As long as humanity existed, betting has been a huge part of economy and hugely affected the very evolution of market and money. World’s economy still respects betting and gambling as highly influential domains. Some countries depend on their gambling and betting industries big time and would not survive a sudden collapse of mentioned domains.
With betting being such an integral part of economy, we have to understand how big this part compared to other industries. To be exact, we need to understand the scale of betting industry. How does it affect global economy? How does it influence various countries? These questions are hard to answer and there is no way in which one can describe the whole betting industry and its place amongst other important entertainment domains in a short article. However, some points can be made and we will try to elaborate on each of them.
Betting and gambling as entertainment industries
What is entertainment? We define entertainment industry as an industry that provides goods and services that people purchase in order to make their free time enjoyable and interesting. Some industries can be defined as such more than others. However, we need to understand that gambling as an entertainment industry is not the biggest part of global economy. There are multiple factors that strictly limit gambling and betting in terms of popularity and thus revenue.
- Gambling is prohibited or partially in a significant number of countries.
- Gambling and betting are products for adults and cannot be used by underage customers (unlike alcohol and drugs that still can be purchased by youngsters).
- Gambling and betting are less accessible to general publicity.
Most of the reasons that reduce total gross revenue of gambling and betting industry are limited by the fact that their audience is much smaller compared to other entertainment industries. However, Gambling is still doing well enough to be a huge part of global economy. People spent over $110 billion in 2007 in land-based casinos, on sport betting, and other forms of gambling. Compare this number to $1,163 billion spent on alcohol globally. Quite a difference.
Other industries that are ahead of gambling are adult sex-related industries ($400 billion cumulatively), drugs ($546 billion), restaurants and cafes ($183 billion), and movies with $180 billion. Yes, people spent nearly just as much money on restaurants and movies as on trying to win big in casinos. These numbers were initially presented by doctor Elliott Morss in his research related to gambling and betting. While some figures look off, specialists in general built a consensus that the article is still fair towards entertainment industries.
Note that the research is focused on gambling in general and define as such a whole multitude of subindustries. An incomplete list of such subindustries consists of:
- Casinos (land based and online);
- Gambling machines, slot machines;
- Charitable betting (bingo, roulettes, etc.);
- Sport betting (including horse racing and unorthodox betting);
- Various lotteries.
However, we need to talk only about betting and its exact place in global economy. While it is hard to actually evaluate the amount of global expenditures related to betting and sport betting in particularity, we can surely find enough statistical information about betting. However, before we start talking about it, we need to identify the total share of betting in global gambling industry. According to Statista, over 53% of gross win is generated by betting both online and land-based. This is a huge share and the amount of money generated by this subindustry is a direct consequence of recent laws pushed by governments of highly stable countries notorious for high levels of entertainment expenditures.
For example, Business Times pointed out that the U.K. Gambling Act is responsible for the incredible growth of sports betting industry that is estimated to be worth anywhere between $700 billion and $1 trillion. The numbers may vary. Some researches include gray bookmakers, other prefer only official statistics. However, the number would impress anyone. These estimations were actual in 2013. Today, the numbers should be way higher, as the estimated annual growth is about 11-15%.
When Times publish such astonishing numbers, the research by Elliott Morss surely looks a bit off. However, one must understand that U.K. market showed a spectacular rate of growth lately. The U.K. Gambling Act passed in 2005. In 2007, their betting industry was still just trying the new ground slowly making its way out of shadows. Another point is that Elliott Morss uses gross bets minus gross winnings, while Business Times published their article accounting for the overall size of the market. Interestingly enough, about 70% of revenue and gross win comes from football betting.
Note that over 55,000 matches are being monitored by Sportradar alone and it covers more than 350 bookmakers all over the world. Notably, about 1% of matches are being fixed. Other 99% are played fairly. So just about 54 thousand football matches is a number of games that make our fair market. This is an incredible amount of games.
Betting. Legal and Illegal.
While betting is definitely an industry that should be regulated and monitored closely, there is still enough room for illegal business to shine. Note that we do not want to condone illegal part of the industry, but want to point out that betting industry as a whole is much bigger than many imagine. You simply cannot ignore illegal betting services that exist in the world. They make a big part of gambling industry.
Betting is a very attractive industry for investors and capital holders. Entertainment in general is a safe bet for those investors who want to put their money to good use and receive profit as soon as possible. This makes the industry more attractive to shady investors as well. This makes the whole industry harder to estimate as illegal money streams are nearly impossible to track. However, there are ways to estimate the illegal share of the market and Business Times used them recently to present their view of the betting industry.
