Balkan States Nascent, Attractive Market for Industry, Consultant Says

8 January 2009

Having expanded across Western and Southern Europe, the global gambling industry is looking toward the Balkan states and Eastern Europe for growth.

In particular, the Balkan states -- a market that, by gross win, Media & Entertainment Consulting Network, or MECN, estimates is worth approximately 4.5 billion euros in gross win -- is drawing an increasing amount of attention.

The Balkan states -- Greece, Turkey, Croatia, Slovenia, Serbia, Montenegro, Romania and Bulgaria -- are home to approximately 130 million people. Gambling, especially sports betting, is quite popular in the region, and in 2007, Balkan residents turned over an estimated 25 billion euros.

In a survey conducted by MECN, more than 60 percent of the 90 market experts and operators polled on the region agreed that its growth potential is "great" or "very great," while just 3 percent said its potential is "small."

With regard to online gambling, meanwhile, MECN, by gross win, values the Balkan markets at 520 million euros -- most of which is generated by operators without local licenses. Country to country, market size varies significantly -- Turkey and Greece are the largest.

Across the region, there are around 43 million Internet users, with an average Internet penetration rate of approximately 36 percent. Just 7 million of those users, though, have broadband connections.

In more competitive jurisdictions like Croatia, Serbia and Romania, foreign online gambling operators are currently capturing between just 1 percent and 3 percent of the total market. However, in monopolistic jurisdictions like Greece and Turkey, one foreign operator alone can derive between 20 million euros and 30 million euros in gross win, annually.

The market experts and operators polled by MECN see the betting and online gambling sectors as having the most potential for growth in the region, while traditional games -- like instant lotteries and casino -- have less growth potential, the respondents said.

Already, companies like Sportingbet, Bwin Interactive Entertainment A.G. and Bet-at-Home have made inroads in the region, particularly Sportingbet, which derives 4.9 percent of its net gaming revenue from Bulgaria.

More and more, online operators are localizing their Web sites with language and currency features. Of 14 operators analyzed, 12 had localized Web sites for Turkey and 11, Greece. Serbia and Montenegro, by contrast, have been largely ignored in this respect with just two operators offering a Serbian-language Web site and no operators offering a Montenegrin-language site.

Looking ahead, between 20 percent and 30 percent of the operators surveyed by MECN indicated that they are planning to increase their investments in the region -- particularly in Croatia, Romania and Greece -- while the majority of operators are in the process of developing a regional strategy.

Mr. Oelbermann is the managing director of Media Entertainment & Consulting Network in Munich, Germany.