Spain: Report on gaming and betting shows 38 percent growth in Q4 2017

Sports betting leading by far, accounted for 59,78% of gross gaming revenue or GGR, Casino for 28,05%, Poker 8,92%, Bingo 1,87% and Contests with 0,92%.

2018-02-19

Spain

Reading time 11:10 min

2017 shows a total wagering of USD 16.618 million (€13.316 million) which represents an increase of 22% compared to 2016, with the sports betting segment as the leading driver, followed by casino games.

The Spanish Online Gaming and Betting reached €560,3 million Euros in GGR for the full year of 2017, representing a 30% growth compared to 2016.

Total wagering for the year 2017 reached USD 16.618 million (€13.316 million Euros) which represents an increase of 22% compared to 2016
The sports betting segment has been the main driver alongside with casino games including slots.

4Q 2017 Data

The online gambling and betting market in Spain experienced an overwhelming growth in the 4Q 2017, according to the data provided by the DGOJ, reaching USD 4.438 million (€3.556 million) of amounts played which is 7,5% more than previous quarter.

According to the official data, the Spanish online gaming and betting market continued its exponential growth in the fourth quarter of 2017, both on YoY and quarterly GGR revenue growth, reaching USD 216 (€173,33) million in the 4Q, representing a 24,49% more than 3Q 2017.

24,49% increase in gross gaming revenues or GGR in the 4Q2017 coincides with a 65,36% increase in advertising spending compared to prior quarter, and minus 1,39% less YoY compared to 4Q2016, according to figures from the Directorate General for the Regulation of Gambling (DGOJ).

The operators generated a combined GGR for all game verticals of USD 216 (€173,33) million, in the three months that ended on December 31st, a 24,49% more than in the third quarter. Sports betting leading by far, accounted for 59,78% of gross gaming revenue or GGR, Casino for 28,05%, Poker 8,92%, Bingo 1,87% and Contests with 0,92%.

Revenues from sports betting increased by 34,67% compared to 3Q2017, reaching USD 129,328 (€103,63) million, while revenues from casino games increased by 12,97% to USD 61,65 (€49,40) million in the quarter compared to the prior quarter 3Q2017, with Poker recovering slightly with 4,96% increase to USD 19,29 (€15,46) million compared to 3Q2017, and bingo grew 14,77% to USD 4,05 (€3,25) million euros compared to 3Q2017.

The casino games continue strong with USD 61,65 (€49,40) million in GGR in the 4Q2017, and the vertical of slots continues to be a lead driver for the segment, and in the 4Q2017 contributed with USD 32,08 (€25,71) million, 52,04% of all casino games; roulette follows with USD 21,83 (€17,5) million and 35,43% of the casino verticals, with an strong live roulette contributing with USD 12,28 (€ 9.84) million or 56,23% of all roulette play.

Data Highlights of Q4 2017 Online Gaming and Betting in Spain

• Amounts Played for the quarter USD 4.438 million (€3.556 million) – an increase of 7,5% compared to the previous quarter and an increase of 18% compared with same quarter of 2016
• GGR for the quarter, of USD 216 (€173,33) million - an increase of 23,49% compared to the previous quarter and an increase of 39,94% compared to the same quarter of 2016.
• Total amount of deposits made during the quarter was USD 618,44 (€495,56) million - an increase of 17,56% compared to 3Q 2017, and 53,18% compared to the same quarter of the previous year.
• Total amount of withdrawals by registered users, of USD 410,51 (€328,94) million - an increase of 16,45% in relation to Q3 2017, and an increase of 59,12% compared to the second quarter of 2016.
• Operator advertising spending during the quarter was USD 40,28 (€ 32,28) million, which represents a increase of 65,36% compared to the previous quarter and minus -1,39% compared to the same quarter of 2016.

GGR – 4Q 2017 Gaming Revenue versus 3Q2017

With to the GGR, there has been an increase in all segments except contests, compared with the previous quarter:
• Betting (+34,67%),
• Casino (+12,97%),
• Poker (+4,96%),
• Bingo (+14,77%) and
• Contests (-24,78%).

