity force mobile to strike out on its own?
                                                          • Figure 6: Personal ownership of smartphone, July 2012- April 2013
                                                        • Tablets turn living rooms into virtual casinos
                                                          • Figure 7: Access to tablet computers (have in household), July 2012-April 2013
                                                        • Smart TV ownership trends
                                                          • Figure 8: Access to internet-enabled television (have in household), July 2012-April 2013
                                                        • Spending gives way to saving as consumers stay cautious
                                                          • Figure 9: Trends in what extra money is spent on, July 2010-July 2013
                                                        • Rules of social gaming still being established
                                                          • Figure 10: Accessing online social networks via any device during the past three months, by demographics, April 2013
                                                        • Demographic trends unfavourable to natural growth
                                                          • Figure 11: Past-month participation in gambling, via any method and online, by gender and age, 2012 and 2013
                                                        • Regime change to trigger major players’ land grab?
                                                          • Problem gambling not just a question for the high street
                                                            • Figure 12: Locations used to gamble by GamCare clients, 2010/11 and 2011/12
                                                        • Who’s Innovating?

                                                          • Key points
                                                            • Watching other players’ poker faces
                                                              • Getting mobile counters shop shortage
                                                                • Web shop link-ups connect with a younger crowd
                                                                  • Roulette puts a new spin on cricket and darts
                                                                    • Gamblers able to Ukash out
                                                                      • Facebook starts to like casino and betting
                                                                        • An alarm call from smartwatches
                                                                        • Market Size and Forecast

                                                                          • Key points
                                                                            • Maturing market sustains double-digit growth
                                                                              • Figure 13: Online gaming and betting market size, 2008-18
                                                                            • Forecast
                                                                              • Figure 14: Online gaming and betting market size and forecast, 2008-18
                                                                              • Figure 15: Online gaming and betting market volume (number of participants) and forecast, 2008-18
                                                                            • Forecast methodology
                                                                            • Segment Performance

                                                                              • Key points
                                                                                • Mobile keeps sportsbook moving upwards
                                                                                  • Figure 16: UK online gaming and betting market size*, by segment, 2009-13
                                                                              • Market Share

                                                                                • Key points
                                                                                  • Market leaders back very different horses
                                                                                    • Figure 17: UK online gaming and betting market, by operators’ value share (estimated), 2012-13
                                                                                • Companies and Products

                                                                                  • Key points
                                                                                    • A world of choice for UK gamblers
                                                                                      • William Hill
                                                                                        • Background
                                                                                          • Recent activity
                                                                                            • Financials
                                                                                              • Figure 18: Key financials for William Hill (Online), 2011 and 2012
                                                                                              • Figure 19: Key performance indicators for William Hill (Online), 2011 and 2012
                                                                                            • Promotion
                                                                                              • Future strategy
                                                                                                • Bet365
                                                                                                  • Background
                                                                                                    • Recent activity
                                                                                                      • Financials
                                                                                                        • Figure 20: Key financials for Bet365 Group ltd, 2012 and 2013
                                                                                                      • Promotion
                                                                                                        • Future strategy
                                                                                                          • Betfair
                                                                                                            • Background
                                                                                                              • Recent activity
                                                                                                                • Financials
                                                                                                                  • Figure 21: Key financials for Betfair, 2012 and 2013
                                                                                                                • Promotion
                                                                                                                  • Future strategy
                                                                                                                    • Ladbrokes
                                                                                                                      • Background
                                                                                                                        • Recent activity
                                                                                                                          • Financials
                                                                                                                            • Figure 22: Revenue breakdown for Ladbrokes plc (Digital), 2011 and 2012
                                                                                                                            • Figure 23: Key performance indicators for Ladbrokes plc (Digital), 2011 and 2012
                                                                                                                          • Promotion
                                                                                                                            • Future strategy
                                                                                                                              • Sky Bet
                                                                                                                                • Background
                                                                                                                                  • Recent activity
                                                                                                                                    • Financials
                                                                                                                                      • Promotion
                                                                                                                                        • 888
                                                                                                                                          • Background
                                                                                                                                            • Recent activity
                                                                                                                                              • Financials
                                                                                                                                                • Figure 24: Key financials for 888 Holdings, 2011 and 2012
                                                                                                                                              • Future strategy
                                                                                                                                                • Rank Interactive
                                                                                                                                                  • Background
                                                                                                                                                    • Recent activity
                                                                                                                                                      • Financials
                                                                                                                                                        • Figure 25: Key financials for Rank Interactive, 2011 and 2012
                                                                                                                                                        • Figure 26: Key performance indicators for Rank Interactive, 2011 and 2012
                                                                                                                                                      • Future strategy
                                                                                                                                                        • bwin.party
                                                                                                                                                          • Background
                                                                                                                                                            • Recent activity
                                                                                                                                                              • Financials
                                                                                                                                                                • Figure 27: Key financials for bwin.party, 2011 and 2012
                                                                                                                                                                • Figure 28: Key performance indicators for bwin.party, 2011 and 2012
                                                                                                                                                              • Promotion
                                                                                                                                                                • Future strategy
                                                                                                                                                                  • Tombola
                                                                                                                                                                    • Background
                                                                                                                                                                      • Recent activity
                                                                                                                                                                        • Financials
                                                                                                                                                                          • Figure 29: Key financials for Tombola Limited, 2011 and 2012
                                                                                                                                                                        • Promotion
                                                                                                                                                                        • Experience of Online Gaming and Betting

