iGB Market Monitor: UK market worth £4bn in 2016
New iGaming Business Market Monitor report shows the UK market will surpass £4bn mark in 2016. Australia focus reveals the market Down Under is also set from strong growth, with or without in-play betting ban.
Research by the iGaming Business Market Monitor has shown that the UK online gambling market in will surpass the £4bn mark in gross gaming revenues in 2016 as the country's double-digit growth looks set to continue.
Looking at the UK market in the wake of figures collected by the Gambling Commission and comparing those with the most recent results from the major UK-listed operators, the report suggests that the market has grown substantially in the 12 months since the last reported data from the Commission.
The iGB Market Monitor concurs with a recent report from analysts at Morgan Stanley which suggested the UK market had grown at least 12% in 2015, with a top 3 made up of Paddy Power Betfair, William Hill and Bet365.
However, it also suggests that the market beyond the major listed operators is also larger than has been estimated and is also showing signs of growing at the same speed as the top of the market.
The iGB Market Monitor can be viewed by following this link
A simple extrapolation from the five-months worth of data from November 2014-March 2015 suggests that as of the end of 2014 the market was likely worth circa £3.3bn to £3.4bn. Adding in a market-wide 12% growth rate and it is likely the market was worth £3.7bn to £3.8bn as of the end of 2015.
With the football European Championships sure to boost revenues in the summer and with no sign yet of the double-digit growth rate abating, the iGB Market Monitor suggests that by the end of 2016 the market could worth circa £4bn in GGR.
The report also suggests that estimates for market shares among the top six operators might be overestimated. Looking at previous assumptions about the rest of the market, and in particular the second and third-tier operators, the report suggests that the tail of the market is larger than estimates would suggest and growing broadly at the same pace as the top end of the market.
Such data also suggests that despite the ultra-competitive nature of the UK market, there is little sign of the smaller operators being squeezed out by the weight of marketing spend by the top operators.
However, the report does caution that the profit warning from William Hill, which cited recent responsible gaming measures instituted at the behest of the Gambling Commission, suggests there are some stronger-than-expected headwinds being encountered by the sector.
Alongside possible margin deterioration in sports and the yet-to-assessed potential impact from the taxation treatment of player bonuses announced in the budget, it is likely that there are some dampening pressures on growth in the rest of this year.
Following on from this growth, the introduction of the Point of Consumption tax in December 2014 has not acted as a deterrent to new entrants in the UK market, nor (to date) as a brake on marketing spend.
Matching the evidence with regard to the size of the market with the recent first-time participation data from the Commission, the report also suggests there might be circumstantial evidence that a more promiscuous customer is willing to try out new or re-launched brands.
The participation data published in February this year showed that the tendency for multiple accounts among users was highest among the 25-34-year-old age group.
The first in the iGaming Business Market Monitor series also looks at the Australian market and concludes that despite the mixed fortunes of the UK and Ireland-based operators, there are signs that the recent growth in the sports betting market is set to continue, even without further regulatory loosening of in-play betting.
The report suggests that Paddy Power Betfair’s Sportsbet operation is the big winner in the online market in Australia, though it still trails behind the various Tabcorp brands in terms of market share.
However, with revenues growing 43% and stakes up by 39% in 2015, it is clear the business is growing faster than the market overall. It is estimated the total market is worth circa A$2.25bn-A$2.3bn (c. £1.2bn).
The iGaming Business Market Monitor is the first in a quarterly series of reports that will collate the latest evidence for market size and market shares across a number of major markets in Europe and further afield.
The next report in June will cover the 11-month online gambling market figures from the Gambling Commission released that month as well as key European markets including Spain and Italy.
Subscribers to the iGaming Business Intelligence Centre can read the report here
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