Types and sizes of online gaming markets: analysis and geography
Interested in opening an online casino but not sure where to start? The answer is in the question — by choosing where. Keep reading to learn about the types of gambling markets.
The first decision new gambling operators must make is choosing a gambling market. Far from being a question of geography, the answer should take into consideration both one’s budget and the industry’s legal status in potential target markets. In this article, we’ll give you a brief introduction to the various types of gambling markets and highlight some of the pros and cons of each by providing examples based on our experience.
Market insights
The number of online casinos and sportsbooks appearing around the world is growing every year. However, not every gambling market is equally attractive for operators — and what’s more important, not all of them are equally regulated.
Slotegrator has many years of experience in iGaming, and our specialists believe that market research is not only about studying demographic differences such as player age and gender, game and bonus preferences, sums and frequency of bets, cultural background, and historical habits; markets also differ in their level of regulation and their reputation among the global gambling community.
Types of gambling markets
On one hand, gambling markets can be divided by regions. Countries around the world are at varying levels of development when it comes to both their regulations and the size of their market.
However, there are general trends of gambling market development.
Europe, one of the world’s largest gambling markets, has many countries with legalized gambling and well-developed regulations, including Italy, Spain, Germany, France, etc. The estimated growth of the European gambling market by 2030 is expected to be 12% CAGR.
Asian markets are rapidly developing. You can find our detailed overview of the region in this ebook. Due to the increasing spread of the internet, the use of mobile devices, the availability of cryptocurrencies, and the relaxation of legislation, the gambling market in Asia is expected to grow to $50 billion by 2030.
Talking about the North America casino market, only three American states regulate both online gambling and sports betting: New Jersey, Nevada, and Pennsylvania — these make up the largest gambling market in the region. Canada has also regulated gambling, and the online gambling market volume in Mexico will reach $2.72 billion by 2024.
The Latin American gambling market is showing unprecedented growth, attracting the attention of the global gambling community: Brazil has regulated its gambling market, as has Peru and Colombia, a bill on legalization has passed in Chile, and Ecuador is on the path to regulation.
African gambling markets are also attracting attention. Kenya is in the process of a legislative review to create a new regulating body, raise taxes, and increase fines — throughout 2023, Kenyan players collectively placed sports bets totaling $1.75 million per day.
The Slotegrator team monthly collects a brief digest of the most important news in the industry in Slotegrator Academy. Learn how laws change in different countries, where bet sums are limited, when to expect new markets opening, and how the licensing structures change.
On the other hand, gambling markets can be classified according to online gambling legislation: regulated markets, gray markets, and black markets. It should be noted, however, that through the use of modern technologies like cryptocurrencies and VPNs, players can visit casinos in other countries.
Regulated markets
Jurisdictions that explicitly allow and regulate gambling, issuing local licenses, are known simply as regulated markets. This model was pioneered by European states and is rapidly spreading to key markets in other regions. Regulated markets tend to be the richest and most coveted by operators; however, local licenses often come with a steep price tag attached, and strict marketing regulations can make it difficult for newcomers to challenge established operators.
The list of regulated online gambling markets includes the UK, Czech Republic, Sweden, Germany, Italy, Brazil, Kenya, Nigeria, and many other jurisdictions across the globe.
Possibilities in newly regulated markets
In October 2021, the Netherlands opened its regulated online gambling market, ending a long-lasting ban. The Dutch market’s total revenue is projected to reach $1.19 billion 2024. If the estimates turn out to be accurate, the Netherlands will become one of Europe’s largest markets.
The regulation of previously closed markets is a great opportunity for operators to quickly establish themselves in an untapped jurisdiction, provided they can acquire a license. The Kansspelautoriteit (a.k.a. Netherlands Gambling Authority, or NGA) banned operators known to have targeted Dutch players in the past from applying for a license. These operators were blacklisted, mandated to stop targeting Dutch players, and inflicted with a 33-month cooling-off period before regaining eligibility for a license.
And the Dutch are far from alone in their goals of regulating the gambling industry.
Albania lifted the ban on sports betting in 2024 and is planning to issue 10 licenses in order to reduce the size of the black market in the country; Brazil passed long-awaited regulations for sports betting; Finland is planning a transition from a monopoly to a modern licensing system by 2026; Peru recently implemented licensing and regulation of gambling and betting — and this is far from a complete list of regulating gray or black markets.
These examples highlight one of gray markets’ main advantages: they may be volatile, but operators targeting them don’t suffer from repercussions in case of regulation. Rogue operators targeting black markets, on the other hand, risk both immediate legal consequences and to be denied future opportunities due to blacklisting.
Aside from the obvious issue of legality, this is why young operators lacking the resources to obtain a license in a rich, regulated jurisdiction would do well to focus on opportunities in gray markets.
Black markets
At the opposite end of the spectrum, we find black markets. These are jurisdictions that explicitly outlaw gambling — be it for political, cultural, or religious reasons. Countries may ban offline, online, or both forms of gambling. Most Muslim-majority countries across Asia and North Africa fall into this category, but they’re not alone.
In some cases, operators may be allowed to offer their services exclusively to foreigners. This is the case for countries heavily relying on tourism as a source of income, where casinos are generally allowed to operate within resorts. Recently, certain jurisdictions — particularly island nations — have begun issuing online licenses which specifically prevent holders from targeting local players, in a bid to siphon revenues from abroad.
Gray markets
Finally, there are gray — unregulated — markets. These are jurisdictions that don’t outright ban land-based and/or online gambling, but either lack comprehensive regulations and a licensing process or suffer from crippling loopholes in the existing laws.
While most rich markets have transitioned towards the local licensing model, smaller ones unable to support a robust regulatory or supervisory agency often wind up in gray market territory.
