Internet gambling – how big is it really?

I came across a really interesting article in the Economist the other day discussing the Internet’s significant impact on the worldwide gambling industry.

The global online casino and sports betting markets have grown exponentially since 1995.

Growth of the online poker market has been even more explosive thanks in part to an accountant and amateur player from Nashville who took out the 2003 WSOP.  Then 27 year old Chris Moneymaker pocketed $2.5 million for his win and sparked the ambitions of millions of poker-pro wannabees world wide – now dubbed the ‘Moneymaker effect’ by industry analysts.

Too big, too accessible, growing too fast

These arguments and variations on this theme are put forward by many governments and traditional gambling (land based) industries around the world.  Terrestrial horse racing associations are particularly vocal about the detrimental impacts of online – and you can understand their concerns.  Their once captive market now has the choice between parimutuel odds returning around 90%, and online fixed odds offerings providing substantially better value.

What’s the informed punter going to choose?

The stats – Internet gambling

And the stats show this growth.

The figure left, from industry analysts H2 Gambling Capital illustrates a clear upward trend.

It also, interestingly suggests that the impact of America’s 2006 UIGEA legislation was minimal.  You can see the small level off in 2007 and then the upward march continues.

So in 2009 online gambling generated $25 billion.  A massive number right?

Well it is.  Considered in isolation its the kind of number that justifies the concerns of industry opponents.  But when considered relative to the total gambling market, it starts to look far less significant.

The stats – all gambling

The figure left, again from H2 puts the total global gambling market for 2009 at $335 billion, with the lion’s share coming from lotteries (29%) and casinos (31%).

The approximately $100 billion casino industry is dominated by Las Vegas and Macau which are responsible for $10.4 and $14.7 billion rspectively.  This number is likely to grow with Asian governments’ changing stance toward casinos and a demand that Sheldon Adelson has described as capable of accommodating “five to ten Las Vegases.”

A telling stat to take out of both charts is that despite the strong growth of Internet gambling, it still comprises less than 10% of global gambling.