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Divided nation leaves only a small pool of potentials
                                                                                                                                                                              • Figure 30: Experience of online gaming and betting, July 2013
                                                                                                                                                                            • Younger players first to cash out
                                                                                                                                                                              • Figure 31: Experience of online gaming and betting, by age, July 2013
                                                                                                                                                                            • Economic pressures squeezing the player base
                                                                                                                                                                              • Figure 32: Experience of online gaming and betting, by employment status and gross annual household income, July 2013
                                                                                                                                                                          • Online Gaming and Betting Activities

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Women warm to more formats online
                                                                                                                                                                                • Figure 33: Participation in online gaming and betting activities, July 2013
                                                                                                                                                                              • Gamblers willing to play the field
                                                                                                                                                                                • Figure 34: Repertoire of remote gamblers’ current and potential future online gaming and betting activities, July 2012
                                                                                                                                                                              • Horserace gamblers best bet for casino marketing
                                                                                                                                                                                • Figure 35: Future interest in online casino games, by current participation in remote gambling activities, July 2013
                                                                                                                                                                              • Casino players most open-minded
                                                                                                                                                                                • Figure 36: Future interest in remote gambling activities, by current participation in online casino games, July 2013
                                                                                                                                                                            • Devices Used for Online Gaming and Betting

                                                                                                                                                                              • Key points
                                                                                                                                                                                • Laptops lead – and bring women into the market
                                                                                                                                                                                  • Figure 37: Devices used to gamble online, July 2013
                                                                                                                                                                                • Platform neutrality drives diversity in devices
                                                                                                                                                                                  • Figure 38: Repertoire of devices used to gamble online during the past 12 months, July 2013
                                                                                                                                                                                • Take a tablet, turn off your phone
                                                                                                                                                                                  • Figure 39: Future interest in using a smartphone to gamble online, by devices currently used to gamble online, July 2013
                                                                                                                                                                                • Casino players look for big screen experiences
                                                                                                                                                                                  • Figure 40: Devices online casino players are interested in using to gamble online in the future, July 2013
                                                                                                                                                                              • Smartphone Gambling

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Security and screen size leave smartphones a second choice
                                                                                                                                                                                    • Figure 41: Attitudes towards smartphone gambling, July 2013
                                                                                                                                                                                  • Tablets seen as safer than smartphones
                                                                                                                                                                                    • Figure 42: Agreement with the statement ‘I would be wary of gambling on a website I didn’t recognise using my smartphone’, by devices currently used to gamble online, July 2013
                                                                                                                                                                                • Online Gaming and Betting Habits