Registered Players and Active Users 4Q2017

Active users during 4Q 2017 was 676,232 (average of the active users in each month), increased 10,18% with respect to the previous quarter, and an increase of 13.44% with respect to the same quarter of 2016.
Users registered during the fourth quarter of 2017 were 602,001, which represents a decrease of 15,18% in relation to the previous quarter, and +0,62% compared to the same quarter of 2016.

Advertising, Promotion, Sponsorship and Affiliation 4Q2017

Advertising for the quarter reached the amount of USD 39,03 (€31,28) million, - a increase of 65,36% compared to the previous quarter and minus 2,39% in relation to the same quarter of 2016.
Promotion (bonuses) accounted for the quarter amounted to USD 26,28 (€21,06) million, a decrease of 7,49% over the previous quarter, and an increase of 13,14% in relation to the same quarter of 2016.
Sponsorship, with an amount of USD 3,93 (€3,15) million, has experienced a increase of 65,98% over the previous quarter, and an increase of 76% over the second quarter of 2016.
Affiliation, with an amount of USD 9,34 (€7,49) million, has meant an increase of 51,18% compared to the previous quarter, and 38,59% compared to the same quarter of 2016.

The distribution of the Amounts Played and GGR by segments 4Q2017

Distribution of the amounts played by segments is as follows:
• Poker (11.57%),
• Casino (49,89%),
• Betting (37,76%),
• Bingo (0.72%)
• Contests (0.06%).
Distribution of the GGR by segments 4Q2017:
• Poker (8,92%),
• Casino (28,50%),
• Betting (59,79%),
• Bingo (1,87%)
• Contests (0,92%).

Evolution of Played Amounts and GGR by segments

Poker
The distribution and evolution of the amounts played and the GGR per Poker modality is as follows:
The Poker segment has experienced a increase in terms of the amounts played (8,17%) and an increase of 4,96% in the GGR compared to the previous quarter.

Of the USD 513,69 (€411,62) million played in the Poker segment, the Amounts played per modality were:
• Cash Poker: USD 334,421 (€267,97) million (65,1%).
• Tournament Poker: USD 179,285 (€143,66) million (34,9%).

The total GGR obtained by the operators of Poker, reached USD 19,29 (€15,46) million, which is distributed by modality:
• Cash Poker: USD 7,88 (€6,32) million (40.88%).
• Tournament Poker: USD 11,40 (€9,14) million (59.12%).

The evolution of the amounts played shows that, with respect to the same quarter of the previous year:
• Cash Poker: there is a increase of 2,58%.
• Poker Tournament: there is an increase of 2,22%.
In relation to the GGR, with respect to the same quarter of the previous year:
• Cash Poker: there is a decrease of 6,04%.
• Poker Tournament: there is an increase of 7,4%.

Casino Games

The distribution and evolution of the amounts played and the GGR per Casino game was as follows:
The amounts played and GGR have increased compared to the previous quarter: 4.79% and 4.56%, respectively.

Casino games by vertical

Of the USD 2,213,91 (€1,774,12) million of amounts played in Casino Games, vertical was as follows:

• Slot machines: USD 874,172 (€ 700,47) million (39,48%).
• Blackjack: USD 325,635 (€260,93) million (14.71%).
• Punto y Banca: USD 0,22 (€ 0.18 million) (0.01%).
• Roulette: € 812,53 million (45,8%), which are distributed:
• Live Roulette: € 449,49 million (61,47%).
• Conventional Roulette: € 313,04 million (38,53%).

The total GGR obtained by the operators of Casino Games, for an amount of € 49,4 million, are distributed as follows:

• Slots Machines: € 25,71 million (52,04%)
• Blackjack: € 6,19 million (12.53%).
• Roulette: € 17,5 million (35,43%), which is bet on:
• Live Roulette: € 9.84 million (56.23%).
• Conventional Roulette: € 7,66 million (43.77%).