Gray markets are a solid starter option for industry newcomers, as they allow operators to offer their services without having to obtain local licenses or being subject to strict regulations. According to our experience, the main downside is a built-in instability, as they may be regulated at any time and lack a clear taxation regime.
It’s important to keep in mind that a single jurisdiction may fall into more than one of these categories at the same time. This is due to the distinctions between offline and online gambling, and between casino gaming and sports betting. Many countries only regulate land-based gambling, leaving online “gray”. In other cases, casino gaming may be outright banned, while sports betting is legal and regulated.
The volatility of gray markets
As we mentioned, gray markets are a good springboard for recently new operators. Indeed, they can be a very interesting proposition for operators of any size, but they come with downsides that have led some established brands to rethink their strategy.
For example, leading sportsbook William Hill pulled out of 55 gray markets in 2014, citing “regulatory issues” as the main reason. The company immediately ceased all advertisement targeting these markets and stopped local players from depositing and wagering.
Gray markets’ volatility is, simply put, not worth the hassle for a company that gets most of its income from regulated markets to begin with.
SportPesa’s experience in Kenya is perhaps gray markets’ worst-case scenario, but one worth being aware of.
A bit of history: founded in Kenya in 2014, SportPesa is an operator that experienced a meteoric rise in its early years thanks to a gambling craze in its home market. It quickly grew to operate in five other countries — the United Kingdom, South Africa, Italy, Tanzania, and the Isle of Man (which hosts its global operations).
In mid-2019, the Kenyan government introduced a steep 20% tax on wagers, while the Betting Control and Licensing Board (BCLB) went on to revoke 27 licenses (including SportPesa’s). With profitability plummeting, SportPesa (and many others) suspended operations in the country later that year.
The tax hike was highly controversial. In 2020, it was first dropped, then reintroduced, in a matter of days; finally, it was reduced to 7.5% in July 2021.
These fluctuations can be ascribed to the Kenyan government’s mixed concerns. On one side there was the attempt to limit unregulated gambling’s ill effects on society by kneecapping companies; on the other, the need to rake in enough gambling taxes to sustain the national budget.
In 2020, SportPesa attempted to re-enter the Kenyan market by attaching its trade name to a second gaming firm. However, authorities took issue with it due to the brand’s involvement in a pending tax-related court case, and the BCLB ended up suspending the second gaming firm’s license just one day after SportPesa’s return.
Again, this is the most extreme example of how volatile a gray market can be, and an offshore operator probably wouldn’t have been hit in the same way. Still, it’s important to keep in mind that the lack of clarity in regulations can at times create more problems for operators than opportunities.
How to choose a gambling market
The choice of online gambling market depends on a multitude of factors. Based on our experience, the Slotegrator team recommends operators take into account everything mentioned above and carefully consider how you envision your future project. Factors such as licensing costs, the cultural background of the population, strictness of laws, language preferences, popular currencies and payment methods, and local players’ game preferences — everything plays an important role here.
Slotegrator recommends opting for regulated jurisdictions and carefully studying their requirements to safeguard your future and ensure stable income, good reputation, uninterrupted operation, and good karma for your business.
If you don’t know where to start, start with an interactive map of gambling regulation. We created this tool for a better understanding of which countries allow and regulate land-based and online gambling and betting so that you have something to begin with your research.
The general recommendation from Slotegrator is to follow this step-by-step process:
- Determine which type of market best suits your project.
- Choose the most suitable region for your future gambling project.
- Study the legal requirements for online casinos and betting platforms in countries within the chosen category and region.
- Calculate the costs of opening a business in the chosen markets and outline the necessary budget, as well as the project's potential profitability in these countries.
- Contact us with any questions and receive a free consultation with our managers.
Slotegrator’s predictions of market growth
The gambling industry is rapidly evolving, and with the emergence of new technologies and new regulated markets, the industry is reaching unprecedented size.
According to Statista the global volume of online gambling and betting is expected to reach $184.28 billion by 2032.
Such rapid growth opens up new opportunities for online casino operators, but at the same time, it increases the level of competition, especially when it comes to new regulations: as soon as a jurisdiction implements new gambling legislation and becomes a white market, it is the most attractive for gambling business — players are most active in the emerging market, and there are few competitors. That's why it's crucial to launch your gambling project as soon as possible without wasting your time and losing players’ attention.
Contact our team today to learn more about the industry and gambling markets and to plan your casino launch in the near future.
How can Slotegrator help?
For new iGaming operators, the first steps are arguably the most difficult. Choosing the right market to enter is crucial, which is why we provide licensing and jurisdictional advisory services to help you in the process.
What’s the size of today’s online gambling market?
The global online gambling market is projected to grow from $88.65 billion in 2023 to $96.89 billion in 2024, representing a 9.3% compound annual growth rate according to The Business Research Company's forecasts.
What region is the fastest developing?
The North American gambling market is growing the fastest.
What region has the greatest share of the online gambling market?
In 2023, the total revenue of the European gambling market amounted to $113.4 billion, with $42.1 billion coming from online gambling, making Europe the world’s largest gambling market.
What new technologies will determine the future of online gambling?
There are several technologies that are actively used in the gambling industry worldwide. Artificial intelligence is being implemented in research and analysis, speeding up work processes and increasing precision in determining actions such as future marketing strategies. Blockchain technology is influencing payment methods as well as offering greater transparency, such as provable fairness seen in some games.
What are the future drivers of online gambling market growth?
The online gambling market will continue to grow under the influence of technological advancements, but its growth will also heavily depend on the emergence of new regulated markets worldwide. The experience of recent years gives us the right to assume that the ideas of legalizing gambling in various countries have been successful, and this trend is likely to continue.
