With The Rise Of Online Gaming, Is It Time To Get On Board?

According to business intelligence and industry research firm IBISWorld, the global casino and online gambling market currently generates a whopping US$285 billion in annual revenues. Since 2010, this industry has recorded growth of 3.8% too, with expansion in China and other Asian countries spearheading future success.

But while the Interactive Gambling Act of 2001 still prohibits the opening of new online casinos in Australia, this doesn’t mean to say investors can’t provide capital for such an emerging industry. Even if you held previous reservations about backing this new market, all the signs seem to be pointing towards monumental future profits.

An expanding online industry

Although real-world casinos are the main driver behind predictions from IBISWorld, opportunities remain extremely lucrative online. Market data from H2 Gambling Capital suggests that the global online casino and bingo market will increase to US$13.5 billion by 2018, which represents an annual growth rate of more than 10% from 2014.

In Canada, the second biggest country in terms of industry market cap behind the United Kingdom, Amaya Inc.’s US$4.9 billion purchase of the PokerStars and Full Tilt online poker brands made it the world’s biggest publicly listed online gaming firm.

Since making its market debut in April 2010 at just $1 per share, Amaya now trades at $35. But having conquered the world of online poker, Amaya is looking abroad at other options such as casino games and sports betting.

Opportunities in the USA and Australia

Although online gaming is only legal in some American states such as New Jersey and Nevada, this hasn’t stopped Amaya from setting forth proposals to capitalise on the US market if and when it fully opens up to investors.

By this same logic, Australian investors should probably follow suit if Minister for Social Services Scott Morrison’s review of the Interactive Gambling Act finds that this market has financial potential. By his own admission: “Online gambling is a $1.6 billion dollar business in Australia with sixty per cent of this revenue going offshore to more than 2,000 sites beyond the reach of our regulators and tax collectors.”

Morrison’s final recommendations are expected by 18th December 2015, but seeing as he will carry out consultations with representatives from wagering associations and call for public submissions, Australia could well become an attractive online gaming investment opportunity.

Managing levels of risk

Regardless of whether Australia decides to amend or update its gaming legislation, investors will still need reassurances over risk. Thankfully, the diverse range of offerings currently available can suit all tolerances. For example, online bingo is seen as a much more innocent game compared to something like poker but can still yield impressive returns. That said, the image may well be unfair – all operators have a necessary level of focus on risk.

Advancements in technology also means that lottery terminals featuring digital ‘scratch and win’ tickets have been cropping in countries where the industry is legal and regulated such as Canada. This helps avoid scrutiny that traditional slots encounter but also provides investors with a fairly straightforward way of making money.

It seems like only a matter of time before the online gaming industry becomes too big to ignore. Jumping on board too late might diminish the potential for rewards, however.

Image source: Royal Vegas Casino.