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Austerity Britain puts its sensible head on
                                                                                                                                                                                      • Figure 43: Online gambling habits, July 2013
                                                                                                                                                                                    • Football talks a good game
                                                                                                                                                                                      • Figure 44: Agreement with the statement ‘I discuss winnings and losses with my friends’, by gambling activities participated in online, July 2013
                                                                                                                                                                                  • Drivers of Online Gaming and Betting Choice

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • Word of mouth opens a third promotional front
                                                                                                                                                                                        • Figure 45: Influences on online gaming and betting preferences, July 2013
                                                                                                                                                                                      • TV advertising costs – but it also works
                                                                                                                                                                                        • Figure 46: Drivers of online gaming and betting activity among gamblers who have visited a gaming or betting website as a result of advertising, July 2013
                                                                                                                                                                                      • Casino and poker sites come personally recommended
                                                                                                                                                                                        • Figure 47: Drivers of online gaming and betting activity, by products gambled on in past 12 months, July 2013
                                                                                                                                                                                      • Smartphones open up new communication channels
                                                                                                                                                                                        • Figure 48: Visiting a gaming or betting website after receiving an email offer from it, by devices used to gamble online, July 2013
                                                                                                                                                                                    • Appendix – Market Drivers

                                                                                                                                                                                        • Figure 49: Accessing online social networks via any device during the past three months, by demographics, April 2013
                                                                                                                                                                                        • Figure 50: Participation in ‘freemium’ gambling and free games on social networking websites, by gender, 2012
                                                                                                                                                                                        • Figure 51: Trends in the age structure of the UK population, by gender, 2008-18
                                                                                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                                                                                        • Figure 52: Forecast of consumer expenditure on gaming and betting online, 2013-18
                                                                                                                                                                                        • Figure 53: Forecast of number of participants in gaming and betting online, 2013-18
                                                                                                                                                                                    • Appendix – Experience of Online Gaming and Betting

                                                                                                                                                                                        • Figure 54: Experience of online gambling, by demographics, July 2013
                                                                                                                                                                                    • Appendix – Online Gaming and Betting Activities

                                                                                                                                                                                        • Figure 55: Participation in national lottery draw games online, by demographics, July 2013
                                                                                                                                                                                        • Figure 56: Participation in horserace betting online, by demographics, July 2013
                                                                                                                                                                                        • Figure 57: Participation in football betting online, by demographics, July 2013
                                                                                                                                                                                        • Figure 58: Participation in online slots and instant win games, by demographics, July 2013
                                                                                                                                                                                        • Figure 59: Participation in online bingo, by demographics, July 2013
                                                                                                                                                                                        • Figure 60: Participation in online casino games, by demographics, July 2013
                                                                                                                                                                                        • Figure 61: Participation in other sports betting online, by demographics, July 2013
                                                                                                                                                                                        • Figure 62: Participation in online poker, by demographics, July 2013
                                                                                                                                                                                        • Figure 63: Participation in rugby betting online, by demographics, July 2013
                                                                                                                                                                                        • Figure 64: Participation in cricket match betting online, by demographics, July 2013
                                                                                                                                                                                        • Figure 65: Participation in betting on events online, by demographics, July 2013
                                                                                                                                                                                        • Figure 66: Participation in football pools online, by demographics, July 2013
                                                                                                                                                                                        • Figure 67: Participation in online gaming and betting activities, by other online gaming and betting activities participated in, July 2013
                                                                                                                                                                                        • Figure 68: Interest in future participation in online gaming and betting activities, by online gaming and betting activities currently participated in, July 2013
                                                                                                                                                                                    • Appendix – Devices Used for Online Gaming and Betting

