Global revenue of over $70 billion implies over $1 trillion in wagers, given industry average margins of less than 7%

Fact Check Friday: Did Global Online Wagering Actually Exceed $1 Trillion In 2021?

Did worldwide online gambling wagers actually exceed $1 trillion last year? Quite probably, but much of the reporting on that figure has been based on a misread press release.

A 2016 study by UK-based Juniper Research predicted global online gambling wagers would reach nearly $1 trillion during 2021. In 2018, however, the firm pushed its target date back to 2022.

In that 2018 research, Juniper foretold that North America and Western Europe would generate 75% of that $1 trillion in online gambling wagers during 2022.

Juniper didn’t make any subsequent revisions to its forecast, even as circumstances changed. Part of that may be because that particular analyst, Lauren Foye, left for – literally – greener pastures. She is now the head of research at Zero Carbon Academy, working to fight climate change.

However, a fair amount of news outlets published the $1 trillion figure as if Juniper’s 2016 prediction were 2021’s reality. They likely did so because of a Jan 11 press release from a news commentary site, FinancialNewsMedia.com, which misleadingly presented it as Juniper’s “latest research.”

The research in question is the 2016 analysis, now long out of date.

A lofty target

It’s an open question whether or not North America and Europe collectively hit that $750 billion target last year, or whether the world hit $1 trillion. Without knowing Juniper’s methodology, it’s impossible to repeat their calculations.

That said, it’s probably the case that 2018’s revised forecast was the result of American online gambling progressing more slowly than anticipated. At that time, the battle over PASPA was just reaching its conclusion. Pennsylvania was the only state yet to have followed New Jersey’s lead in legalizing iGaming. From 2018 on, sports betting has swept the nation, but online casino expansion has been disappointing in comparison.

In its 2018 projection, Juniper said it expected the North American share of global wagering to be $250 billion in 2022. For 2021, we know that US online sports betting handle amounted to approximately $47 billion. Not all online casino states report wagers, but extrapolating from those states’ figures, and the revenue numbers of other states, Online Poker Report estimates 2021 US online casino betting to be somewhere in the vicinity of $125 billion to $130 billion.

That makes for a total of roughly $175 billion for regulated US online gambling. Although other North American countries like Canada contribute a bit, most of their online gambling activity takes place with unregulated operators and can’t be counted. So, it seems that North American contributions to the global total are trailing somewhat behind Juniper’s original projections.

That shortfall is almost certainly due to the slower-than-expected progress on the legislative front, as individual states have performed well. It also wouldn’t have taken much for Juniper’s predictions to come true. For instance, if Illinois had legalized iGaming at the same time as sports betting, that alone would have probably added at least another $40 billion to the total.

Pandemic gains offset US shortfall

But what about the global market? That likely has surpassed $1 trillion, in accordance with Juniper’s original 2016 projection. The reasons for that, however, are not what the group would have expected at the time.

North America may be trailing, but global markets received a big boost from the COVID-19 pandemic. Exactly how much of a boost varied region to region, depending on what retail options existed beforehand, whether these shut down and for how long, and what restrictions were in place where retail gambling was available. In the US, for instance, the shutdown of retail casinos in Spring 2020 may have helped produce an immediate month-to-month increase in online casino revenues of over 20% in New Jersey, and 30% in Pennsylvania. Moreover, those gains never went away. This is perhaps because online gamblers prefer the channel and would’ve used it, with or without a pandemic.

Meanwhile, estimates for global total revenue are easier to come by than total wagers. These range from about $64 billion to $66 billion in 2020, and around $72 billion in 2021. What this implies is that if the industry’s average margin is anything less than 7%, then wagering definitely crossed the $1 trillion mark last year.

Guessing at that margin is difficult, as it depends on the mix of sports betting to casino. However, sportsbooks often hold close to that 7% level, while online casino margins are much lower. In the US for 2021, OPR estimates the casino margin to be in the vicinity of 3%, while online sportsbooks held 7.4%. Taken together, the average is well below 7% in the US, and should be internationally as well. It’s therefore hard to imagine that any less than $1 trillion was wagered across verticals worldwide in 2021.

