Gambling on Mobile IIIww1.prweb.com/prfiles/2006/08/30/0000431172/whitepapermgambling3.pdfAug 30, 2006 · gambling market. Not covered in detail are betting exchanges, which constitute

Gambling on Mobile III

. . . information you can do business with

WHITEPAPER

Third Edition

White Paper – Gambling on Mobile

Page 1 Juniper Research Ltd Tel: +44 (0)1256 830002

Gambling on Mobile ~ Third Edition

Introduction Mobile gambling is one of the most talked about mobile entertainment services, and offers great potential for rapid market growth as the various barriers to market development diminish. Since the publication of its last study of mobile gambling at the beginning of 2005, Juniper Research has been monitoring market developments and interviewing players in the market place. It is clear that some of the early optimism for the uptake of mobile gambling services has been unfounded. Many of the hurdles identified in 2004/05 still remain, but there is a new air of realism about how the market will develop. This stems in a large part from the experience gained from early service launches and a realisation that the dynamics of the mobile gambling market are not going to be exactly the same as those in the online gambling market.

Juniper Research believes that in the long term the mobile gambling market will develop in a different way to the online gambling market. Initial development in some market sectors is likely to be as an additional channel for existing gamblers, but in the longer term the market will attract significant number of new users as the inherent advantages of the mobile channel become more apparent and as mobile gambling and other forms of games develop into mass market applications. This two phase development will be reinforced by existing online gambling service suppliers moving into the mobile space.

Types of Mobile Gambling In the mobile world, there are four main areas of gambling:

• Casino games

• Lotteries

• Sports betting



• Betting exchanges

Juniper Research covers the first three of these in detail in its new study of the mobile gambling market. Not covered in detail are betting exchanges, which constitute a different (peer to peer) type of betting environment.

Traditional casino style gambling is one of the most glamorous forms of gambling, and almost all games of the traditional casinos translate well into the online or the mobile environment. These games, however, depend upon good graphics and robust high-speed connections, and thus, are expected to gain in popularity with the increasing deployment of 3G networks and advanced handsets. There is also the emerging market for skill games with prizes (SGWP), which promises much in terms of mass market adoption. For the moment Juniper covers SGWP together with casino games, but this will undoubtedly constitute a market sector in its own right as the mobile gambling market continues its development.

Lotteries are the most common commercial gambling activity in operation. Lotteries and related games are not viewed by many as gambling, but as harmless fun. This, along with the fact that they are fairly basic in terms of how they work and easy for users to play, makes them ideal candidates for a mass market mobile gambling offering.

Sports betting is a form of gambling that suits the nature of the mobile platform more than any other type. The option to gamble anywhere and anytime whilst watching sports (or other) events is very appealing. Much of the current market activity in mobile gambling is currently in sports betting, with big name betting brands developing mobile sportsbooks both as an additional channel for existing customers and as a means to open up new markets.

Market Drivers and Constraints The mobile channel has many inherent advantages for the provision of gambling services. It also has some disadvantages. Both will help shape the nature of future services and their speed of uptake. The relative weight of individual drivers and constraints will vary by individual market. The principle drivers and constraints that Juniper has identified are summarised in the figure overleaf.

At the moment the scales are fairly evenly balanced between drivers and constraints, with the market striving to establish itself. Over time Juniper Research is convinced that the balance will swing emphatically to the benefit of the market drivers in all but the most conservative gambling markets. In these regulation is likely to remain the ultimate determinant of market development.



Figure 1: Mobile Gambling Drivers and Constraints

Drivers

• Desire to gamble• Growing disposable

incomes• Technology improvement• Availability/ convenience• Increasing mobile

penetration• Mobile user profile• Privacy

Constraints

• Regulation• Age verification• User confidence• Payment processing• Supply side conservatism• Speed of advanced

network roll out• Handset capability and

availability• Usability

Source: Juniper Research

Market Drivers

Key drivers for mobile gambling are: the inherent desire to gamble in some sectors of the population; rapidly advancing mobile network and handset technology; the inherent advantages of mobile communications in terms of convenience and pervasiveness; and the continued growth of the mobile communications subscriber base, particularly in the Asia Pacific region.

