This month Dominic Gates looks abroad to the highly active online gambling markets of France, Germany and Sweden to see how they differ and what the working environments are like there. And for all the talk of tech wonder, the industry is not as advanced as it likes to make out.
The UK is such a major market for online gaming and betting that it is easy to forget that European countries with comparable populations such as France, Germany; or even those with much smaller population numbers such as Sweden, with just 11 million inhabitants, have highly active markets of their own. Nothing new there and a statement of the obvious to an extent. There are however significant differences in how those countries regulate (or not) betting or casino sites and the impact those regulations have had on their respective sectors.
Unlicensed casinos flourish
Take France as an example. The country opened up its online gambling sector to regulation in 2010 but decided to only license online sports betting (fixed odds on most sports, pari mutuel-only for horse racing) and poker. Casino, the industry’s cash-cow in many ways, was not included in the regulations as the risks of addiction and problem gambling were deemed too serious a threat to allow operators to advertise casino games on the population.
Throw in some decidedly non-business friendly taxation and the industry is only just starting to see the benefits of its involvement there, eight years after the market opened up. The only growth has been for the betting operators, as the poker and horse racing verticals are still struggling.
However, if you happen to operate an unlicensed casino site targeting French players and are unworried about the possibility of being pursued by the French authorities for offering an ‘illegal’ online gambling product, you will have done very well out of the past eight years of untaxed, unregulated business and your business acumen will have been risk-free as the authorities have done very little to counter the activity by way of arrests or other restrictive legal tools.
For such are the consequences of governments not thinking through their regulatory frameworks (or lack thereof).
The situation in Germany meanwhile is much less clear, in that its regulatory handling of the industry has been marked by clumsiness and a refusal to look at the situation in a pragmatic way. The EU’s biggest economy, surprisingly, has failed to get a regulatory grip on the online gambling operators targeting German players.
In 2012 it issued a set number of betting licences as part of its Interstate Gambling Treaty, which was widely criticised by groups such as 888, bwin and PokerStars and actually fell foul of European competition law. Not that it made the German authorities rethink their decision.
This has led to a situation where one state, Schleswig-Holstein, has issued licences that enable operators to work and promote their products across the country, while paying taxes to the federal authorities. Most of them offer betting and casino products, although the latter is done in a discreet way so as not to upset national or state regulators, since the casino vertical is the ‘least legal’ of the two and most frowned upon by the authorities. What this means in practical terms is that the industry is able to benefit from operating in Europe’s biggest economy at a relatively low cost or regulatory risk.
Of course banks could suddenly decide to stop processing payments or state governments could issue decrees banning German media from accepting advertising from gambling operators, but for most operators that is a risk worth taking as the market still has room for growth, with stats showing that player spending levels and credit card usage levels are lower there than in the UK or Sweden.
When it comes to the offline betting experience, it must also be said that it is much more enjoyable in Germany. Go to a sports bar on a night of Champions League football and it is possible to enjoy a reasonably priced beer while watching top level sports and placing a bet or two on the self-service betting terminals located on the premises. As a customer experience it beats the UK’s high street betting outlets with something to spare.
Sweden meanwhile has been at the forefront of the online gambling industry for the past 20 years. Whether as operators or suppliers to the sector, Swedish groups have been pioneers in harnessing the web’s potential to grow revenues from remote gambling.
Most of you will not have heard of the suppliers but the consumer-facing companies include names such as Mr Green, Unibet, Leo Vegas or BetHard, a bookmaker whose profile has risen considerably recently with its recruitment of Zlatan Ibrahimovic as brand ambassador. If that goes against the widely-held image of Scandinavians as generally low key, self-effacing types, the regulatory situation in Sweden is akin to that of Germany.
The country has been a hive of activity for the sector for the past two decades yet will only officially regulate its online gambling sector next year when it issues operator licences to the likes of Unibet and Mr Green. This of course hasn’t stopped those companies from working in the country for years, but it shows how businesses have always been ahead of the authorities in this sector and to a large extent always will be unless told otherwise.
“Why are you telling us this?” we hear you ask (not unreasonably). On the whole it’s for information purposes, but also to show that other markets have their own particular working environments that affect their respective industries. Interestingly some of those companies, notably the Swedish ones, are also active in the UK. Unibet is currently shirt sponsor of Aston villa, sponsors the Derby horse race and has had betting partnerships with the likes of Arsenal, while Mr Green has run TV and broader media campaigns in recent years.
One of the mantras of the online gambling sector is that it is highly innovative and makes optimal use of all the technology at its disposal while the offices of suppliers and operators alike are havens of tech-enabled bliss where everything works so smoothly that one forgets about the ‘mundane’ worries of the surrounding physical world.
Utter nonsense of course. One of the most common complaints about the industry is that it makes minimal use of all the tech resources that are out there while products lack innovation and operators merely copy each other when a new feature or functionality has some success.
The main reason for this state of affairs is that it is relatively easy to make money as an online gambling site. The business model is clear and while revenues keep coming through, the urgency to establish the best user experience possible just isn’t there.
One contact who works in mobile gambling agreed to speak to Jackpot Gaming on condition of anonymity. They said: “The mobile is such a personal device that you would think companies in the sector would ensure they communicated highly relevant promotions and information to players.
“In fact it’s rare, there is minimal engagement to drive loyalty with the right message at the right time, for example information on a team on which a player has already had a winning bet. Some suppliers are developing those features, but they are the exception rather than the rule.”
So this brave new world of tech is not so amazing after all and while some companies are moving in the right direction, currently it’s more a case of “if it ain’t broke, don’t fix it”.