YoY variance same quarter:

• Amounts played: Variation between the third quarter of 2016 and 2017:
• Slot Machines: an increase of 61,85%.
• Blackjack: an increase of 21,56%.
• Punto y Banca: a decrease of 29,72%.
• Roulette: an increase of 47,22%. Broken down by modality:
• Live Roulette: an increase of 71,56%.
• Conventional Roulette: an increase of 20,05%.

GGR: Annual variation same quarter 2016 vs 2017:

• Slot Machines: an increase of 53,24%.
• Blackjack: a decrease of -3,28%.
• Baccarat: 0%.
• Roulette: an increase of 37,04% - Broken down by modality:
• Live Roulette: an increase of 51,88%.
• Conventional Roulette: an increase of 21,81%.

Betting

The distribution and evolution of the amounts played and the GGR by type of betting was as follows:

The Betting segment should be highlighted by a substantial change in its evolution, experienced a increase in the amounts played (1,65%), and an increase in the GGR (34,67%) compared to the previous quarter. USD 1,674,79 (€1,342,91) million was reached in amounts played distributed as follows:
• Fixes odds betting: the € 1,300,01 million (96,81%) fixed odds sports betting was divided into:
• Conventional: USD 512,807 (€410,91) million (31,61%).
• Direct (Live): USD 111,30 (€ 889,19) million (68,39%).
• Para-Mutual Sports Betting: USD 0,012 (€0.01) million.
• Fixed Odds Horse Bets: USD 24,52 (€19,65) million (1.46%).
• Exchange Betting: USD 16,43 (€13,17) million (0.98%).
• Other Fixed odds Betting: USD 12,45 (€9,98) million (0.77%).

The USD 129,016 (€ 103,38) million in GGR obtained by the operators was divided into:

• Fixed Odds Sports Betting: USD 126,52 (€ 101,38) million (97,84%), which were divided into:
• Conventional: USD 61,97 (€49,66) million (48,98%)
• Direct (Live): USD 64,54 (€ 51,72) million (51,02%)
• Fixed Odds Horse Betting: USD 1,7 (€ 1.4 million) (1.36%)
• Exchange Betting: USD 0,2 (€ 0.1 million) (0.1%)
• Other fixed odds Betting: USD 0,911 (€ 0.73) million (0.7%)

YoY variance comparing same quarter:

The variation between the fourth quarter of 2016 and 2017 of the amounts played, was:
• Fixed Odds Sports Betting had a 6,45% increase on Fixed Odds Sports Betting Counterpart, broken down by modality:
• Conventional: increase 11,24%.
• Direct (Live): increase of 4,37%.
• Para-Mutual Sports Betting: decrease of 51,67%.
• Fixed odds Horse Betting: decrease 10.38%.
• Exchange Betting: decrease of 45,01%.
• Other fixed odds Betting increase: 8,42%.

YoY variance in terms of GGR:

• Fixed Odds Sports Betting had a 48,19% increase broken down by modality:
• Conventional: Increase of 64,57%.
• Direct (Live): Increase of 35,31%.
• Para Mutual Sports Betting: Decrease of 20,24%.
• Fixed Odds Horse Bets: Increase of 218,6%.
. Exchange Betting: Decrease of 32,96%.
• Other fixed odds Betting: decrease of 5,54%.

Bingo

The Bingo gaming segment reflected a nice increase compared to the previous quarter in the amounts played (+15,52%), had an increase in GGR (14,77%).
In addition, there has been an increase compared to the same quarter of 2016 in the amounts played (35,34%), and in the GGR (30,04%).
Bingo GGR has been growing steadily from 4Q2016 USD 3.11 (€2.5) million – 3Q2017 USD 3,53 (€2,83) million– 4Q2017 USD 4.05 (€3.25) million.

Contests

The Contests segment reflected a decrease in activity compared to the previous quarter, both in amounts played (18,84%) and in GGR (24,78%).
Compared to the same quarter of 2016, there was an increase in both the amounts played (24,69%) and the GGR (27,65%).