People like to gamble, to the extent that taken to extreme it can be seen as an addictive habit that can be extremely damaging to the individuals involved and to those around them. In moderation it can be great fun, providing an added dimension to games playing and sports and event appreciation.

As with most mobile value added data services, technology is both an enabler and a constraint. It depends on the market you are in, and where you are within it. There is no doubt that the more sophisticated gambling services, such as complex casino games and some sportsbook applications benefit tremendously from the higher bandwidth and improved handset capability that goes with 2.5G and 3G services. As the pace of deployment of these services increases around the world the technical environment for an enjoyable mobile gambling experience for end users will become more commonplace.

The most convincing and inherent advantage of the mobile platform is in the fact that it allows access anywhere and anytime. A mobile user has immediate access to his/her mobile for most part of the day and in most countries in most locations. This opens up a new manner of gambling which has not been possible before – ‘on-the-spot’ gambling, including “in-event” gambling. It also opens up the market for “casual” gambling, that is gambling as a form of entertainment to fill time. Juniper Research sees casual gambling as the biggest growth element in the mobile gambling market, delivering low stake games for the mass market.



Added to the inherent advantages of the mobile channel for some forms of gambling is the impetus provided by the continued growth of the mobile subscriber base. This is particularly relevant in the Asia Pacific region and in other developing markets. Also relevant as a driver for mobile gambling even in more saturated markets, is the migration of existing subscriber bases to 3G networks.

Market Constraints

Despite the compelling drivers for mobile gambling services, there remain significant constraints on market development. The principle constraint is regulation.

Gambling is a regulation constrained industry. Government bodies at all levels have taken an interest in the regulation of gambling in the “public interest”. Quite rightly both government bodies and the industry itself have sought to establish the right balance between regulation and market freedom, in order to encourage” responsible gambling”. Other regulations exist in some markets as much to protect vested interests as public interest. Whatever the reason for regulation, it is here to stay and will remain a constraint on market development. However, most in the industry accept a degree of regulation, what the market requires is clear and unequivocal regulatory frameworks, so that solution and service providers can design and offer their products and services accordingly.

Linked to regulation is age verification. The whole industry is keen to prevent under-age gambling, which is a significant risk because of the large base of young mobile users. Apart from ethical concerns, the gambling service provider is intimidated by the daunting prospect of an under-age gambling scandal that could damage the entire industry and limit its take-off. Therefore, robust age verification is the cornerstone of all new gambling-related legislation and self-regulatory codes.

Another significant constraint to market development is winning the trust of the customer. There are various aspects to this. Ultimately, there has to be complete faith in the fairness, reliability and security of the gambling service offered and in the associated payments processing. As the industry achieves more legitimacy and users become more familiar with the operation of the services available, trust will increase – barring major scandals. Industry participants are well aware of this and seek all means to police their own activities and to make services easy and fun to use.

Branding plays an important role in user confidence. Users are more likely to trust gambling services offered through a recognised brand, such as a global mobile network operator (MNO), or a well known online gambling provider, or bookmaker. In turn the brand owners want to retain brand value, so are reluctant to do anything that they feel may diminish it. This in itself will act as a constraint to industry development. A number of participants in the mobile gambling industry are taking a cautious approach to offering mobile gambling services, while business and regulatory models are evolving. This includes some major operators and bookmakers.

As indicated above, technology is both an enabler and a constraint to mobile gambling. Whilst 2.5G and 3G roll out is a general enabler, in any specific market delays can become a constraint. Similarly for handsets, where availability of the latest technology models has traditionally lagged network roll out.

Handset availability part, the size of the mobile screen and the usability of the controls will restrict the user experience of mobile gambling services as compared with their online gambling counterparts. This is one of the main reasons why Juniper Research feels that the



mobile channel will develop a dynamic of its own, being the preferred method of gambling for more casual gamblers seeking to fill time with exciting forms of entertainment. In this respect the handset will not be so much a constraint on the overall market as a constraint on the path of development.

