interactive gambling market dynamics simon holliday h2 gambling capital lottery expo las vegas, 16...

Interactive GamblingMarket DynamicsSimon HollidayH2 Gambling Capital

Lottery ExpoLas Vegas, 16 November 2010

Agenda• Interactive Gambling Market Background

• The European Story• Particular Reference to Lotteries• Case Studies

• US Past and Present

• US Market Potential• Gaming• Lotteries

• Final Word on Mobile

Internet Gambling the Global Picture• It’s 15 Years Old: $29bn

Industry 2010

• Over 2,600 Real Money Sites Operated by 660 Site Owners

• Largest Markets Include:• US Japan• UK Germany• Italy France• Canada

Global Internet Gambling Gross Win ($bn)

Internet Gambling; The Product Mix• Sportsbetting Largest• Betting Exchanges• In Play (or Live Betting)

• Bingo and other Gaming is the Fastest Growing• Slots/Other Side Games

Important

• Poker is Hard Going• (Esp for Non-US Facing Sites)

• Casino Strong Growth• Live Dealer• Slots

Internet Gambling by Product 2010e

The European Regulatory Story

State Lottery Products on the Internet• Approx. 35 Lotteries Offer

Interactive Products

• Global 2010e – Interactive Gross Win $2.8bn• 3.0% State Lottery Total

• European 2010e• Gross Win is $2.3bn• 80% State Lottery Total• Excludes Non-Lottery

Products

• European 2010e Total• $3.0bn Inc. Sports-Poker-Casino

Global State Lottery Core Games Gross Win ($bn)

The European Lottery Internet Story• Following UIGEA Europe became

the World’s Largest Market

• Lotteries Key Players on the Internet• Core Lottery Games• Sportsbetting• Poker• Other Casino/Bingo

• Strengthening their Hand in Regulated Markets• Sazka• Lottomatica• SISAL• La Francais de Jeux

European State Lottery Interactive Gross Win ($bn)

European Lotteries and Internet Poker• Monopoly Markets• Sweden 2006

• Svenska Spel• Poker SEK305m 09 (-18%)

• Austria 2008• Win2Day• Poker €6.5m 09 (+29%)• (Also Casino Games)

• Competitive Markets• Italy 2008

• Lottomatica/SISAL

• France 2010• La Francais de Jeux

Svenska Spel Interactive Gross Win (SEKm)

France: A Case Study• FDJ Monopoly Lottery &

Sports

• Interactive Sports/Horse Mkt Opened Up – June 10

• Interactive Poker Added – June 10

• FDJ Late to Market with Poker

• Onshore Interactive Gross Revenues• €567m 10e• €906m 11e• €1.36bn 15e

French Interactive Gambling Gross Win (€m)

Italy: A Case Study• Open Interactive Markets• Betting Early 07• Tournament Poker Sep 08• Bingo Dec 09• Cash Poker Mid-Jan 11• Casino (Ex Slots) Late Q1 11

• September 2010 Market Shares• Lottomatica 15.6%• SISAL 6.3%

• Onshore Interactive Gross Revenues• €910m 10• €1.93m 12e• €2.12bn 15e

Interactive Gambling Gross Win (€m)

Interactive Gambling MKt Share Sep 10

The US Market Past and Present• Offshore US Internet

Gambling Market• Peaked at $6bn

• UIGEA• Significant Reduction

Initially

• Today Approx.• $5.2bn

• Continues to Grow Offshore Operators Act Without Penalty

US Offshore Internet Gambling Gross Win ($bn)

The US Internet Gaming Potential• Poker – The Most Likely?

• Casino/Bingo – Could Follow as Legislators/ Regulators became More Comfortable

• Sportsbetting – Only in States Where Legislation Pre-Dates Federal Ban?

• Year 3• All States All Gaming

$16.6bn• 12 Largest States Poker

Only $3.4bn

US Regulated Interactive Gaming Gross Win ($bn)

Why Interactive has to be the Future for Lotteries• Convenience• What the Consumer wants• New Media - where you need to be to Capture the Attention

of many Consumers (Esp the Younger ones) much of the time

• Opportunity to Engage with the Customer 24/7

• Opportunity to Broaden Product Reach and Develop the Interest of Games

• Enable more Regular Play

• Not Just Computers/Internet – Mobile Devices will be Just as Important

US Interactive Lottery Market?• Lottery Products• Just as Likely as Poker?

• Greater Proportion of Instants Vs Draws

• Excludes EGMs• (Casino/Bingo)

• Assumption 50% of Interactive Cannibalized From Land Based

• $8bn Sales 10 – (14%)• $15bn Sales 15 – (>20%)

US Lotteries Potential Interactive Sales ($bn)

Interactive Includes Mobile• Windows Approx. 15% of Operating Systems Sold in 2011

• Increasingly People are Accessing the Internet via Mobile Devices• Google Android• Apple OS4

• In the UK Betting/Lottery seeing nearly 15% of Interactive from Mobile

• Japan Racing Association Majority of Interactive Revenues Mobile Since 08

• Mobile Gambling Nearly $3bn Gross Win this Year• And Set to Grow!

Thanks for ListeningAny Questions?Simon HollidayH2 Gambling Capitalsimon.holliday@h2gc.com

Lottery ExpoLas Vegas, 16 November 2010