                                                                                                                                                                                        • Figure 69: Gambling online using a laptop computer, by demographics, July 2013
                                                                                                                                                                                        • Figure 70: Gambling online using a desktop computer, by demographics, July 2013
                                                                                                                                                                                        • Figure 71: Gambling online using a tablet computer, by demographics, July 2013
                                                                                                                                                                                        • Figure 72: Gambling online using interactive satellite/cable TV, by demographics, July 2013
                                                                                                                                                                                        • Figure 73: Gambling online using smart TV, by demographics, July 2013
                                                                                                                                                                                        • Figure 74: Gambling online using a smartphone, by demographics, July 2013
                                                                                                                                                                                        • Figure 75: Gambling online using a games console, by demographics, July 2013
                                                                                                                                                                                        • Figure 76: Devices currently used to gamble online, by other devices used to gamble online, July 2013
                                                                                                                                                                                        • Figure 77: Use of smartphones to gamble online, by other devices used to gamble online, July 2013
                                                                                                                                                                                        • Figure 78: Use of games consoles to gamble online, by other devices used to gamble online, July 2013
                                                                                                                                                                                        • Figure 79: Devices interested in using to gamble online in the future, by devices currently used to gamble online, July 2013
                                                                                                                                                                                        • Figure 80: Devices currently used to gamble online, by past-year participation in online gambling activities, July 2013
                                                                                                                                                                                        • Figure 81: Devices interested in using to gamble online in the future, by past-year participation in online gambling activities, July 2013
                                                                                                                                                                                    • Appendix – Smartphone Gambling

                                                                                                                                                                                        • Figure 82: Attitudes towards smartphone gambling, by participation in online gaming and betting activities, July 2013
                                                                                                                                                                                        • Figure 83: Attitudes towards smartphone gambling, by devices used to gamble online, July 2013
                                                                                                                                                                                    • Appendix – Online Gaming and Betting Habits

                                                                                                                                                                                        • Figure 84: Most popular online gambling habits, by demographics, July 2013
                                                                                                                                                                                        • Figure 85: Next most popular online gambling habits, by demographics, July 2013
                                                                                                                                                                                        • Figure 86: Online gambling habits, by online gambling habits, July 2013
                                                                                                                                                                                        • Figure 87: Online gambling habits, by most popular online gambling activities, July 2013
                                                                                                                                                                                        • Figure 88: Online gambling habits, by next most popular online gambling activities, July 2013
                                                                                                                                                                                        • Figure 89: Online gambling habits, by devices used to gamble online, July 2013
                                                                                                                                                                                    • Appendix – Drivers of Online Gaming and Betting Choice

                                                                                                                                                                                        • Figure 90: Most popular drivers of online gaming and betting, by demographics, July 2013
                                                                                                                                                                                        • Figure 91: Next most popular drivers of online gaming and betting, by demographics, July 2013
                                                                                                                                                                                        • Figure 92: Other drivers of online gaming and betting, by demographics, July 2013
                                                                                                                                                                                        • Figure 93: Drivers of online gaming and betting, by drivers of online gaming and betting, July 2013
                                                                                                                                                                                        • Figure 94: Drivers of online gaming and betting, by participation in online gaming and betting activities, July 2013
                                                                                                                                                                                        • Figure 95: Drivers of online gaming and betting, by participation in other online gaming and betting activities, July 2013
                                                                                                                                                                                        • Figure 96: Drivers of online gaming and betting, by devices used to gamble online, July 2013
                                                                                                                                                                                        • Figure 97: Drivers of online gaming and betting, by online gambling habits, July 2013

                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                    • Apple Computer UK Ltd
                                                                                                                                                                                    • Bet365 Limited
                                                                                                                                                                                    • Betfair
                                                                                                                                                                                    • Blue Square Ltd
                                                                                                                                                                                    • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                                                                    • ESPN, Inc.
                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                    • Google, Inc.
                                                                                                                                                                                    • Ladbrokes Ltd
                                                                                                                                                                                    • London Stock Exchange plc
                                                                                                                                                                                    • Manchester United PLC
                                                                                                                                                                                    • Mecca Bingo Limited
                                                                                                                                                                                    • Playtech
                                                                                                                                                                                    • Rank Group
                                                                                                                                                                                    • Tombola
                                                                                                                                                                                    • Twitter, Inc.
                                                                                                                                                                                    • William Hill
                                                                                                                                                                                    • Zynga

                                                                                                                                                                                    Online Gaming and Betting - UK - October 2013

                                                                                                                                                                                    US $2,672.70 (Excl.Tax)