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Who would have bet on it? In less than three years, the mobile gambling and gaming market has gone from being a niche offering to a mainstream activity, generating billions in revenue. Juniper Research reports that wagers on mobile devices reached $19.5bn worldwide in 2011 and that this figure will grow to $100bn in 2017. “Mobile gambling is most definitely mainstream,” says Windsor Holden, research director at Juniper Research. “For some [bookmaking] companies, mobile gambling now represents 40-50 per cent of their revenues.”
Gambling is certainly big business. A British Gambling Prevalence Survey, carried out by the National Centre for Social Research on behalf of the Gambling Commission, found that 73 per cent of the UK adult population – or 35.5m adults – had gambled in some form in 2010. “Gamblers range from the person who buys the odd lottery ticket to seasoned gamblers, which covers everything from a lottery syndicate member to a professional,” says Peter Cobley, commercial director of digital agency homejames.
Aideen Shortt, gambling consultant and author of iGaming Business’ intelligence report on mobile gambling says that mobile gambling started to take off during the football World Cup in 2010. “Prior to that, it was a ‘nice-to-have’ and companies had basic products, but made no effort to market them.” In the month of the World Cup, mobile gambling in Europe grew by 400 per cent, albeit from a low base. “It was enough for people to start taking mobile gambling seriously,” says Shortt.
Three factors were responsible for the growth of mobile gambling, she says – the arrival of the iPhone; the take up of the device in young, affluent, sport-loving males, and the rise of in-running betting, whereby bets are made during a live sports event rather than prior to it. “In-running betting is very conducive to the mobile platform,” says Shortt. “You can be watching a sports event at home or in the pub, with your phone on your lap.”
In the past, mobile gambling was cross-sold to existing customers as an add-on, but now there is a mobile-only demographic – and gambling operators are actively targeting it. It’s a strategy that has paid dividends – in the 12-18 months following the World Cup, the leading gambling companies in Europe found that around 40-50 per cent of their active sportsbook gamblers (covering various sports including football, horse racing and boxing) had gambled on a mobile device.
Today, mobile gambling accounts for around 30 per cent of European sportsbook revenue, a figure that is expected to reach 50 per cent over the next 12 months, says Shortt. The UK is driving the mobile gambling market in Europe, and another major market is Japan, although here it is dominated by the Japan Racing Association.
Here in the UK, William Hill launched its first mobile gambling product in 2001, designed for WAP phones. Until recently, its William Hill Online (WHO) division was a joint venture with online gaming software developer Playtech, but this company is now solely owned by William Hill. WHO offers apps for both mobile sportsbook and casinos, and the company says more than 600,000 apps have been downloaded from Apple’s App Store. WHO also reports that 30 per cent of its revenue is now from mobile devices.
Last March, Ladbrokes signed a five-year deal with Playtech, giving the gambling company access to more than 200 Playtech games. Ladbrokes, whose offering includes apps for sportsbook and casino, reported an 800 per cent increase in mobile gambling for Q1 2011.
Paddy Power offers a range of mobile gambling apps including Mobile Casino and Paddy Power Vegas, which have been widely acclaimed for their features and functionality (see box out). Betfair offers apps for mobile sportsbook and casino on iPhone, iPad, Android, and BlackBerry.
Mobile gaming, which includes casino-type games like blackjack, poker and slots is also growing and now accounts for about 30 per cent of worldwide revenues, although Shortt says the revenue share between sportsbook and games will be flipped by 2017, a similar trend to what occurred in the online market.
All the major gambling operators have launched mobile websites and apps to cater for mobile gambling and gaming. While Apple allows gambling apps on its App Store, the Google Play Android store bans them, so gambling companies have resorted to offering play-for-fun apps embedded with links to the full gambling app.
Probability, a mobile cash gaming platform business, offers a range of B2C and B2B products and services, and its clients include Paddy Power and William Hill. Matthew Sunderland, Probability chief operating officer, says that the arrival of broadband, 3G and touch-screen smart phones transformed the mobile gambling market. “There’s a saying that ‘the internet used to be a place you went to; now you take it with you on your phone.’ Consumers can now do great stuff on their phone.”
A survey by Probability found that mobile game play lasts for around 12 minutes, compared with 1-2 hours for online gaming. A mobile entertainment gambler today is 18-35 and most likely a female (60 per cent); the typical mobile wager is between £1.50 and £2.70 and most mobile gamblers focus on three games. The most popular playing location is at home, in front of the television.
“The scale of play-for-fun mobile gaming is astounding,” says Juniper’s Holden. “Even though these games pay no winnings, people enjoy playing them and will even purchase chips to play them,” he says.
The growth of mobile gambling has been pronounced, but the market still faces many challenges. Gambling companies have embraced digital and invested in desktop gambling, but some are still not embracing mobile as fast as they should, says Cobley. “Mobile is a natural progression for the public, and companies need to address this trend more urgently.” The reluctance of some companies could be due to issues around legislation and regulation, he says.
Holden agrees that regulation is an issue. “There has been some liberalisation in the market, but you need to be a lawyer to understand what is permitted, in some cases, [in the US] on a state-by-state basis. It’s a complex arena,” he says.
In Europe, the situation is equally complicated. A gaming licence is required in all European territories, and Probability’s Sunderland says this is unlikely to change. “If anything, we are moving away from a single European licensing system,” he says.
Payment processing is another issue, says Shortt. “The Holy Grail is for somebody to be able to make a deposit on their phone; play a game on their phone and collect their winnings on a phone, but at the moment, most mobile play is funded at the desktop,” she says. There has been some progress in payments – for example, a number of mobile gaming services from companies such as Ladbrokes, William Hill and Bet365 accept payments from the e-money company Ukash. “What would also be great is if you could, say, place a bet on The Grand National, and have it automatically billed to your phone. It’s a question of whether mobile operators will accept a smaller slice of the revenue cake in order to make this happen,” adds Shortt.
Looking to the future, Sunderland sees more social games coming into the mobile gambling space, and Probability has teamed up with US social gaming developer Glu Mobile to launch six new slot games. As for Facebook, Sunderland notes that there are already social casino and slot games on the social network’s platform. “It would have to be regulated and monitored before we saw games with cash winnings being offered,” he says. The roll-out of 4G services is likely to bring even more sophisticated games and higher resolution graphics.
Improved user interfaces are also likely to emerge and Shortt thinks there could be a trend towards HTML5 web-based apps from native apps, especially if Apple decides to start charging gambling companies to have their apps in the App Store. Shortt says that while there are no signs of this happening in the short term, the gambling industry cannot rule out a change in Apple’s strategy in the future. If that happens, it might be more economic for gambling companies to switch to offering HTML5 apps, in the same way that publications like the FT have adopted the technology in order to avoid sharing revenue with Apple.
Probability creates HTML5-based apps, and Sunderland believes the market will continue to offer a mix of both. “The message we should be telling people who want to gamble is: you can use great content on a phone or tablet; it’s safe, and it’s fun.” Gambling has moved from the high street to the desktop and onto mobile, and it’s a safe bet that more of us will be having a flutter or two on our smartphones and tablets in the coming years.