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European Gambling Market: Development Trends

Article writer: Elliot Clark

Europe has become the centre of the entertainment industry. The British, Italian, German, French, and Spanish owners of gambling projects earn more than others, and we will talk more about these countries now.

European gambling market: general info

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About the Betting Niche

Bookmaking in its modern form originated at the end of the 18th century. In those days, racing and betting on its results ceased to be the exclusive privilege of aristocrats and quickly recruited supporters among ordinary people. If before that, the noblemen made bets on faster horses only among themselves, then in the 18–19 centuries, such entertainment spread to the audience of the competitions.

It was then that intermediaries who could organise the collection of money and payments to the winners appeared. The growth in the number of participants in horse racing contributed to the increase in the number of wagers.

This accelerated the development of a system that provided for the evaluation of the possible winnings of each rider participating in the race. This is how the pool of bids was formed (that is what the prize fund is called in the sportsbook niche).

Bookmaker Operations: Nuances

Before the start of the competition, bookmakers had to calculate the amount of the total prize pool, having previously stopped accepting bets. They received a certain percentage of commissions. All that was left was distributed among those who made bids on the winner.

Since the amount of money was determined by the total pool, the people who placed bets could not know in advance how much they would receive if the result was positive. For players to be able to navigate at least a little, the bookmaker announced indicative odds calculated based on the size of the prize pool.

Thanks to this, the participants got an idea of how much they could earn. Also, winnings began to be affected by wagers that were later made by other gamblers. This was the first step toward the emergence of betting odds.

To facilitate the calculations, a special counter that showed the stakes for a particular participant in the race and the total size of bids was created. This counter was called a “tote”. As a result, a whole form of betting where it was used was named after this device. The tote or sweepstakes appeared in Great Britain back in 1790 and quickly turned into a universal standard.

Modern Situation in the Segment

To increase profits, bookmakers began to look for ways to complicate the subject of wagering. There were bids on 2 or more winners who took part in different races, and they provided for an increased coefficient. Today, this approach is called an ordinary or multi-bet.

The handicap also appeared during the popularity of horse racing:

  • To equalise the chances of winning for an experienced rider and a less strong participant, the front-runner had to carry an additional weight that had a fixed mass — a handicap.
  • The then king passed a law that gave the French horsemen an advantage: all foreign participants in the race had to make their animals heavier.
  • In the 20th century, betting shops turned into a mass phenomenon, and sports began to develop rapidly. This was the reason for the emergence of bookmakers’ offices where people could place bids with specific coefficients.

The new generation of owners of sportsbook enterprises got rid of the dependence of odds on the number of wagers. Betting locations in the form that we know today appeared at the beginning of the last century.

Legislative Regulation and Taxation

The modern gambling culture is the result of hard work. On the way to the formation of the niche, there was a total spread of illegal companies, and criminal liability for such an activity existed as well. Eventually, everyone realised that the prohibitive measures did not bring any results. After the end of the war, a control system was developed.

The legal regulation was formed in Europe from 2005 to 2011. It was during this period that the main statutory provisions were adopted, and they are in force to this day. Some countries have improved and updated already existing acts, while others have started to regulate the market from scratch, passing several laws and legalising certain segments of gambling.

Great Britain

Gambling in the UK: nuances

The world's best regulation system currently functions in the UK. The rules that are applied here affect almost all niches and sectors of the industry. Special conditions are provided for everyone, from local land-based bookmakers to foreign brands.

The Gambling Commission strictly monitors the compliance of licensees with legislative acts and publishes detailed statistics with research on the local market every 6 months. The authorities have developed diversified access to absolutely all parts of the niche for the British population.

Let us consider this using the example of “one-armed bandits”: there is a whole classification that determines the level of access for people of different ages and the maximum possible loss. As for taxation, on average, business representatives have to pay about 15% of their total income to the public treasury. The size of the tax rate is determined by the sector in which a particular firm operates.

Spain and Germany

Unlike the UK regulator, these states have entrusted the control of the gambling business to the regional government. Spain legalised such entertainment as bets on sports events, poker rooms, bingo, lotteries, roulette, blackjack, and baccarat but live betting is under the authority of the local administration.

The same organisation selects the zones where betting shops can be located. As a result, entrepreneurs pay taxes to both the national and local treasuries.

Germany decided to allocate the territory of Schleswig-Holstein for licensing the amusement business and created optimal conditions for work. The federal government took this idea well and decided not to develop the narrowed legislative framework.

It is also worth noting the fact that the permits previously issued by the local authorities were not cancelled, and therefore, today, the companies continue to operate under the same conditions that were provided by the already invalid certificate.

France and Italy

These states approached the issue of taxation in a non-standard way. In these countries, legislators have fixed the so-called “payout ratio”, which reduces payments to players by 15%. If we carefully consider this point, we can safely say that this is meant for bookmakers to artificially increase the margin.

France has introduced universal taxation of owners of sportsbook projects according to the complex principle. However, not only the mentioned scheme works there. Bookmakers pay a turnover tax and are required to deduct a certain sum to the Ministry of Sports.

