In my comments on Italian gambling trend I always warn against trivial analysis that do not take into account introduction of new games, change of games mix, transfer of volume from dot.com, as well as other more subtle dynamics.
In my post dated February 3rd, 2014, I remarked increase of gambling GGR in 2011 – 2013 is explained by introduction of new games and flow from dotcom, and I remark 3,9% GGR decrease in 2013 hides a major double-digit fall of dotit + dotcom online gambling. Similarly, moderate 1.3% growth in 2014 hides a relevant decrease of overall online gambling propensity, taking into account (i) volume flow from dotcom consequent to casino games providers’ decision to ban dotcom operators in Italy and (ii) entry of bet365 in the dotit market. Italian online gambling market was smaller in 2014 than in 2011, one-fifth at least, and much more legal, by the way.
2015 GGR increased YoY 13% and became equal to 821 mln euros. Increase was equal to 9,5% only in the first semester and raised to 16,5% in the second one. In 2015 casino games market share became 40% and sportbook one 32,5% while poker share fell to 18%. Those games in total represent around 90% of online gambling GGR, like in previous years.
Same 2014 main drivers – i.e. transfer of bet365 customer base to dotit and ban of dotcom operators by casino games providers – largely explain 2015 GGR increase. But acceleration in the second part of the year proofs there had been a real recovery, since 2011, which is caused also by other factors.
Sportbook GGR increased YoY 18% in the first six-months-period of 2015 and 32% in the second one. Legal online offer became more competitive than in the past, because of product innovation, in particular development of in-play betting, and thanks to performance of mobile channel, which became 30% of total online sport book GGR in 2015. There had been flow both from dotcom and from ground-based sector, quite clearly for the first time in 2015. It is anyway questionable Italians propensity to bet is increasing because bet shops GGR fell and overall legal sport book GGR decreased 3% (net of ground based volume of three operators that joined the “regularisation” pursuant to Budget law and became legal in 2015).
Casino games GGR increased YoY in total 27,6% in 2015. Slot boosted 37% in the first semester and 44% in the second one. Casino table games increase had been instead much slower, 7% in the first semester and 12% in the second one, but there had been a reversal of the trend in comparison with 2014, when there was a -19% YoY fall. That shows a real rise of casino games net of recovery from dotcom sector. One-third of GGR total increase landed on mobile channel, which is going to play a key role, due to devices’ performance, applications availability and user expertise.
Poker GGR continued to fall, it seems inexorably, also in 2015. Poker cash decreased YoY -23%, similar throughout the year, while launch of spin&go version could break in poker tournament decrease, but only temporarily as the fall had been minimized to -2,5% in the first semester but grew up again to -17% in the second one.
With reference to poker economics it had never been pointed out GGR is the algebraic sum of two components of opposite sign: (i) expense of the majority of players, occasional or not, which essentially play for entertainment, (ii) profit of professional players minority that play to make their income. Professional players are anomalous customers and should rather be considered in all a business entity. Those could have contributed to favour poker appeal and promotion at the beginning, but then they became proportionally invasive, causing a pathology in the ecosystem, consequent flight of amateur players and market collapse. Operators, particularly PokerStars, are now taking remedial measures. If the ecosystem will be brought back into balance, poker will have again a fundamental role in gambling in the future.
This is not the place for a quantitative estimation of customers’ loss absorbed by professional players but it is proper instead a qualitative analysis of the consequences of relocation of professional players from the demand side to the supply one. Let us assume by way of a mere example customers expense absorbed by this atypical partner is equal to licensees’ GGR, which were about 345 mln euros in 2011 and fell to 150 in 2015. Players that play for leisure spent consequently in poker about 690 mln euros in 2011. The amount became equal to 300 mln euros in 2015. It would grow up again if the ecosystem turns more sustainable.
That estimation could seem a paradox, but it is just like that. If we go back to the early years of online poker in Italy and remember its great success, its impact on gambling market and even on entertainment habits, the glare of media and public opinion, it becomes credible gambling online expense, dotit and dotcom in all, is now still lower than in 2011.
Bear in mind that is still a minimal amount in comparison with ground-based gambling players expense. Doubling poker GGR, total online gambling expense in 2011 is still less than 1 billion euros, against over 17 billion euros of ground-based gambling GGR.