Evolution comparison by segment – GGR 2016 vs 2017
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Commentary

The Spanish Online Gaming & Betting GGR's growth from €429,3 million euros to €560,4 million has been benefited from a substantial increase in volume, especially in terms of GGR, - again thanks to sports betting with a 23% increase and Casino growth 40% on YoY basis, which has also saw the improvement of the betting gross margin to 7,7% which is magnificent news compared to the 4,5% reached in 2016.

So we can say the Spanish online gaming and betting continue to enjoy a very good health - and from which it should be noted the overall sustained growth, triggered by an outstanding 4th quarter, and we must remark the improvement of the gross margin in sports betting that it, something that we must consider a substantial change in the operative results of the operators in a market that has suffered from its origin from some margins far from those that are normal in other regulated markets.

Higher investment in advertising in the last quarter, 65,36% more compared to the previous quarter, compensated with the results of the quarter. Good data with 10% up in Active players, and descent of 15% of new registered players, which results in an improvement of the ARPU.

Casino games remain solid with the important contribution of slots and live roulette, which already accounts for c. 60% of the roulette game. Betting Live is now over 60% and Mobile takes as well over 60% of all wagering.

The evolution of the quarter has been very good in terms of the results of the gross gaming revenues, despite lesser increase of the overall volume amounts played, which is important since the gross margins directly impact the operating results of the companies, in a market where most of them still suffer from the lack of scale or market share that means continue to experience negative results.

The market is still controlled by half a dozen of companies that account for around 80% of the total market, although in some vertical as it is betting, the number of companies that controls that percentage plus, is reduced to 4, and if we refer to poker we would be talking on 2 companies that account for 90% of the market.

Nice improvement in the Bingo revenues which being an small volume (+11,5 million GGR but with a nice gross margin +15%), is practically shared by two major operators which also benefit from the cross sell with Slots and Roulette and allows them to do good business with small turnover.

Spanish based companies have improved their share based in their start to capitalize the land- based position they have specially in the betting premises which are growing substantially and as a result of a soft for now conversion of retail players into digital, mostly mobile.

The opportunity is there for Spanish retail betting operators to follow suit of the strategy of their UK colleagues and efficiently capitalize their high street premises to make their players omnichannel both ways retail to digital and digital to retail under one registered account and single wallet.

With this scenario, there is still a lot of pure online operators with operative losses, with some punctual exceptions, as referred before, which have their acquisition base in their land-based retail positioning, although without a well-defined and worse executed strategy yet -which will be improved for sure to optimize their omnichannel strategy.

Still to be resolved though, the difficulty in applying a convergent existing retail and digital regulations, since the land-based retail sector is regulated by the 17+2 regional governments and the digital is under the central DOGJ regulator (except Madrid, Basque Country, Murcia, Castilla La Mancha, Castilla y Leon …. Ans soon others ... with their own online gaming & betting local rules at 10% gaming tax instead of national 25%), which makes it difficult to develop a proper omnichannel strategy under a single wallet account, which is the ideal model for companies present in both channels; and on this topic it is expected that soon at least 3 or 4 national operators can take advantage of - and capitalize- on their physical strengths using their land based retail numerous locations – many thousands - to gain and enjoy a better position in the digital channel.

Online gaming in Spain is on track to exceed the USD 18,7197 (€15,000) million mark of amounts played and USD 823 (€660) million of GGR by the end of 2018, which would mean an increase of almost 20% over 2017 figures. The opening of the new licensing window until December 2018, will allow new entrants to come to the Spanish Online Gaming and Betting Market, and while is a very competitive and risky business for any new entrant they will endeavour to gain a sufficient market share for a viable business operation, and to proof that the operators entering in this last window, will endeavour to compete and take part of the share now in hands of the 5-6 top rank of operators.

Still, over 30 companies - all suffering from starvation and pumping money into the companies to keep them alive. The market has a great potential still, probably will reach the €750-800 million euros GGR by 2020+, but as it pertains to the dominant operators, we just have to look around other powerful regulated markets, except the UK which is more diversified, to see how at the end of the day +80% of the market share is normally controlled by no more than half a dozen of operators.