Europe, Asia, and the US are markets that present short and long term promise for the gaming industry. Some European countries, such as France and Italy, are currently shifting their online gaming regulations to open up markets to privately-owned websites, providing significant potential for organizations ready to penetrate these regions. Meanwhile, in the US, China and Korea, countries in which internet games are enormously popular, online gaming is prohibited. Should they reform their gaming laws in the future, however, these countries offer considerable promise to the industry.
Growth of mobile gaming
As consumers are increasingly more comfortable using mobile phones for services such as banking, wireless Internet and messaging, mobile gaming is likely not far behind. It will enable people to place bets at an event, bar, or pub while watching a game, and live streaming of sporting events via faster 3G and 4G connections has the potential to open up and further enhance this market.
While much global legislative action focuses on liberalizing online gaming regulations, in many cases these efforts move slowly, and it may take many years for markets to actually open up to licensed competitors even after a law passes.
Concerns over reputation, privacy, tax issues
Prospective online gaming customers remain sensitive to any perception that a provider cannot be trusted. Concerns include everything from the potential for money laundering or fraud on the part of the site, to players using software to beat the system, to providing assurance that online gamers have a fair chance to win.
In Canada, with the government controlling the gambling industry, concerns are mitigated as to the legitimacy of the business. The focus will more likely lie in ensuring robust technology systems, particularly for payment and credit card acceptances, as well as solid governance over risks such as fraud and privacy. In addition, it is anticipated that there will be tax issues, such as the HST.
Online gambling has taken a strong foothold in Europe and represents significant potential in other parts of the world, including Canada and the US. Enhanced 4G networks and the increasing consumer preference for smartphones will further fuel the market. While it is difficult to predict political and legislative action, many markets that now ban online gaming could change their laws as a means of authorizing what is now an underground economy and use it to increase tax revenues—something that the current economic environment may be making more urgent.
This is a great opportunity for software developers, casinos and other land-based gambling operators, related suppliers, and industry newcomers and investors alike—one that must be undertaken with an understanding of the underlying financial, information, and security risks, and the implementation of a strong governance framework.
By Silvia Montefiore, Audit Partner and the Gaming Sector Lead for KPMG.