Global gaming revenues set to reach US$182.8 billion by 2015

Asia Pacific will be the fastest-growing region for casino gaming spending over the coming five years, and could surpass the US as the biggest gaming region in 2013.

SINGAPORE, 7 Dec 2011 - Globally, the global gaming industry faces key challenges:

  • The gaming industry positions itself for the future amidst global economic uncertainty.
  • The industry that has long been accustomed to stable growth, continued revitalisation and expansion, sets its sights on a future that must command consumer trial and loyalty.

PwC’s latest annual report “Global Gaming Outlook: The casino and online gaming market to 2015" highlights the changes and challenges in mature markets, the upcoming opportunities in new and developing jurisdictions, as well as the legislation, regulation, and potential impacts brewing in the online gaming arena.

Casino gaming through to 2015

According to our projections the global casino gaming revenue across the United States, EMEA (Europe, Middle East and Africa), Asia Pacific, Latin America and Canada will grow at 9.2 per cent compound annual rate during the next five years, rising from US$117.6 billion in 2010 to US$182.8 billion in 2015.

Spending in the US will rise by 5.0 per cent from US$57.5 billion in 2010 to US$73.3 billion in 2015. In contrast, we’ll see dramatic growth in Asia Pacific with a projected 18.3 per cent increase compounded annually to US$79.3 billion in 2015 from US$34.3 billion in 2010. With this projection, the Asia Pacific region looks set to overtake the US in 2013 to become the largest region for casino gaming in the world.

Revenues in EMEA will reach US$18.3 billion in 2015 up from US$16.3 billion in 2010, an average annual increase of 2.4 per cent compounded annually. Weak economic conditions, coupled with the impact of adverse regulatory developments in some countries will curtail growth. The much smaller Latin American market will see growth of 8.1 per cent compounded annually from US$3.8 billion in 2010 rising to US$5.6 billion in 2015. Canada will grow from US$5.7 billion in 2010 to US$6.2 billion in 2015, a 1.8 per cent compound annual rate.

Greg Unsworth, Singapore Leader for Technology, InfoComm, Entertainment and Media Industry, PwC LLP said:

“Total global spending on casino gaming in 2010 has surged 9.6 percent and at first sight appears deceptively buoyant. It belies the slump currently facing the industry in some of the major gaming markets as the turbulent global financial markets have curtailed consumer spending significantly. However, Asia provides the bright spot in the global industry with huge growth potential.  New major developments in locations, such as Macau and Singapore have been very successful as they tap Asia’s rising affluent and mobile middle classes in search of new entertainment.”

Asia Pacific – the growth engine

As we forecast, Asia Pacific will see aggressive growth during our forecast period with Macau being the jewel in the gaming crown. This growth will be driven by three main factors: continuing economic growth which will increase disposable income and the emergence of a prosperous middle-class; a deep attachment to casino gaming and other forms of gambling in many of the societies in the region; and the growing opportunities for consumers to take part in casino gaming as new centres are established and new facilities open up in existing markets.

Singapore’s dramatic emergence as a casino gaming centre is a prime example of new territories entering the market. Revenues have surged from zero in 2009, to US$4.4 billion in 2011 and a predicted US$7.2 billion by 2015. The improvement in transport links to key casino gaming markets and the easing of regulations is also contributing to the increase in revenues. The Philippines already has a stable casino gaming market and new casinos in that country will propel growth. If regulatory approval is given in Japan, it’s likely that integrated casino resorts will be built in three locations.

As the Asia Pacific region continues to flourish and offer a more local gaming experience for Asian gamers, some high roller customers that would otherwise travel to the US will be diverted by these overseas attractions. The impact will be on US gaming centres, like Nevada, which have a higher reliance on foreign tourists to drive revenues.

Charlotte Hsu, Singapore Entertainment and Media Leader, PwC LLP said:

“Although Macau has the highest total market revenue in Asia Pacific, Singapore casinos have the highest return on margins on a property-by-property basis of comparison in this region. Singapore is proving to be stiff competition for Australia, for instance”

Greg Unsworth Singapore Leader for Technology, InfoComm, Entertainment and Media Industry, PwC LLP added:

“We are seeing new centers and new facilities being opened up in existing casino gaming markets to challenge the competition. The question is whether the market is expanding rapidly enough and if growth will be a zero-sum competition. Singapore’s casino industry will need to continually reinvent itself to be compelling as an entertainment ground for the well-heeled and well-travelled to widen the lead against existing and emerging competitors.”

Online gaming

Online gaming remains illegal in nearly all countries in Asia Pacific, and there has been little change to regulation in the region in 2010 or 2011. The culture of legal gambling in the region is very much focused on destination resorts such as Macau and now Singapore. The Philippines is the only country where online and mobile gaming is permitted. In Australia, online sports betting through licensed services is permitted. 

How will the future of casino gaming and online gaming look in 2015 and beyond?

  • By 2015 the financial balance of power in the global casino gaming industry will have undergone a fundamental shift to the east. Asia Pacific looks set to overtake the US in 2013 as the biggest regional market in terms of revenues.
  • This change could also be accompanied by a dramatic evolution in several aspects of the industry as online gaming becomes an increasingly regulated mainstream activity with revenues and usage taking off in many markets.

Marcel Fenez, Global Entertainment & Media Leader, PwC added:

“Whether you look at the physical casino market or online gaming opportunities, the overriding challenge is the same. In this ever increasing digital world where consumers can access vast quantities of information and experiences from wherever they are (without the need to travel to another location), the gaming industry will face tough competition for their fair share of consumer discretionary spending.”

ENDS

 

Notes:

Copies of the report “Global Gaming Outlook: the casino and online gaming market to 2015” can be obtained from the above media contacts.

The future of online

We believe that there are four key change drivers which will shape the industry over the coming years:

  • Harnessing cross-border liquidity:   national or state-based regulation of online gaming will continue to evolve. In every operating jurisdiction, there remains the question as to the number of available players and whether this number is sufficient to sustain a viable and growing market. The best long-term solution to support growth in revenues and tax receipts is to allow cross-border gaming so that liquidity flows between different territories with the right regulatory framework in place to allow this.
  • Setting realistic taxation levels: though the thought of additional online gaming tax revenues is attractive, the setting of levels of taxation by Governments for both operators and customers, needs balancing. If the right level of taxation is not established, growth could be stunted in some of the higher-tax territories and the risk of losing out on revenues is greater.
  • Varying approaches to different online gaming disciplines: the different approaches being adopted for the different forms of gaming will shape both the regulation and growth of various forms of online gaming in different markets. We believe when legalized in the US, online poker players will be allowed to operate on an inter-state basis, and that this will happen in the next few years. Online betting on horse racing will also grow and US lotteries will continue to spread across state borders. This regulatory change will represent a watershed for legalized cross-border online gaming in the US, marking the start of a new era. One segment where different territories are likely to diverge most strongly is sports betting. There’s already a strong market in Europe but concerns in the US mean that little headway is likely to be made in the online environment.
  • Combining online gaming and social networking: social networking will be a key driver of activity and growth in the online gaming world, as it represents a natural extension to users of digital and mobile technology. Social networking’s role in driving online gaming is especially significant because of its high levels and ease of remote access.

 

For media inquiries, please contact:

Jesslyn Foo (Direct Line: +65 6236 7257, e-mail: jesslyn.cl.foo@sg.pwc.com)
Yih Lin Chen (Direct Line: +65 6236 3960, e-mail: yih.lin.chen@sg.pwc.com)