Technavio Research, the leading market research company, recently released a report, which looked in to the online gambling market in the USA. According to Technavio’s latest report, their analysts at the company have said that expect the online sector of the gambling industry in the country to grow at a Compound Annual Growth Rate (CAGR) of more than 51 per cent during the forecast period, between 2016 and 2020.
Technavio Research is a leading market research company that has both a global presence and global coverage. The company focuses their research and analysis on emerging market trends, in a bid to help businesses identify opportunities in the market and to develop effective strategies to optimise their positions.
The research company, which was founded in 2003, is currently headquartered in London, UK; however, Technavio has offices all over North America, Europe, and Asia. They cover more than 100 industries across 50 countries and develop over 5,000 research deliverables annually.
Technavio uses a combination of quantitative and qualitative tools in their research methodologies; with a team of more than 300 specialised analysts, who are continuously monitors and evaluates the market landscape to build forecasts across market segments and geographical regions. The company boasts a large and growing base of satisfied clients from all around the world. Businesses of all sizes can rely on Technavio’s extensive research, through coverage and actionable insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.
Online Gambling Market Study in the US for 2016 to 2020
The research study by Technovia looked into the online gambling market in the USA; they looked into the status of the industry at present, as well as growth prospects for the sector for the next five years, between the years of 2016 to2020.
Firstly, the study calculated the market size by looking only at the revenue that is generated from just the legal online casinos, betting, and lottery segments in the country.
The report discussed the primary market growth drivers and the challenges that are faced by vendors in the country and the market as a whole. After looking at the data, the report also provided an overview of the key trends that are emerging in the market in the USA.
Given the popularity of gambling destinations such as Las Vegas and Atlantic City in the USA, the country has developed a reputation for being a hub for gambling; however, it is often overlooked or even unknown that the USA follows some of the most stringent federal laws in the world, when it comes to gambling.
Last year in 2015, the US was ranked 8th in the global online gambling market, coming in after China, the UK, Australia, France, Italy, Germany and Spain.
According to media and entertainment analysts at Technavio, the three main factors that are expected to contribute to the growth of the online gambling market in the USA are firstly, the easing of government regulations, secondly, the scope for increased contribution to the national economy and finally, the wider reach of online gambling compared to traditional gambling.
Easing of Government Regulations
In 2006, the federal government of the USA passed the Unlawful Internet Gambling and Enforcement Act (UIGEA), which outlawed all forms of online gambling in the country. However, in 2012, a new law was passed that allowed individual states to license online and mobile casinos, sportsbooks and poker sites, but just to operate within their state borders. In the three years after the law had been passes, as of 2015, only three states in the country had amended their laws to allow mobile and online gaming -namely Delaware, Nevada, and New Jersey.
However, with the federal government easing laws further in the country, more than five other states are expected to legalise the online gambling by the year 2020.
Increased Contribution to the Economy
One of the most obvious benefits that a state stands to get from legalising online gambling is a boost to their local economy; firstly, they can collect increased tax revenues and secondly, online gambling could help generate new jobs for local people.
The individual state government has full say on how much tax to impose on such operations, most states so far have choosen to impose high rate of tax on online gambling vendors, generating generous tax revenues in return. The money can then be used for the development of the state and therefore piece by piece, the whole country. The funds can be directed towards societal welfare through NGOs, construction and renovation of hospitals and educational institutions. Moreover, the legalising of online gambling can create job opportunities for people in a number of sectors.
Ujjwal Doshi, a lead analyst at Technavio for media and entertainment services research, said, “ The easing of regulations on gambling serves the wider interest of the government and may be an important trend followed by various other states thereby driving the growth of the market during the forecast period.”
In 2015, the casino segment in the USA generated more than USD 13 billion as tax revenues; casinos are charged taxes at the rate of 25 per cent of their earnings, and all winners also have to pay 10 per cent of their prize money to the government in taxes; this generates a huge income for the country. If more states joined in to offer online wagering, these figures could increase dramatically.
If online gambling is legalised is more states, the contribution to the national revenue will grow significantly and it will also generate a lot more jobs. In 2015, the casino segment in the country also managed to generate about half a million jobs.
Scope for Wider Reach
In contrast to traditional gambling, online gambling has the scope to reach a much bigger audience in the USA; several factors starting from advertising laws in the country to the popularity of smartphones and mobile devices can all contribute to this great reach that the online gaming industry can tap into.
The tourism industry in certain parts of the country, such as Nevada and New Jersey is driven by casinos; furthermore these casino studded town are considered to be of the more glamourous tourist destinations in the US. Since the end of Great Recession in 2010, the tourism industry in the country has begun to revive itself and has grown consistently over the last five years at a CAGR of 7.7 per cent.
In addition, the US is one of the very few countries, where widespread advertising of casinos is legal; this provides immense opportunity for online casino vendors, when it comes to attracting more customers to their sites and maybe even affiliated brick and mortar sites.
Online gambling also had a bigger reach as it is web based and does not require the customer to be physical present at the operators’ venue to take part or place wagers. More people can access their services without having to spend time, money or effort into travelling to specific venues; customers can place bets from the comfort of their own homes and with the advancement of gadgets today, even on the move.
The casinos in the country have been struggling to get younger customers through their doors for some time now; while the younger generation does not seem to enjoy the traditional gaming floor at a casino resorts, they are constantly checking their mobile devices for all their communication and entertainment needs. The popularity of computing and mobile devices among the younger generation could be the biggest factor behind the extended reach of the online gambling market in the US. By using the mobile tools optimally, casinos can look forward to introducing their online services to a group of people who otherwise would take no interest in their products.
Mobile advertising has also become the strongest mediums of advertising over the last few years; the popularity of mobile devices among the younger generation could allow the industry to tap into a demographic of the population that refrains from going to casinos or bars, where betting is allowed. Through the mobile platform, they can be introduced to the entertainment factor of online gaming and influenced into trying it out.
Doshi also commented on how the younger generation is already more active on the online side of the business.
He said, “In the US, the average age of an individual visiting a casino is 45 years, whereas the average age of an online gambler is 34 years. The increasing presence of younger population on the online gambling platforms will be one of the significant factors driving the growth of the market during the forecast period.”