• Asia the growth engine - strong growth during PwC’s forecast period with Macau being the jewel in the gaming crown
• The casino gaming market in EMEA has been the hardest hit of any region
• UK was one of the few countries to post an increase in revenues in 2010

New analysis by PwC looking at the casino and online gaming market, forecasts that 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 $117.6 billion in 2010 to $182.8 billion in 2015.

Spending in the US will rise by 5.0 per cent from $57.5 billion in 2010 to $73.3 billion in 2015 and we will see dramatic growth in Asia Pacific with a projected 18.3 per cent increase compounded annually to $79.3 billion in 2015, overtaking the US to become the largest regional market for casino gaming in the world.

Commenting on the casino market in EMEA, David Trunkfield, lead gaming partner at PwC, said:

“The casino gaming market in EMEA has been the hardest hit of any region by the economic downturn, with revenues slumping by 12 per cent in 2009, followed by a further 7.2 per cent in 2010, the third consecutive annual decline. We expect that revenues in EMEA will reach $18.3 billion in 2015 up from $16.3 billion in 2010, an average annual increase of 2.4 per cent compounded annually. The weak economic conditions and the impact of adverse regulatory developments in some countries will curtail growth.”

The UK

The UK was one of the few countries to post an increase in revenues in 2010, with 0.6 per cent advance.

Several countries have substantial gaming activity that occurs outside of casinos. In the UK, gaming machines generated more than $3billion in total revenues in 2010. The Casino market, however, totalled only $1.2billion.

David Trunkfield, lead gaming partner at PwC, said:

“Looking ahead, growth in the UK over the period should also be supported by the opening of the eight large, and eight small, new casinos permitted under the 2005 Act, which we expect will help to generate gains averaging 4.1 per cent compounded annually between 2012 and 2015. However, with the current pressures on UK consumer spending, we forecast a decrease in casino revenue in 2011 and a modest 0.6 per cent advance in 2012.”

Asia Pacific – the growth engine

Asia Pacific will see strong growth during PwC’s 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 in China; 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.

David Trunkfield, lead gaming partner at PwC, said:

“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 $4 billion in 2011 and a predicted $7 billion by 2015. The improvement in transport links to key casino gaming markets, such as Macau, and the easing of regulations is also contributing to the increase in revenues.”

Online gaming

The online gaming industry has continued to evolve during the past year, and there are moves around the world by policy makers to bring online gaming into a locally licensed, regulated and taxed framework. This contrasts with the historical situation, where online gaming was made up of fragmented pockets of legal and illegal spending, served by operators licensed in a range of jurisdictions, with the size of the market almost impossible to measure accurately.

Most of the legal online gaming in the world occurs in EMEA, with the UK being the largest legal online gaming market. The regulatory complexities, which are often unclear and open to different interpretations, still vary widely between countries and even between various forms of online and mobile gaming.

In particular, a growing number of countries within the European Union (EU) are setting up regulatory regimes for online gaming, particularly poker and sports betting, with this year alone Spain, Denmark, Greece, Bulgaria, Germany and Hungary all taking steps towards developing a locally regulated, legal online gaming market. However, they are finding that this is more complex and taking longer than they expected as any national regimes in the EU need to be consistent with EU law.

David Trunkfield, lead gaming partner at PwC, added:

“With governments now facing severe fiscal constraints and eager to replenish their coffers, their attention has been caught by the potential of legalised and licensed online gaming services as a valuable source of tax revenues. There is also a strong argument that, since consumers will engage in illegal online gaming if countries don’t regulate, it is better to license and tax it than to allow the revenues to go to unlicensed operators – and player protection will be greater too in this scenario.”

The UK too is looking at changing regulation to capture tax revenues which are currently being lost to offshore jurisdictions such as Gibraltar and Malta.

David Trunkfield, lead gaming partner at PwC, concluded:

“With online gaming being complementary to bricks and mortar revenues, there will be more than enough room in the market for both online and physical gaming services, provided each offers a compelling experience for the consumer. 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, the gaming industry is competing for the increasingly limited share of the money consumers have for discretionary spend.”