Last week I received a review copy of the "Mobile Gambling" report, written by Stuart Dredge and published by Informa Telecoms & Media, which predicts that the global mobile gambling market will generate US$1.2 billion in revenues in 2005 and rise to US$7.6 billion by 2010.
I had other numbers in my head, so I looked up Juniper Research's report, "White Paper - Gambling on Mobile, Second Edition" (published Feb. 28, 2005), which suggests the mobile gambling market is much bigger. Juniper's research indicates that it's already a $US2 billion market and will balloon to $19.3 in 2009.
I'll get back to this contrast later, but let's first take a look at Informa's research, which divides the market into three categories:
Sports Betting - Informa says that mobile sports betting is expected to be less popular than lotteries or casino games, yet it will still be an important part of the market going forward, particularly as offline bookmakers continue with their remote gambling strategies. The sports betting sector is predicted to generate US$78.3 million of revenues in 2005, rising to US$345.2 million by 2010.
Lotteries - Informa says that Mobile lotteries will become the most popular form of mobile gambling in the next five years, aided by the fact that they can be deployed even in emerging markets, where the majority of handsets support only SMS. Mobile lotteries are predicted to generate US$636.9 million of revenues in 2005, rising to US$5.7 billion by 2010.
Casino and Skill Games - Although lotteries are forecast to be the most popular form of mobile gambling, Informa says an equally large amount of activity exists within the casino and skill games category. This sector is forecast to generate US$442 million of revenues in 2005, rising to US$1.6 billion by 2010. The category includes card games such as poker and blackjack, but also mobile slot machines, roulette and skill-based games.
Regional Outlook
According to Informa, the United States supplies as much as 90 percent of the users for some overseas Internet poker Web sites. The increased availability of mobile handsets with Internet browsers will ensure that U.S. law enforcement is relatively powerless in preventing consumers from gambling on their mobile phones. Informa says that North America will generate US$979 million of revenues from mobile gambling in 2010.
Europe is a considerably more healthy market for mobile gambling, thanks to more relaxed legislation, a better-established culture of mobile content usage and a proactive attitude among cell companies (cellcos) toward the launch of such services on their portals. Efforts by cellcos to employ age verification systems have been key to this. Informa reports that Europe will be the largest mobile gambling market going forward, generating US$647 million of revenues in 2005, rising to US$3.2 billion by 2010.
Asia-Pacific is expected to take a considerable share of global mobile gambling revenues because of the strong culture of gambling in certain countries in the region, especially in South Korea. For countries like Japan and China, there are legislative obstacles to the launch of play-for-money mobile games. Meanwhile, even state-sanctioned gambling providers, such as Pagcor in the Philippines, face stiff opposition from religious leaders. Asia-Pacific is forecast to generate US$426 million in 2005, rising to US$2.7 billion by 2010.
Key Issues
The biggest challenge facing the mobile gambling industry is the issue of social responsibility. In essence, this is about preventing underage consumers from gambling using their handsets, while also monitoring and dealing with problem gambling and addiction.
Every mobile user now potentially has a casino in his pocket, which is why mobile gambling service providers and cellcos must develop policies and programs to address social responsibility.
The six U.K. cellcos have already put in place a code of practice to regulate all forms of adult content--including gambling--on mobiles. This included setting up an independent classification body to decide what commercial content was unsuitable for under-18s and enabling the cellcos to set up age-verification systems to prevent such users from accessing the content or services. Many gambling service providers, especially those from the online space, already have their own age-verification systems in place, providing a double barrier.
Problem gambling is trickier because services cannot install automated systems to block addicts from using their mobile to gamble.
Security is another issue that the mobile gambling service providers must grapple with in the years ahead. When gambling using their handsets, consumers want to know that their bets have been placed successfully and that their personal data remains secure.
Technology providers are already taking pains to promote their security benefits. For example, Spin3's patent-pending SpinLoc security and authentication system stores all player details, login information and other sensitive data on a server rather than on the player's handset, ensuring that even if his phone is lost or stolen, his account cannot be hijacked.
Comparing Research
Since there are such vast differences between Dredge's "Mobile Gambling" report Windsor Holden's white paper, I contacted both researchers seeking an explanation. Here's what they had to say:
Dredge: "You're absolutely right, Juniper's forecasts were different to ours. Obviously, we don't have knowledge on how they came to their conclusions, so we can't comment on their working. You'd need to ask them for their thinking.
"Needless to say, we don't just pull the numbers out of thin air, so we believe that our forecasts are a balanced and reasonable prediction of the possible growth of the mobile gambling market, based on our current knowledge.
"Obviously, it's very dependent on legislation. If the U.S. was to legalize remote gambling next year, revenue growth would be very different than if that happens in, say, 2008. It makes this market much harder to predict than other types of mobile content, as I'm sure you're aware.
"We're also much more conservative on sports betting, taking into account the current mobile payment situation in Europe and the likely regulatory regime in the U.S. So that's partly why our figures have come out as they have."
Holden: "I too noticed the discrepancy in the figures. That said, I'm prepared to stand by our forecasts."
"Clearly, there are various hurdles to the establishment of successful gambling services--not least the plethora of regulations and prohibitions in countries such as the U.S.--but these were taken into account during the forecasting process. (However, it is interesting to note that in several such countries--the U.S. included--moves are afoot to launch mobile lotteries.)
"However, even with the U.S. regulatory situation (which will naturally minimize any service outside of states with exemptions, such as Nevada) and the mobile payment issues, we're confident that the forecasts will be met--one reason being the phenomenal level of wagers already being experienced in countries such as Hong Kong, where mobile sports betting is now more popular than fixed betting."
Shall we bet on who has the right numbers?