A further technology constraint lies in application development. Designing mobile casino games is particularly challenging, demanding good quality graphics, rapid response, security of gaming (including restoration after signal loss) and money handling. A number of developers of online casino gambling solutions for the internet have found porting the application to the mobile environment more challenging than they first thought. This has been a constraint on the early stages of market development, but will diminish over time.

The Market for Mobile Gambling Taking all types of mobile gambling service together, Juniper Research estimates that the mobile gambling market will be worth just under $2bn in terms of total wagers placed per year, by the end of 2006. This will grow rapidly through to 2011, giving a total market figure of over $23 billion in the final forecast year. These figures could be even larger if more liberal gambling environments are introduced in key countries, particularly in North America.

Figure 2 and Table 1 show Juniper Research’s forecasts for total mobile gambling revenues for each year 2006 to 2011 broken down by regional market.

Figure 2: Total Revenues from Mobile Gambling (Casino, Lotteries & Betting). Regional Forecast 2006-2011 ($m)


The largest geographic market throughout the forecast period is estimated to be Asia Pacific, although it should be noted that the most active individual country market for mobile gambling is currently the UK. The second largest market is estimated to be in Europe, with the other three geographic regions a considerable way behind. Europe and Asia Pacific are estimated to contribute similar revenues over the forecast period, although with different business mixes. Asia Pacific is forecast to grow from $966 million in 2006 to $8.8 billion in 2011, with the European market growing from $950 million to $7.9 billion in 2011.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

2006 2007 2008 2009 2010 2011

Rest of World

Asia Pacific

Europe

South America

North America



Table 1: Total Revenues from Mobile Gambling (Casino, Lotteries & Betting). Regional Forecast 2006 and 2011 ($m)

2006 2011

North America $0 $3,340

South America $34 $1,328

Europe $950 $7,940

Asia Pacific $966 $8,818

Rest of the World $40 $1,765

Total $1,991 $23,190


Mobile Gambling: Casinos, Lotteries & Betting 2006-2011 This white paper is taken from the authoritative study which provides a detailed analysis of the evolving market opportunity for mobile gambling, concerning casino games, lotteries and sports betting. With over 175 pages this report considers the next five years and is packed with market opportunities, forecasts and technology comparisons. With extensive primary and secondary research supporting in-depth quantitative forecasts, this report covers market drivers and constraints; combining evaluations from technology improvements to mobile penetration, billing, security, and Internet & gambling regulations.

For more details on this report visit the website www.juniperresearch.com or phone +44 (0)1256 83002.

Juniper Research Limited Juniper Research specialises in providing high quality analytical research reports and consultancy services to the telecoms industry. We have particular expertise in the mobile, wireless, broadband and IP-convergence sectors. Juniper is independent, unbiased, and able to draw from experienced senior managers with proven track records.

About the Author

Bruce Gibson has worked in the IT and telecom industries for over 20 years, providing consultancy services and information products to telecom service operators, application



developers/service providers and to industry investors. Bruce is currently Research Director of Juniper Research Ltd and is responsible for its publications research programme and related consulting activities.

Prior to joining Juniper Research, Bruce was Managing Director of Zetetic Consulting, a consultancy specialising in IT solutions for the global telecommunications industry. At Zetetic Bruce provided consultancy services to telecom operator and solution supplier clients in Europe, the Middle East and Africa on IT-lead business process improvement and market strategy. Before this he joined Cerillion from Chorleywood Consulting where he was Managing Director from 1997 to 2001 and actively participated in major telecom industry projects as both Project Director and Managing Consultant.

Bruce is a frequent conference speaker and chairman at telecom industry events. He is also an experienced workshop leader and trainer.

Publication Details

Publication date: June 2006

For more information, please contact: Michele Ince, General Manager [email protected] Juniper Research Limited, Century House, Priestley Road, Basingstoke, Hampshire RG24 9RA Tel: +44 (0)1256 830002 / 476200 Fax: +44 (0) 8707 622 426 Further whitepapers can be downloaded at http://www.juniperresearch.com.

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Gambling on Mobile IIIww1.prweb.com/prfiles/2006/08/30/0000431172/whitepapermgambling3.pdfAug 30, 2006 · gambling market. Not covered in detail are betting exchanges, which constitute