Global Gaming Trends 2011: The Clear Picture

Posted by: on Sep 7, 2012 | No Comments

Despite the lull in the world economy, the global casino revenues climbed 5.2% to US$117 billion in 2011, marking a 2.2% rise over the figures reported in the previous year and the strongest development in the past decade. Three factors are expected to drive the global casino industry, enabling it to register robust profits in the forthcoming years:

  • Growth of personal and disposable incomes in the developing nations
  • The ever expanding middle class section of the population
  • Expansion of the casino sector in the promising markets
  • Gradual global economic recovery
  • Growing acceptance of casinos

Since 2008-09, there has been a steady shift of investment from the more mature and established markets to the emerging markets. This is because the mature casino markets (such as the US, Western Europe and Australia) are able to promise only gradual growth prospects. With this, the investments, momentum and center stage have been captured by the booming markets in the Asia-Pacific region.

According to a report by PWC, the Asia-Pacific region is set to overtake the United States as the world’s largest casino market by 2013-14. Additionally, from 2012 through 2016, the revenues of the industry are expected to swell at an impressive rate of 6%, way ahead of the 2% annual growth recorded during 2007-11.

The report also states that in the upcoming years, governments of several nations are expected to recognize the contribution of the casino industry to the national economy and deregulate foreign ownership and investment. These governments are expected to carry out legislative amendments in order to encourage the corroboration of online and land casinos. This would result in an increase in capital investments into licensed casinos and their online counterparts.

The Improving US Gaming Sector

One may be tempted to think that the US gaming sector reeled under the pressure of the receding economy and growing jobless claims. On the contrary, this sector delivered sustained revenue growth figures and spiraling credit ratings irrespective of the minimal gains that the country’s GDP and consumer spending made over the past couple of years.

In 2011, the US casino market recorded a healthy growth rate of 3.5%. Moreover, revenues are expected to surge by about 5% in 2012, which is way ahead of the growth rates recorded over the last five years, indicating that the lull that the industry has been facing for quite a while is likely to end in the near future.

The Las Vegas Strip registered 5.1% growth in 2011. It was the Atlantic City, however, that failed to deliver and was the least performing market. The reason for this may be the stiff competition being posed by the neighboring states.

In Canada, gaming revenues improved considerably in 2009, only to contract by around 2% in 2011. Again, this could be because of competition from the US gaming sector, coupled with the lackluster growth of the economies of both Canada and the US.

The situation was further dampened by the increase in the value of the Canadian dollar viz-a-viz the US greenback, combined with the stringent restrictions that were imposed by the US government on border crossing, which stopped Americans from visiting Canada. The industry is most likely to attain stability and grow in 2012, as a number of provinces have successfully enacted the necessary regulations, which permit the functioning of online casinos. Further, as the economic environment gains mileage, the market is likely to expand and exhibit better revenues and growth rates.

The Asia-Pacific Region: Driving the Global Casino Industry

The consistent growth rate showcased by the Asia-pacific region has been astounding to say the least. In 2011, revenues in the region jumped by 37%. And, keeping in mind the ongoing growth in Singapore and Macau, the revenues are expected to surge by another 25% in 2012. The PWC projections further indicate that Asia-Pacific should deliver revenue growth of about 20% per annum till 2015, accounting for approximately 40% of the global gaming revenues.

The Chinese government’s repeated efforts to tighten the credit policy in 2011 had no effect on its gaming market, as the revenues escalated a whopping 42%. In fact, the industry witnessed a further 21% year-on-year rise till May 2012, despite the pressure in China’s economy.

Singapore hasn’t been far behind either, registering robust growth since the initiation of the sector in the country in 2009.

What poses as a threat for the market, however, is the economic slowdown that the world economy is currently facing, and its duration. The meltdown has affected the economy as well as the real estate market in China, which in a way is alarming.

Complex Challenges Going Forward

Despite the flourishing trends and figures, there are a few challenges that the market is facing or is likely to face while expanding and moving forward. One such issue is the necessary interaction between game owners and the various organizations in the public and private sectors, which includes investment banks, commercial creditors, analysts and even the governing and licensing bodies, which are responsible for regulating the functioning of their casinos.

Challenges also include the gaming regulators. Questions such as how to safeguard the projects that offer the tax revenues, while also keeping intact the veracity of the casino and gaming environment as well as the interests and repute of all involved!

In the online gaming arena, the regulatory complexities seem to be more. The last two years have witnessed patchy and intermittent movements towards the goal of a wider regulation of online gambling, with little being done for the same in markets like the US.

However, it is expected that the prevailing approach of in-state licensing and the regulation of online casinos will gradually fade in the next five years. This is likely to be a result of the increasing popularity of cross-border gaming.

In Europe, it is the European Commission that drives the progress and expansion of the gaming sector and takes the needed legal actions against national gaming monopolies. Such examples of local regulation will likely escalate in the future.

Such transformations would not only make the industry and its environment better, but will also discourage the illegal elements and address various other challenges that the sector has been facing of late.



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