Online Gambling Overcomes Legal Uncertainties

Combined revenues from the online and iTV gambling market in both the United States and Europe are predicted to grow from an estimated $6.7 billion in 2001 to $20.8 billion in 2005, according to research by Datamonitor.

Datamonitor found that online gambling companies will generate revenues of $6.6 billion in 2001. Growth will continue unabated to reach $13.6 billion in 2005. Meanwhile, the number of online gamblers in Europe and the United States will grow from 2.9 million in 2001 to 7.4 million in 2005.

Despite legal uncertainties surrounding online gambling, with 1.9 million online gamblers the United States is the largest market for online wagering. The European market is also beginning to develop, spearheaded by Britain. Despite the fact that online gambling is still prohibited in some countries, many European consumers have started to gamble on sites that appeal to them with country-specific offerings. Furthermore, the gradual entry of established bookmakers into the online gambling industry is building up the credibility and reputation of this market.

“Despite adverse conditions due to legal restrictions, the online gambling market is thriving,” said Jacob Hayler, gambling analyst at Datamonitor plc. “This shows the strong appeal of this content with consumers. The dot-com crash has led many to think of the Internet as an unprofitable medium. This clearly does not apply to online gambling.”

Datamonitor’s research also found that the adoption of interactive television (iTV) will give the gambling industry the potential to target a very attractive audience — the armchair sport fans. Enhanced TV technologies are gradually enabling companies to overlay gambling services with live events. Sports betting, followed by lotteries, will be the most popular major form of gambling on iTV, according to Datamonitor.

Britain and France are currently the only countries where iTV gambling has been rolled out. Although still in its infancy, iTV gambling is already showing strong signs of growth. Datamonitor estimates that in 2001, the European market will be worth $130 million, and predicts it will increase to 7.1 billion in 2005.

According to Datamonitor, the success of such services in Britain and France will lead other European countries to phase them in. However, due to legal restrictions, Datamonitor does not predict any introduction of iTV gambling in the U.S. market in the medium term.

“iTV gambling will be a very profitable market,” said Jacob Hayler, gambling analyst at Datamonitor. “However, due to nature of this distribution medium and the involvement of governments in this market, entry barriers will be high and only a few companies will be able to benefit from these growing revenues.”

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