The betting business does not have the right to receive tax benefits. As a result, gambling activity in this country is unprofitable. Especially when you consider that there are many alternative options, such as online brands from other jurisdictions that offer much better conditions.

Italy introduced the dependence of the amount of taxes on the variety of bets. Up to 20% is counted from singles, and about 30% of winnings are withheld from multi-bets.

Thanks to national tradition, France has simplified the tax policy concerning the races, which is why many people here choose the hippodrome for wagering.

How the Market Is Organised: Development Trends

Gambling in the EU: development trends

The European Union is one of the most influential economic centres in the world. About 14% of adults on our planet live here, and the EU is the first in terms of GDP: it outran even the United States and China. A high level of economic development contributes to the growth of the gambling industry. A quarter of the income from the niche comes from the European Union.

The British, Italians, Spaniards, Germans, and French contribute 75% of the income of the EU market. The leaders are the United Kingdom and Italy, whose citizens are especially fond of gambling. The UK is showing an increase in turnover of about 4–8% per year. As for other regions, they do not have a stable growth trend.

The annual profit based on the average income of an adult:

  • Italy is considered a leader with an indicator of €350.
  • The UK with its €332 is a bit behind in this aspect.
  • Spain is in third place: approximately €225 is spent there per year.

Considering the development of online casinos, one can observe steady growth. Over the past few years, the share of virtual entertainment for money has grown by 5–10%, depending on the country. iGaming itself annually increases revenues by about 10%.

Most of the profits from the online sector come from UK gamblers. In 2014, local digital casinos managed to earn €5.1 billion and made the country take first place in the ranking. At the moment, the internet segment occupies 30% of the entire market here. In Italy, the same figure is only 5%.

It is all about well-written legislation and regulation that helps enterprises grow. The adequate taxation system and the long history of the formation of the local gambling industry also deserve special attention.

If we talk about the general dynamics of changes in the online niche, then recently, it has been growing throughout the European Union. Italians remain true to their conservative views on the amusement industry, which is why 95% of players still visit land-based casinos.

Legalisation Aspects

A gaming site can be registered in an onshore or offshore zone. In the first case, the company chooses a specific market and operates under the requirements of its legal field. The second option is to own an enterprise that is managed by the jurisdictions of other countries (for example, an Indian platform, which provides its services in Germany) or in a special economic zone (Costa Rica, Curacao, etc.).

Onshore and offshore operators divide a specific market among themselves, and their share directly depends on the regulation of local online gambling, tax rates, various functional advantages, bonus systems, and much more. Offshore operators managed to overtake the local business only in the UK and Germany.

The latter has poor regulation of local internet gambling. The country legalised online casinos only in 2012, so that is why before that, Germans were forced to play in offshore establishments. Today, the situation is gradually improving since local operators have won back a quarter of the market.

It is also worth considering France and Spain in more detail. Here, digital casinos became legal in 2010 and 2011, respectively. The peculiarities of the established regulation allowed the French government to immediately give more than 70% of the market to local entrepreneurs. In Spain, offshore operators still control half of the market.

Market Segmentation

If we consider the distribution of income from the gambling business, taking into account segments (bookmakers, casinos, bingo, etc.), we can see the stability of the European industry structure:

  1. The main income comes from lotteries, which bring a third of all income.
  2. They are followed by slot machines, poker, roulette, and other entertainment with a strong 30%.
  3. Bookmakers bring about 15%. Everything else is brought by other non-standard gambling formats.

Each country has its market characteristics. The British prefer to play the lottery, which brings more than 30% of income to the public treasury. However, all areas, except for bingo, are currently strengthening their positions. The popularity of the amusement niche is growing faster than others.

The French also like to play the lottery, which brings in 41% of the general income. In the second place, there are betting shops with a figure of 32%. The specificity of the local sportsbook market is the high share of races. Slot machines are prohibited in France. The legal gambling industry here is growing by 2–3% annually.

If we consider the EU market in general, they bring 35% of the total income of the online market, while only 12% is accounted for by land-based betting. There are no exceptions here: a similar situation is observed in almost every European country. Somewhere the percentage may be slightly higher or lower but this does not change almost anything.

It is worth noting that the stable growth in the volume of income of online sportsbook platforms — by an average of 13–14% every year. The offline market boasts only 2%. Experts say that in the future, the share of the offline segment will decline.

The Main Things about the Development Trends in the EU Gambling Market

EU gambling market: key notions

The only stable niche that dominates the amusement industry is the lottery. This is due to the high-quality regulation of the activity and the constant influx of new customers. An impeccable reputation brings additional profit since a significant percentage of the prize fund is transferred to the state budget.

  • The income of lottery companies is quite often transferred to charitable organisations or spent on expensive projects. This practice has been used for 400 years.
  • Other niches are not so balanced. The problem lies in the difficulty of controlling certain types of gambling throughout Europe (except the UK). The imperfect legislative framework needs improvements. France, for example, has an aggressive tax policy that repels many entrepreneurs. German regional authorities and the federal government cannot find common ground, blocking adequate initiatives.
  • Considering the big picture, the development prospects of the amusement sector are very bright. And if the legislation of European countries settles down, then soon, the industry will become much more attractive for both operators and players.
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Elliot Clark


Elliot Clark


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