What else Juniper got right and wrong

That $1 trillion in global wagering wasn’t the only thing Juniper predicted back in 2016. As appealing a number as that is, some of the company’s other forecasts are more interesting to look at in hindsight.

Right: loyalty programs

Going back to Juniper’s 2016 forecast, Foye was already talking about loyalty programs combatting customer churn in a crowded market.

Juniper used examples from the European online gambling market:

“The research argued that within an increasingly consolidated and maturing sector, providers had intensified their focus on securing customer loyalty. It observed that leading players were exploring a range of options to achieve this, with Ladbrokes offering a rewards scheme and the Rank Group’s Grosvenor business providing cross-channel memberships.”

Juniper was right about this prediction. All of the Big Three online casino operators in the US automatically enroll gamblers in their loyalty programs:

Many other online casino operators have the same practice, hoping to retain customers. For instance, after Caesars  Entertainment acquired and rebranded William Hill last year, the company folded those US online gamblers into the Caesars Rewards program. Bettors now wager on Caesars Casino or Caesars Sportsbook apps, with some still using the combined app called Caesars Casino and Sportsbook.

Right: content in online gambling

Foye wrote in 2016:

“User engagement goes a long way towards drawing in return business. Providing features such as news and media on favourite teams, as well as personalised offerings based on past betting activity, enables greater engagement and is likely to reduce churn.’

The most obvious example of integrating content with online gambling is, of course, Barstool Sportsbook. While David Portnoy and his fans aren’t everyone’s cup of tea, the pairing of his company with Penn National has produced a successful and visible brand in the sports betting space. It’s even enjoying a more modest but not-insignificant market share in the online casino vertical.

Another more recent example is MaximBet. Carousel Group partnered with men’s lifestyle magazine Maxim to create the online casino and sportsbook platform. So far, only MaximBet Sportsbook launched in September in Colorado.

However, the brand illustrates Foye’s vision in another way. In a crossover to the loyalty program advice, Maxim ran a piece in October about MaximBet’s Max Rewards program.

Other companies are going about things the other way around. For instance, DraftKings is getting into the content business, specifically user-generated content. DrafKings Social launched in June.

Wrong: virtual reality

In 2016, virtual reality (VR) and augmented reality (AR) were supposed to be the Next Big Things. Foye was far from the only one saying so.

Juniper announced in 2016:

“The new format of VR will attract a niche clientele initially, though these participants will wager significant amounts on real world ‘casino-style’ VR gambling products.”

Marketing thought leaders believed the same, expecting AR and VR to be big that year. By 2017, however, only 15% of them were using the tools.

In the end, AR and VR have limited uses.

Adweek reported in 2017 that Royal Caribbean allowed its “travelers to plan shore trips with virtual reality tours.” That application makes sense. The cruise line’s VR dining? Perhaps not so much.

Bally’s Board Chairman Soohyung Kim dismissed the concept outright when discussing Bally Bet with OPR in June.

Half-right: online casinos drive online gambling innovation

Juniper was wrong in its 2018 prediction that online casino products would be the main drivers of innovation. At least in North America, there has been more ground broken on the sports betting front.

First, states and Canadian provinces legalized online sports betting before online casino products. Therefore, online sportsbooks far outnumber online casinos. These operators are providing most of the innovations. However, they tend to offer both products.

For that reason, a lot of Foye’s visions did happen – but in a different way.

Of course, Juniper’s statement that online casino would create “over 40% of online wagers by 2022” didn’t happen. [Double check this]

However, Foye was right about this:

“We believe new channels, such as chatbots, have the potential to drive customer engagement, through delivery of personalised offers, alongside 24/7 player support.”

Indeed, some of the more adventurous tech providers flopped, including the main one Foye highlighted:

“The research anticipated significant disruption from social offerings, with provider LetsBet among the innovative start-ups which the research believes are set to disturb the status quo. The company hopes to deliver live streamed entertainment and social interaction to users, whilst also implementing gamification through a ‘secret agent’-themed product.”

LetsBet founders gave up in 2019, according to EGR.

Still, those who took chances often did drive innovation.

OPR Managing Editor Alex Weldon contributed to this article.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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