JRA: World’s biggest remote gambling business
Prior to today, if anyone had asked me who the world’s largest online gambling business was, the first names that would have sprung to mind would be the big listed European operators…Bwin.party, William Hill or Ladbrokes. All have market caps around the £1.5 billion mark and annual revenues at or approaching £1 billion.
But when compared with the biggest remote gambling organization in the world, The Japanese Racing Association (“JRA”), these guys are small fry.
World online gambling, H2 Gambling Capital and the JRA
Net gambling research consultants H2 Gambling Capital yesterday revised their projections for the size of the 2011 global interactive gambling market to €23.76billion, down from an earlier forecast figure of €25billion. They believe 2011 will now see the slowest rate annual growth (4.4%) the industry has experienced since records began, and the reasons given for the slow down were…
- continued post GFC economic pain (fair enough…but this has been going on since 2008);
- the US ‘Black Friday’ poker indictments (this makes perfect sense);
- the Japanese earth quake and tsunami (what the f&@k?);
I couldn’t believe that a single event in a country that doesn’t even have an open and regulated online gambling market could possibly have such an effect on global numbers. The reason that it does, is the shear size of the single (legal) online gambling option for Japanese punters…the JRA.
JRA snapshot
The JRA is Japan’s government owned/operated wagering organization. Any bets placed by Japanese residents on any horse race must be placed with the JRA. It’s a closed shop.
Bets are placed either on-course, at WINS betting shops or via the JRA’s telephone/internet betting system which includes a number of different betting channels:
- ARS (Audio Response System) – bets placed via telephone;
- PAT (Personal Access Terminal) – an in-home-use system designed for use with personal computers, TV game devices, or other related devices that can be directly connected to JRA’s PAT system; and
- IPAT (Internet Betting) – bets via PC, mobile/smart phone.
The value of total wagers placed with the JRA in 2008 was ¥2,750,200,990,400 (USD $34 billion). Of this amount ¥1,416,543,752,600 (USD $17.5 billion) was wagered via ARS, PAT and IPAT remote channels (indicated by ‘Telephone’ in the below graphic).
JRA Revenue (& a note on punter value)
Calculating JRA revenue from turnover is a very simple exercise. They run a pari-mutuel system that takes 25% of all bets placed and returns 75% of the bet pool back to punters in winnings.
So revenue from remote channels in 2008 was just under $USD4.4 billion! That’s more than Bwin.party, William Hill and Ladbrokes will make from online activity combined in 2011!
So the first takeaway is yes…the JRA is a behemoth of an online betting organization.
The second takeaway is this. Their customers are being robbed blind, facing a fixed house edge of 25% on all bets they place. And to think I sometimes worry about roulette’s 2.5% house edge.
This is a very good example of a monopoly operation offering a service that would not stand up in a competitive market situation.
Leave a Reply
Want to join the discussion?Feel free to contribute!