iGB Market Monitor: Denmark poster child for regulation, but uncertainty about UK market

6 April 2017

The Danish igaming market is small but almost perfectly formed, with its business-friendly approach driving more consumers to use licensed operators than in most other European jurisdictions, the latest research from the iGaming Business Market Monitor reveals.

This is the first time our quarterly Market Monitor has delved into the Danish market and the inclusion of the Nordic nation is timely given the likely impending regulation of the Swedish market and also our inaugural Nordic Affiliate Conference.

The Market Monitor is a quarterly update of key igaming markets and is part of the iGaming Business Intelligence Centre subscription service.

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Denmark is something of a poster child for proponents of online gambling regulation in Europe. When the market opened up in January 2012, legislators set a relatively attractive tax rate of 20% of gross gaming revenues (GGR) for all products.

By opting for the taxation regime favoured by online gambling firms, the Danish authorities have managed to bring most igaming activity in the country within the regulated market, something those European jurisdictions that have opted for a turnover tax have largely failed to do.

According to a survey of 4,000 gamblers by the Danish Online Gambling Association in 2015, only 6% reported using offshore/black market sports betting operators. Higher percentages were reported, however, for unlicensed casino (23%) and poker (27%) sites.

The survey also found that it was more likely to be higher spending players using unlicensed sites, which means licensed igaming operators are missing out on some of the country’s VIP players.

Since the market was regulated, total GGR has risen from DK7.5bn (€1.01bn) in 2012 to DK8.9bn (€1.19bn) in 2016.

While these figures show that the Danish market remains small, it is growing steadily, which may or may be the case in the other market covered in our Market Monitor, the UK.

The direction of the UK market is much more difficult to determine, with the most recent results season revealing a mixed picture from the leading operators. While Paddy Power Betfair’s results were positive, at William Hill online revenues were falling and there are doubts over whether the market has much room to grow after the rapid growth of recent years.

The UK is also facing a number of regulatory headwinds, with the Competition and Markets Authority inquiry into online gambling’s terms and conditions ongoing and the Triennial Review also looming large over the market.

The latest Gambling Commission participation data also revealed that it isn’t just regulators that are mistrustful of the sector – the results of the December survey show that UK consumers’ trust in the igaming sector has fallen dramatically to 34.3%,  a big drop from the 48.8% recorded in 2008 when the Commission began collecting such figures.

There was also good news from the data, however, with online gambling participation up two percentage points and social engagement with igaming companies also rising, particularly among the much-coveted Millennial demographic.