3 minute read
LAST WORD
Gambling on uncertainty
Sharon Singleton | Managing Editor, AGB
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A quick Google search for the size of the global online gambling industry provides a range of figures so wide that the only thing it really tells you is that no one has a truly accurate forecast for how much is bet through the internet.
A ban on online gambling in some of the world’s biggest markets, such as China, means that accurate data is almost impossible to come by. The one consensus is that the market is big -- very big -- and growing, and that Asia is the most exciting place to be.
This promise of the online eldorado has led company after company to develop content and products designed to appeal to the Asian markets, but many are finding it’s not as easy as they had expected to break into these complicated and unregulated jurisdictions.
Last year provided a wake up call for those operating in the markets, testing even the strongest nerves. After years of seemingly turning a blind eye to gambling products targeting its nationals, Beijing in
August decided to act, warning in no uncertain terms that its patience had run out.
Cambodia, whose economy is heavily dependent on investment from China, complied immediately, slapping an all out ban on online gaming that came into effect from Jan. 1st this year.
At first some companies had hoped that once the dust had settled, the government in Phnom Penh would change its mind, or at least fail to actively enforce the ban. That’s proving not to be the case and many are now conceding that they need to shut up shop, closing the door on one of only two jurisdictions in Asia that allowed online gaming.
The other -- the Philippines -- has created some nail-biting moments for the industry. Hosting the largest igaming community in Asia through its Philippine Offshore Gaming Operator licenses, there were anxious times as Manila mulled its reaction to Beijing.
However, it seems at least for the moment that danger may have passed. The government and the Philippine Amusement and Gaming Corp. have stepped up their supervision of the industry, seeking to stamp out tax evasion and to document illegal workers.
While it’s unlikely to permit rapid expansion, the Philippines is still open for business and President Rodrigo Duterte recently seemed to imply he had managed to appease Beijing by his government’s efforts to reign in the industry.
Regulatory headaches aside, many companies stepping a toe into Asia are finding the market highly competitive, with operators cutting margins in an effort to grow market share.
U.K.-listed Playtech back in August announced it was cutting its revenue forecast for Asia for 2019 to EU115 million, from its initial outlook for EU150 million ($127.4 million), citing increasing competition, especially in China and a clampdown by authorities in Malaysia. As a publicly listed company, it’s one of the few that provides details on its revenue from Asia.
Then there’s the challengein reaching the target audience. Asia-facing firms have spent millions in sponsorship packages, especially for the U.K.’s Premier League, in the hope of reaching the region’s soccer-mad fan base. However, the extent of the practice has raised eyebrows, with the U.K.’s opposition Labour Party recently proposing a review amidst concern the firms were using the reputation of British sport as a marketing platform for their own domestic audiences.
The affiliate space in Asia is growing, but firms are needing to be creative in how they attract and retain their clientele.
Most online operators are confident that at some point in the future Asian governments, outside China, will eventually take steps to legalise online gaming, realising the significant potential for tax revenue and the impossibility of stamping it out. However, they also concede that regulation is still a long, long way off.
In the meantime, after the shockwaves of 2019, the advent of the Chinese New Year of the rat may give rise for some optimism. 2020 is the year of the metal rat, which apparently tends to be reliable and live a stable life. They may hold some power and are able to turn unlucky events into fortune.
