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Online Gambling to Move to East Europe

By: Adam Baker, Sunday October 5th 2008
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Online gambling is on the decline in the Western world. There are two reasons for this. The main is the economic downturn, which is prompting an increase in savings and a decrease in non-necessary expenditure. The second reason is the removal of a large section of the American market because of the UIGEA. And further prohibitions by states like Kentucky are only making things worse. The scene is shifting to the East European countries despite the economic downturn but because of the increasing prohibitions in America.

At the recently held EIG conference in Barcelona Tihana Jurican of the Global Betting and Gaming Consultants (GBGC) spoke about the prospects of online gambling in East Europe. Apart from the reasons already cited, Tihana mentioned three other factors. One was the expected favorable change in the laws to allow online gambling and the second was EU membership. But the most important factor was increasing broadband penetration allowing prospective players to conveniently access online casinos. Studies in the United Kingdom have conclusively revealed a strong positive correlation between broadband penetration and online gambling. Presently the average penetration in the European Union is about 70% with the East European countries falling far below that level. According to GBGC the broadband penetration will rise to 40% in Croatia and to 65% in Poland by 2010. Most East European nations have a strong land based gambling culture, which will translate to online gambling as broadband penetration increases. GBGC has released estimates of expected online gambling revenues for four countries. In Croatia online gambling revenues are expected to grow at 25% per year reaching $13 million by 2012. Those for Slovak and Czech Republic are expected to grow at 40% per year reaching $35 million and those for Poland are expected to grow at 60% per year reaching $120 million by 2012.

Online gambling service providers have already started becoming active. In the Czech Republic it is widely expected that the proposed law legalizing online gambling would be passed this year. Sazka, the oldest and biggest lottery operator in the country, has already launched an online casino E-Sazka where currently players can play games like roulette, blackjack and Texas Hold'em for free. It is actively promoting this enterprise in order to capture market share ahead of the change in laws. E-Sazka has the ability to offer real money games as soon as the laws are passed.

Cryptologic has moved to Russia and the other countries of the Commonwealth of Independent States where online gambling already has a stronger presence. It has entered into a multi-million dollar agreement to provide its world-class software to Kurastica, the leader in online casinos in that region. Kurastica will start using Cryptologic software from early 2009. This initiative is a part of Cryptologic's new aggressive strategy to expand into new markets.

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