Is online gambling market dying

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Keeping up with trends of the online gaming industry is what we try and do. Over the years, there have been many fads that have come and gone. 

For example, when smartphones started taking off, simple online casino games like mobile poker were a huge deal for a couple of years, and now they're on their way out (e.g. it’s now possible to choose from the best casino slot games). The same is likely to happen with Bitcoin gambling, which is currently one of the hot topics.

Like anything based on the internet, the landscape of online gambling is changing so fast that it's hard to keep up with. Some of these changes are happening gradually, as mentioned above. 

Others are incremental changes that are being implemented through new legislation coming into effect in different markets. The biggest one was probably the UIGEA legislation that came into force in the USA and almost destroyed the online poker market in the country.

                                                                                                                                               Photo by John Schnobrich

It's not easy to predict what the next big thing will be, but that's the case for any industry!

In this article, we'll look at some trends of online gaming over the last decade or so, and see if we can notice anything about those trends. 

An interesting place to start is the size of the online gambling market.

The chart below is taken from a presentation by Amaya, the owners of PokerStars and Full Tilt Poker (credit to onlinepokerreport.com), and gives an idea of the overall situation. 

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Online gambling is going through a boom. Although, few would disagree with that statement 

The figures on the chart are a bit hard to see. However, it shows a growth of 36.4% in poker from 2003 to 2013, and they forecast growth of 3.4% over the next few years.

It isn't that straightforward to understand where this growth comes from, as nearly everyone I have met through poker hardly plays into a hand. There has always been talk of emerging markets in the East, so maybe Amaya has a plan to use them, or perhaps they are just trying to keep the stockholders happy with the charts that are going up! 

We can also assume that there is some optimism about the potential return of the entire American market to licensed poker.

The bottom half of the chart is an interesting part. It details the growth in sports betting and casinos over the same period. We have seen a 12.5% growth in these two combined markets until 2013, and the forecast is that the growth will continue at an 8.5% clip after 2018. 

This is a little more plausible, as sports bets, in particular, seem to be at their highest. On UK sports channels, in particular, it seems that every second ad is for Bet365, William Hill, Ladbrokes, or some other sportsbook. 

In the world, there is certainly room for growth of sports betting, as they are still not as culturally fixed in many countries as in the UK and Ireland.

Often, what happens in the USA will also have a big impact on these figures.

Amaya realized that the growth potential in poker had stalled, so they moved on to sports betting and online casino for real money. 

Another slide from the same presentation shows how revenue streams of large gambling companies are divided.

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The casino accounts for quite a large part of the income, especially for Betsson, Unibet, and 888. 

Unfortunately, the data for Bet365 is not shown. Poker is a big player for most operators, and it's not hard to understand why they don't invest as much money in improving their product as they would have done 7-8 years ago.

What Does Google Have To Say?

As mentioned earlier, my gut feeling is that online poker probably has had its day and is on the decline and that we are probably getting closer, or maybe even overstepping the peak for casino games and sports betting. 

What is quite interesting is a tool called Google Trends. Search giants make their global search history available to everyone for free. It's a gold mine of information and a great tool when searching for almost nothing. Of course, it must be accepted with a pinch of salt and may not stand up as an argument in court, but nevertheless.

Let's look at a brief example to see what it can tell us about where the publics’ interest lies on a particular topic. We will look for the answer to one of the great questions of our time: Messi or Ronaldo?

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Ronaldo in Blue        Messi in Red.

The graph illustrates how these two, in terms of public appetite for information about them, coincided back in 2005. 

If you look at Ronaldo's footprints, you can see that public interest in him has shown huge spikes every time a major international tournament was held where Portugal was involved. 

You can also see that Messi didn't even appear on the radar around 2005 when he started making waves in the first team of Barcelona. 

If you look at the time around last year's World Cup, you can see that both men were at the peak of their Google capabilities, although Messi peaked in July and Ronaldo in June, reflecting their personal success in the tournament.

So what does all this have to do with online gambling? Well, we can use the same tool to assess how many people are looking for terms related to gambling compared to previous years, and perhaps make some conclusions about where things might go.

Let's first look at three big terms: 

  • online casino 
  • online poker
  • online betting
Screen Shot 2015-10-28 at 12.21.41

The trend in poker is noticeable. It peaked in 2007 when online gambling was at its peak, and players could support a dozen large poker rooms.

After some revitalization in 2010, the poker path went downhill, and as you can see from the dotted red line. It looks like it will continue as well, according to any forecast by Google. 

Figures looking for "online casinos" are also steadily falling, although not to the same extent as online poker. Google predicts that, for the first time since it started keeping records, more people will be looking for "online casinos" than "online poker."

While poker and casinos are strikingly popular, sports betting is the only search term that will increase in popularity, with a record number of bets expected. 

This coincides with the end of the football seasons as well as the NHL and NBA playoffs in the USA, so it should come as no surprise that these are busy months for sports bettors.

So, what are the most popular casino games? Do any of the three favorites of roulette, blackjack, and slot machines hold out in the face of this adversity?

Screen Shot 2015-10-28 at 12.30.34

Well, they've all gone crazy since 2010, and what happened in June 2010 made them all so famous for one month, I don't know. 

Shortly after that, all three were equally accessible for a short period, but it was the slots that lasted best since then. Blackjack and Roulette have continued their sharp drop since 2010, with search volumes dropping by more than 50% as soon as the spike occurred. 

In the case of slots, the search volume has dropped slightly by 30%, so the general interest for slots has held up somewhat.

Search volumes for all parameters associated with gambling are declining, but income and profit continue to grow. 

Bet365 more than doubled its operating profit from 2012 to 2014 to more than 400 million pounds, and Amaya Gaming sees a bright future with projected earnings on the rise. 

These searchable term charts do not tell the whole story. First of all, I've only focused on English queries, but they can certainly offer guidance. 

This may indicate that perhaps conventional marketing today is the best bet for online gambling companies. This would certainly correspond to the amount of gambling on TV these days.

Is Anything On The Up?

Before we finish, a little bright note for those of you who rely on Google for your customers, there are still niches that are on the rise. Look at the history of the term "daily fantasy sports."

Screen Shot 2015-10-28 at 12.43.40

DFS explodes, mostly in the US. In fact, with the dawn of the new NFL season, it became so popular that Google can't even predict what will happen next! 

It seems that this area will only grow over the next few years and is still not fully used in Europe, where no operators are offering a decent daily fantasy football product.

Summing Up

Google Trends is not a Nostradamus, but with some smart thinking, it can help guide you in the right direction, what to focus on next, and where the online gambling industry can go.

Even though online gambling has its ups and downs, it seems to be quite promising to have more ups than downs in the future.