Over a Million US Namblers Online

23 March 1999
More than two-thirds of all active Internet users (43 million U.S. adults) seek entertainment content online, according to a new report from Cyber Dialogue released in New York on March 3rd 1999. According to the report, as of December '98 there were 63.5 million adults actively online in the U.S.

The report, "Online Entertainment: Trends and Opportunities," provides in-depth information about entertainment seekers and their online behavior and identifies opportunities for traditional media companies to develop Vertically Integrated Portals (online starting points) dedicated to specific content or product category.

Buried in the detail of the report and not published in their press release was a snippet of information about online gambling. Of the 63.5 million Adults they say are online, only some 2 percent of all online adults (in the U.S.) expressed interest in wagering over the Internet.

That means that there are some 1.37 million U.S. citizens who are interested in online gambling and have the technical resources to do so. This is one of the first real research numbers we have seen on the potential for the U.S. market and it is worth while looking at what this may mean for the potential of US originated online gambling.

If we look at various levels of per capita expenditure, how much would this market have to spend to get us to the now infamous "$10 billion business" number.

U.S. Namblers
Spend (loss) Per Capita
Gross Gaming Revenue
1,370,000 * US$ 10 = 13,700,000
1,370,000 * US$ 100 = 137,000,000
1,370,000 * US$ 200 = 254,000,000
1,370,000 * US$ 300 = 411,000,000
1,370,000 * US$ 400 = 548,000,000
1,370,000 * US$ 500 = 685,000,000
1,370,000 * US$ 600 = 822,000,000
1,370,000 * US$ 700 = 959,000,000
1,370,000 * US$ 730 = 1,000,000,000

The per capita spend required for $1 billion gross gaming revenue (the amount Joe Punter loses gambling) is U.S. $730 per person. That makes the famous "10 billion dollar business" in need of a per capita spend of U.S. $7,300 per person per annum.

By comparison, the 1996 per capita expenditure in the USA was $180, and that is for all forms of gambling, (well, all forms of gambling where the records are kept by the government).

Now, per capita expenditure is a rough and ready guide used to compare one country with another. In fact, that number goes though the roof when you take out non-gamblers. Only about 20 percent of the population are what you might call 'regular' gamblers so a spend by a regular gambler of $900 on average per annum is not out of the question. At the very hard end of the gambling market the average spend is even higher--as much as $1,800 to 3,600 per capita per annum.

That does not come up to the 10 billion number but if this 2 percent of online would-be-namblers are at the hard end of the market then that makes for a nice number and one that would really make some people sit up and take notice.

It would be foolish to assume that all of the hard end gamblers' cash is going to end up online. The payment problems and restrictions of credit card and other money transfer options make online gambling far too complicated and time consuming compared to real world forms of gambling. I think it will be a long time before we see a 10 billion dollar online gambling business, but in the meantime, some people will certainly be making some money.

If you would like to buy a copy of the full report Stuart Gibbel is the man to email to at sgibbel@cyberdialogue.com.

IGN's Mr.Nambling is a gaming industry consultant and commentator with over 23 years industry experience, Glenn Barry has held senior management positions in Lottery and gaming operations around the world. His claims to fame include starting the first successful US Lotto in NewYork in 1978 and the NSW (Australia) in 1979.