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European iGaming operators continue to perform well
After taking a look at what challenges some operators will have to face if they choose to enter the African online gambling market, the attention switches back north, to arguably the best online gambling countries in Europe. However, this is far from the ideal industry since there are several problems that operators have to face, especially if we consider the marks left by the global financial crisis in some countries such as Spain, Italy and Greece. The high level of unemployment here makes it more than difficult for gambling operators to get players interested in risking whatever funds they have left.
Even if consider the mature markets, such as the UK and Germany, the recent changes in regulations without much of a warning raise more than a few concerns. The United Kingdom has recently announced a new tax rate which will apply on all licensed operators that have UK customers, regardless of where the company is located in. On top of these issues, there is also the huge competitive pressure exerted by the numerous operators that can be found in these markets, looking to attract as many players as possible from the limited pool.
The pressure of large operators investing huge amounts of money in market strategies and developing software can best be seen in the poker segment, where PokerStars has simply demolished any hope of another poker room taking the top spot.
As a result, investors are hard to come by and taken risks are very rare, which limits the potential of innovation and makes the share prices pretty volatile. With all of these things considered, the European online gambling operators managed to make good profits and increase their share prices over the past two years. 888 Holdings has almost multiplied its share prices by four during this period and software developer Playtech has more than doubled. Other big names in the industry such as Net Entertainment, Paddy Power, 32Red, William Hill and Ladbrokes went up by around 70%.
Over the past couple of months, the share prices have slowed down a bit; something that can be associated with the slow summer months for online gambling. Most of the big operators are also looking to expand beyond the European borders and enter the newly regulated markets in the United States.
Gaining the mobile edge
When talking about expanding in online gambling, mobile is the first word that comes to mind. The growth seen in recent years and the potential for the near future makes it the ideal sector for large operators to focus on. Paddy Power is without a doubt the leader in mobile as it declared that 43% of its online revenue came from mobile customers in the first half of 2013.
888 also experienced an increase of 17% in mobile revenue in the UK market while William Hill continued its focus on mobile to get 14% of its total revenue. The experience in the mobile section can prove to be very useful when accessing other markets since it is obvious that mobile is the future of pretty much all online businesses.
Opportunities for poker operators
Ever since 2006, when the UIGEA passed into law, most publicly traded online poker operators have been seeing their revenues decline. The dominance of online poker behemoth PokerStars and its sister room Full Tilt Poker taking the second spot has made it very difficult for other operators to be successful.
The only exception is 888 Poker, which doubled the revenue over the past 3 years and continued in the same direction in the first half of 2013. It is the fourth poker room as far as market share goes – after Stars, Full Tilt and Party Poker, surpassing the iPoker network.
Although difficult at first sight, the European online poker industry does present a few valuable opportunities for operators that can offer an alternative to the big rooms. Even without the large tournament guarantees and the vast range of games offered by PokerStars and Full Tilt Poker, companies can still grow in smaller markets. 888 Poker proved it can be done by performing very well in a space that other operators seem to have left behind.