The demography of illegal business varies from one country to another. In some countries legal betting is superior. In others, illegal betting makes more money than legal. Just to make you more or less informed, we will provide you some numbers provided by Business Times article.
- In the U.K., with their market estimation being over $1 trillion, only about 2% is illegal betting.
- China leads the industry with the amount of bets generated by illegal betting being over $900 billion. That is over 42% of Chinese betting market size.
- South Korea, Italy, and USA also show high numbers of bets generated by illegal betting.
With an average share of illegal betting being about 20%, we can guess that the real size of betting industry is roughly 20% bigger than official numbers suggest. As betting industry grows at the same rate as gambling industry, we should account for this 20% when predicting how big of a share betting will have in the nearest future.
The future of betting
Firstly, we need to understand that the betting industry leans towards online solutions. It is much faster, convenient, and caters to a wider audience. The vast majority of bookmakers will surely choose to go online. This trend is visible all around the world. Even traditional betting services provide a wide range of online services.
Going online means that the regulations will become even stricter than they are right now. The problem with online betting is that it is hard to control it. While many countries still ignore online betting allowing a multitude of websites to exist, this will surely change when the market volume will exceed a critical point. When this happens, governments will have to make their policies regarding online betting stricter.
This happened in the U.K., in USA, and will happen in a multitude of countries sooner or later. Even countries that already regulate online betting want to make the process more transparent. Going online is a clear trend. Let’s take online gambling in general as an example. Over the last 8 years, the online gambling industry showed steady increase growing 11% annually. Specialists estimate that this industry will grow to $56.05 billion by the end of 2018. We talk only about online casinos.
Another important trend that should not be ignored is that bets are more versatile than they were a couple of decades ago. Bookmakers in England and USA take bets on who will win general elections, who will win presidential race, and many other bets related to politics. This makes the market way more attractive for a whole new audience. Some gamblers do not enjoy sports and will not watch any sport event, let alone betting on the outcome of such events. However, they will surely enjoy betting on other competitive events or events with questionable outcomes.
When the audience grows, the volume of the market inevitably increases. Betting is a huge supporter of various events. Its support doesn’t really show, but whenever an event is accompanied by bookmakers, the viewership grows. This trend is recognized by everyone. Even the Olympic Committee allowed betting for Rio 2016.
The last point is that the betting industry will keep growing both in terms of market volume and geographically. There is still a lot of room for growth.
Geographical expansion means making more presence in underdeveloped countries. While roughly 85% share of global betting industry gross gaming revenue comes from Europe and Asia, other continents are not even close to high numbers. For example, America holds 12% share of global gambling market with more than 86% of that share being on account of USA. Canada and Southern America together generate only 14% of continental gross gaming revenue.
At the same time, Africa and Oceania are responsible for 1% and 2% shares of global gross gaming revenue. Many say that Africa does not produce enough GDP per capita and the distribution of wealth is unbalanced to say the least in the vast majority of African countries. This is one of reasons why gambling in general is not that profitable in Africa. However, an argument can be made that Africa is developing at high pace and soon enough they will have enough room for civilized and profitable betting market.
Oceania is scarcely populated. There is simply not enough people to bet and thus the industry simply cannot develop as much as it would like to. Another important point is that many Oceanic countries do not need to develop their gambling industries as their citizens enjoy betting and gambling provided by companies situated in Asia.
However, Latin America, Africa, and Oceania are still underexplored areas where betting is not yet established as an industry. We strictly believe that when gambling as an entertainment industry will reach its limit in Europe and Asia, we will start seeing more companies that try to penetrate geographical regions where gambling is underrepresented.
Betting is a highly profitable domain that is strictly regulated by governmental institutions. Some countries rely on gambling as a valuable source of income, others try to prohibit it all together. Despite the controversy surrounding this industry, it makes millions of people happier and helps in generating loads of money. With the numbers exceeding trillions of US dollars, we can expect this industry to slow down a bit, but the growth will never stop completely. There is still enough room for growth.
As of right now, developed advanced countries like Canada, UK, USA, and Australia depend on their gambling industries to refill their budgets. USA economy, for example, makes over $260 billion from gambling (both online and land based). This is a huge number! Notice that David Dobric in his small article points out that over 6.8 million active players in Europe enjoy gambling as their main mean of entertainment. This number keeps growing. Simultaneously, the reports say that over 78% of British population tried betting at least once in their life!
Yes, we can surely say that the betting industry is a huge part of global economy pie!