A Global Look at the Online Gaming Sector A Global Look at the Online Gaming Sector

As online gaming continues to mature, the overall market conditions continue to evolve leaving many to wonder what the future holds for the economic health of industry.

From a wide view, the dot-com market is shrinking due to governments implementing laws and regulations around online gaming in their jurisdictions. Regulation increases the cost of operation for online gaming companies, some of which is passed along to the consumer. However, new gaming laws also ease restrictions on pivotal factors such as advertising and financial transactions that in some cases served to throttle revenue from online gaming.

In order to best gauge the economic future of the online gaming sector, one must identify some of the key factors that make up the landscape in some of the strategic markets around the world

North America

The growth of online gaming in the US has been slow compared to industry expectations following the market openings in Nevada, Delaware and New Jersey. Since the New Jersey market launched in November 2013, no other state has really been close to passing legislation to legalize online poker or casino games in any other state.

However, online gaming does exist in other forms in the country. Online horse racing is alive and well in the US, several states have implemented the sale of lottery tickets online (including instant scratch off tickets that function just like a slot machine) and daily fantasy sports have exploded on the scene.

Though DFS is in the process of being restricted in some states, it is also being explicitly legalized in others. But the one form of online gaming that could have the biggest impact on the future of economic growth in the country is sports betting. Keep an eye out for the decision on the New Jersey case as it could open the flood gates for online sports betting in the US.

While Mexico continues to flirt with passing online gaming legislation, Canada is the other North American country to watch in 2016 when it comes to online gaming. Many forms of online gaming are considered to be legal in the Great White North, but individual providences have the authority to govern online gaming and there have been rumblings that they intent to do so. Look for the possibility that some areas in Canada will expand online gaming and some others may add restrictions.

Europe

Europe has a long history of online gaming including having the first ring-fenced jurisdictions to pass online gaming legislation. But, many of the closed markets in Europe such as France, Italy and Spain are suffering.

The United Kingdom has regulated online gaming, but unlike many of its predecessors, does not limit the market to players within its borders. As a result, online gaming companies which offer online poker, online casino games, sports betting, lottery bingo and even daily fantasy sports are seeing better returns from their investments in the UK.

Other regulated markets expected to open in Europe include Portugal and the Netherlands, both of which have experienced delays in opening their marlets.

Wildcards

Other areas to keep an eye on with regards to online gaming regulations are South America, Russia and the greater Asian market in general.

Online gaming is popular in countries in South America and the advent of regulation could grow the market considerably; although, this market will likely affect online gaming revenues more in the long term.

The sheer size of the Russian market means that any significant change there will likely have a large impact on the companies that serve the Russian market. There has been plenty of talk about both regulation and the banning of online gaming in recent months, so monitor the news out of Russia closely.

The emerging markets in India and the Far East could also be sources for considerable revenue for online gaming companies. While legislation could mean big things in these jurisdictions, it is not likely that they will generate meaningful amounts of revenue from online gaming in the short term.