Europe: a snapshot By Andrew Tottenham, Managing Director, Tottenham & Co September 11, 2019 at 2:50 am The gambling industry in Europe today is very much a mixed bag – some sectors are under pressure while others are expanding. There does not appear to be a consistent theme across the continent other than the growth of online gambling, though often seen is a tendency of politicians to rein in various parts of the industry. The following is a quick gallop through four countries, selected for no other reason than to show the variation across the continent. The whole of the Italian gambling market was flat in 2018 compared to 2017, but still a whopping €18.9 billion. Gains in online and video lottery terminal revenues were offset by declines in land-based gambling, slots, lotteries, and casinos. Video lottery GGR grew to €3 billion, while the regular lotteries were lacklustre performers, decreasing almost 3% to €4.7 billion. A bright spot in the land-based sectors was sports betting, which increased by 10% to €1.4 billion, possibly due to last year’s World Cup. Total online and virtual sports revenues were up almost 17% to over €1.1 billion; of online gaming, only poker saw any decline, dropping 7% to €65 million. I expect the advertising ban and tax hikes that came into effect earlier in 2019 will lead to reversals in all of the positive trends. Two of the three remaining Italian casinos saw a modest increase of GGR in the first six month of 2019 compared to the same period last year. The exception was Casino de Venezia, which saw GGR fall from €48.4 to €46.1 million, but this included 23 days when the casino was closed due to strikes. The casino in Saint Vincent saw GGR grow from €27.1 million to €29.3 million and Sane Remo grew modestly from €21.1 million to €21.7 million. It is doubtful that any of the remaining three casinos would have seen very much benefit from the closure of Casino di Campione, because that is more than 200 kilometres away from the closest of the three. Crossing the border, in Switzerland there are two type of casinos, creatively called “Class A” and “Class B”. The eight Class A casinos are allowed to operate an unlimited number of table games and slot machines with unlimited prizes. The thirteen Class B casinos can only offer three types of table games (roulette, blackjack, and poker) and a maximum of 250 slot machines with limited stakes and prizes. The sting in the tail, for both types, is that gaming tax is 40% of GGR for the first CHF10 million, rising steadily to a maximum rate of 80% of any amount above CHF90 million. None of the casinos pay the top rate; Casino Montreux, operated by Groupe Lucien Barriere, had the largest gaming revenues in 2018, at CHF73 million (roughly CHF66 million). On average, the casinos saw revenues increase by about 4% in 2018 compared to 2017. Not surprisingly Casinò Lugano, only a fifteen-minute drive from the shuttered Casino di Campione, saw GGR increase by 42%, to over CHF44 million. Casinos Austria, which operates most of the gambling in Austria, had a mainly positive year in 2018. Revenues for lotteries were up by 13% to €3.9 billion. The WinWin division, which operates video lottery terminals in nineteen small, well-appointed outlets (between 12 and 50 VLTs in each), saw sales increase by almost 40% to €731 million (n.b. this is sales, not GGR, which is not reported). The twelve casinos didn’t do so well, with GGR dropping 4% to €314 million, partly caused by an *% fall in visitors to 2.63 million. Further afield in Latvia, every sector except casino tables in casinos and bingo halls saw a double digit increase in GGR in 2018; total GGR for the country was up almost 12% to €278 million. Casino table revenue was down 7%, probably due to the closure of two casinos during the year. Online gambling saw its GGR soar by 45% to over €41 million. The number of slot machines in operation increased very slightly despite the efforts of some mayors to close down slot arcades, which increased by three during the year. The upward trend in GGR continued into the first six months of 2019, rising by 15% to €155 million. All sectors experienced an increase, with online again leading the way with GGR up almost 40% to more than €25 million. According to the European Commission, Latvia’s GDP grew by 4.6% in 2017, 4.8% in 2018, and 3.1% in Q1 2019, with the expectation that it will flatten out at this level for the balance of the year. So the 2018 and first half 2019 GGR results significantly outpaced economic growth. For Europe, 2018 overall was a positive year for gaming. For 2019, online gambling is growing rapidly, reflecting its recent introduction in many countries. Other sectors, such as land-based casinos, are mature and revenues are under pressure from the growth of other gaming sectors and other entertainment options. In countries with strong, growing GDP, such as Latvia, all sectors are seeing improvements.