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Online gambling : how has the market evolved since the opening of the market to competition?

On May, 13th 2010 the law was passed to open the market of online gambling to competition. Two years after, how does the market look like?

Prior to that date online gambling was forbidden in France and gamblers using Gilbratar- or other exotic countries-based websites were in complete illegality.

After May 2010 numerous new actors popped up and everyone was expecting hard times for the old and venerable PMU, which had the monopoly of horse gambling. What happened is actually a total different story.

The day before Christmas the PMU opened its first “store”, called “PMU City”, in Lyon, a kind of flagship store dedicated to horse gambling. The concept is actually very similar to Ladbrokes stores : you won’t find a bar but only a coffee machine, automated machines to take your bets and flat screens to follow the races. The PMU expects to open up 10 other stores of that type.

The Lyon store is part of a bigger strategy to give the PMU a fresher and more modern look and obviously to enhance the customer experience. The PMU has 11200 points of sales in France (mainly in bars, paper shops) but had until now no store operated under its own brand. Opening new sales points (500 openings in 2011) and attracting the more “addicted” of the customers is a challenge that needs to be harnessed in the future if the PMU wants to keep growing.

After the liberalization of the market the old venerable PMU actually didn’t suffer from the competition. Revenues went up 7,3% in a broader context where poker and sports bets went up 34% and 30% respectively.

As far as the competition is concerned, the picture is much more contrasted. After the liberalization of the market 50 new companies got an agreement from the State, and 7 have gone bankrupt or have ceased operations as of today. Sports bets is the sector that has suffered most whereas online poker has enjoyed a remarkable growth (8.7b€ revenues in 2011, up from 4.1b€ in 2010).

 

My take:

The liberalization of the market was announced as an earthquake for ex-monopolies (PMU, loto) and oligopolies (casino). What happened actually is a strong growth period (except for casinos which have seen their activity grown by 0.9% only), followed for new entrants, by a period of consolidation.

The market is now revolving around historic incumbents which keep developing a multi-channel offer (reinforcement of third-parties distribution, online, and flagship stores) and new entrants specializing on one activity (mainly poker) and fighting for reaching break-even.

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Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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