Gartner® Magic Quadrant™ for Identity Verification
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The digital revolution has transformed many industries, and gambling has perhaps been one of the most profoundly affected, given its transformation from a physical pursuit to now being dominated by iGaming.
Global online gambling has experienced long-term growth practically since the inception of the web and has become a gargantuan revenue generator worldwide. This has been driven by technology, consumer behavior, and regulatory changes that have become steadily more permissive with time in many jurisdictions. This trend shows no sign of slowing down. Let’s take a look at the size and scope of the global marketplace to add some dimension to our subject.
According to Grand View Research, the combined annual growth rate (CAGR) for iGaming is expected to average 11.7% from 2022 to 2030. At this rate of growth, the annual revenue for iGaming is projected to reach a staggering US$153 billion by the end of the decade.
The growth of the iGaming industry is so vast it’s difficult to imagine. This growth is being driven by numerous factors, including the global adoption of smartphones, the internet, and many other obvious modernizing technological influences. What’s not so obvious is that the growth is not as linear or evenly distributed as a quick glance at the data may suggest. Growth in iGaming is happening at different rates and in different ways all over the world, and it’s not just a difference in geography or nation states — it’s technological disequilibrium as well.
The iGaming industry is a place of great specificity and diversity, with many market segments and varying regulatory frameworks and legal codes for different regions and nations as well. Many nations such as the U.S. have legal frameworks in place that push regulation down to individual states, making iGaming a difficult maze for operators to navigate. Others have legalities that allow for some forms of gambling, but not others. And other countries like China have prohibitions with loopholes such that iGaming is growing — or at least operating — within them anyway.
This all makes for an industry that is difficult to probe and gain insight into without casting an expansive net. Some argue that this scattered legal landscape is one of the key drivers of the nonlinearity of growth in many of the markets that have hazy or prohibitive laws restricting iGaming. Either way, regulation and its regional significance and nuances are highly important to understanding this industry. It is because of these numerous factors that a careful analysis is necessary to truly understand both the marketplace and the drivers behind it that are propelling this industry with so many complexities to it.
Sports betting and casinos are the two largest segments of the online gambling market. According to Statista Market Insights, online sports betting is expected to bring in nearly US$50 billion in revenue in 2024, followed by online casinos with an estimated $39 billion. However, these statistics vary tremendously from location to location, with thousands of different games falling under the casino umbrella and a smaller but no less diverse number of sporting events and game types under sports betting.
Since its legalization, sports betting has been the dominant growth driver in many of the largest markets, including the U.S., Europe and South America. In the U.K., esports betting revenue rose nearly 3,000% between 2019 and 2020. In the U.S., more than half of American adults now have access to regulated retail and/or online sports betting in their home state.
One of the key reasons for the explosive growth of sports betting is the popularity of sports. For example, in the U.S., online sports betting is popular at all levels of professional (and semi-professional) sports, including football, soccer and basketball. Furthermore, the advent of smartphone and mobile gaming technologies have created a level of ease and accessibility never seen before, allowing gamers to easily cast bets and take payouts anytime, anywhere.
Online casinos are a massive part of the overall online gaming market across the globe. Online casinos are available and accessible in many ways to online gamblers, and they offer a large variety of games. This market segment is expected to grow substantially through 2030, and 2024 is no exception. This growth is due in part to the popularity of the games and the ease with which mobile devices, including smartphones and tablets, can be accessed.
Online casinos bridge the gap between traditional casino experiences and online computer-based gambling. Around the world, many online casinos are tied into kiosks and operate virtually at in-person locations as well as on smartphones, tablets and computers — offering gamblers multi-device gambling that is tailored to their personal tastes. As this convenience converges with new advances in technology such as the introduction of AI and other technologies, this is anticipated to have a profound effect on the industry.
This report looks at sports betting and online casinos and intentionally omits the various smaller niche gaming types, since regulatory trends affecting the overall market will also largely affect them as well. Instead, the focus of this report is upon the understanding of the legal and regulated world of iGaming. In many jurisdictions, legal iGaming simply does not officially exist, and in its stead are murky figures and extensive — yet unregulated — networks of illicit or dubious gambling. Places where this has proliferated are many and varied, but the single largest illicit gambling market in the world appears to be China, where a hardliner stance against gambling, merged with a large shadow economy, has created a considerable unofficial market. Though these are important trends in iGaming, their regulatory futures are difficult to study, so we are limiting our scope to the legal and regulated markets.
The casino and sports betting segments of iGaming are highly different and diverse in their representation, distribution, market share and revenue on a nation-by-nation basis. This means there is an unequal market share distribution on a global basis, which is of great importance to anyone trying to understand the market. In some countries, sports betting is more popular than casinos, whereas in other countries online casinos dominate. These disparities are not always driven by market demand but also by regulations that may limit the licenses of iGaming, its operators, and even the legality of individual games in each jurisdiction.
The market can be divided into desktops and mobile platforms and users. Even though the regulations may be identical, online gambling establishments and casinos may use different payment methods and verification techniques depending on which devices their customers are using. Some jurisdictions have stricter rules for mobile gaming because they fear minors will be more likely to try to access gambling through this channel.
There are security concerns for both desktop and mobile platforms and devices. Neither are immune to criminal activity, but from a legal perspective, mobile gaming is typically treated more stringently because mobile security concerns go beyond account penetration. Desktop users are at a higher risk of being spoofed, but mobile phones can be stolen more easily and used by criminals more readily to commit criminal activities than desktop computers running off Wi-Fi or hardwired connections.
Although technology moves at a high speed of evolution, legislatures often do not. Clumsy efforts to curb criminality can lead to overregulation and stifle innovation. This is often cited by industry analysts as the reason behind treating mobile gambling differently. Mobile gaming may be subject to a different set of banking and financial regulations as well as mobile wallets, which are subject to laws and regulations that differ from traditional bank transfers. This is especially true today in the age of widespread cryptocurrency adoption and regulation.
Many industry analysts agree that desktop gaming revenue accounted for a small and shrinking percentage of the overall iGaming market. Research suggests that while some players may prefer iGaming with larger screens and the ability to interact and chat with other players, the overall industry is headed in the mobile direction.
There is ample reason to agree with this perspective, as much of the data on non-gambling video games has established the same pattern of desktop usage among gamers. However, as devices such as tablets and smartphones become more sophisticated and powerful, the market share of desktop computer usage will continue to decline.
Mobile gaming is a major sector, with up to 80% of players using their mobile devices to gamble online. As previously stated, many analysts predict that mobile gaming will grow due to the more powerful processors and improved user experience on newer devices. Others question this analysis, believing that the mobile revolution may have peaked. Some believe that “mobile gaming,” as it is commonly called, is actually users playing on tablets via Wi-Fi and is not really “mobile” in the sense often hyped by device manufacturers and others.
Peer-to-peer (P2P) gambling refers to bets made between individuals without a bookmaker, often through a betting exchange. Fueled by cryptocurrencies, peer-to-peer gambling is anticipated to rise by the end of 2024. Though legislation may seek to block this kind of activity, it’s inevitable that it will occur — it’s just a question of how much it will grow. There is very sparse data on independent iGaming, but no small degree of evidence of the rise of cryptocurrencies. We will discuss this in more detail later in this report.
