Saturday, July 02, 2022

Slow progress seen in Asian online gaming regulation

Asian governments are expected to eventually regulate online gaming, given the potential for tax revenue and the difficulty in stamping out illegal activity, though lack of legislation is still a major factor holding back potential, industry experts say.

According to Digitain Regional Director Tigran Sharafyan, Asia now accounts for 60 percent of revenue from the global gaming industry, with growth outperforming projections over the past ten years. He said although some measures have been taken towards legalising gambling, the “major step-change” when it comes to online has yet to happen. 

“Ultimately, most authorities should come to the realisation that it’s a misuse of resources to try and stem illegal gambling when regulating gambling responsibly is a far more positive goal: not to mention the taxes that will accompany such progress,” he said.

The Philippines is the only jurisdiction in Asia to have regulated online gambling, through its Philippine Offshore Gambling Operator licensees (POGOs). However, it’s illegal to target local Filipinos with online gambling services. Cambodia recently said it was banning online activities following pressure from China, while in India the situation is more complex. 

Under Indian law, games involving an element of skill are legal, even online, and therefore sites offering rummy and poker have proliferated. 

EvenBet Gaming CEO Dmitry Starostenkov agrees the main hurdle holding back the potential for growth in Asia is lack of regulation. 

“The potential in Asia in huge and remains palpable, naturally subject to respective regulation and legislative rollouts across a patchwork quilt of varying social trends and jurisdictions,” he said. “On a continent of 4.5 billion people, many of whom have gambling hard-wired into their culture, you don’t need to be an accountant to understand the potential growth – even if it’s been slower to materialize in certain areas.”

“Nevertheless, the hope endures across Asia that authorities will invariably recognize that sensible digital legislation is always the most reasonable and responsible path out of the regulatory woods.”

However, it’s likely to be a slow process and as in the case of Cambodia subject to backward steps. Beijing maintains its hardcore opposition and is willing to pressure any of its neighbours allowing firms to target its nationals.

“Expect a gradual shift from black to white; but the spectrum of grey will continue to dominate for many years to come,” said Julian Buhagiar, co-founder of RB Capital and board member on numerous gaming and fintech firms.

In terms of potential jurisdictions, EvenBet’s Starostenkov says his firm is targeting China and Southeast Asia. “However, I’d also give a huge nod to India where we’ve recently launched a Rummy card game specifically tailored to India’s emerging market this year.”

For Digitain, the key markets are also China and Southeast Asia, “but I would also mention South Korea and India as highly promising up-and-coming contenders.”

Despite the huge potential, Buhagiar warns it’s an uphill battle for most new entrants to Asia, with very few having managed to crack the market. Those that have succeeded have swiftly been bought up, he said pointing to Red Tiger Gaming, which was recently acquired by NetEnt for more than $200 million.

“It’s tempting to be general on Asia, and the truth is that the continent opens up a diverse breadth of opportunity that caters for vastly different markets,” he says. “For instance, Japan boasts one of the highest player LTVs (lifetime values) in the world, but also some of the most expensive and difficult to penetrate.” 

“Vietnam and Thailand on the other hand are very cheap territories to acquire players but the ‘irregularized’ nature of these markets poses entry challenges to white-label operators and suppliers.”

Knowledge of the local market, coupled with painstaking localisation, are essential, the experts said, stressing that taking what works in Europe and expecting it to succeed in Asia is naive. It was a lesson that also had to be learned by land-based suppliers, with many finding they failed to gain traction as their themes and maths didn’t appeal to the Asian audience.

“At EvenBet, we’ve already carried out Chinese, Vietnamese and Malay localisations - each of them requiring laborious to-and-fro to secure a truly intuitive and understandable UI,” said Starostenkov. “It’s a similar story with nuanced payment provider solutions whose successful integrations can be very challenging.” 

The right products and the right acquisition strategies, however, are only part of the equation and the real key to unleashing the market’s full potential -- regulation -- looks still to be sometime off. 










Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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