NetEnt | Better Gaming

Market Overview

The online gaming market has shown positive growth in recent years. The global gross gaming yield for online gaming, including all game segments, has been estimated at EUR 34.5 billion for 2015, an increase of 8 percent compared to the previous year. The corresponding size for the global online casino market has been estimated at EUR 7.6 billion in 2015, an increase of 9% for the year (source: H2 Gambling Capital, June 2016).

Europe is by far the largest gaming market and is expected to represent close to half of the gross gaming yield in the coming years. Deregulation and reregulation of national gaming laws is taking place in many European countries. NetEnt closely monitors the development on all markets that are undergoing regulation. In Spain the online casino market is now regulated and NetEnt was granted local operating licenses and launched games with several operators in 2015. In Great Britain, the largest gaming market in Europe, new regulation was introduced in 2014. As a result of this, all operators offering gaming services to British players need to have a British gaming license and pay gaming taxes in Britain, regardless of where the operator is based. NetEnt obtained local licenses from the UK Gambling Commission in 2015. The Italian market was reregulated a few years ago and NetEnt has developed a close collaboration with the Italian regulator, where both parties are actively trying to get unlicensed operators, with a focus on Italian players, to acquire a local license.

The online gaming markets are regulated in Portugal, Romania and Bulgaria. In Romania, NetEnt has obtained a gaming license, while suppliers don’t need a license in the other two aforementioned markets. In 2017, new gaming legislation is expected in the Netherlands and in Czech Republic.

In September 2015, the Swedish government initiated the process to reregulate the online gaming market and a new law proposal is expected to be announced in 2017 and, if approved by the parliament, come into force during 2018.

Today the majority of NetEnt’s customers are located in Europe and the Company will continue to focus on the European market, but expansion into North America will also contribute to long-term growth. In the US, a few states have opened up for online gaming: Nevada (poker), Delaware (all games) and New Jersey (all games). Political steps towards reregulation have also been taken in other states, for example in Pennsylvania and Michigan. NetEnt has applied for a license in New Jersey and has been granted transactional waivers to launch games with several operators in the state, while its full license application is being reviewed. In Canada, the market is regulated and open for online casino in several provinces such as Ontario, British Columbia and Quebec. NetEnt is continuously monitoring developments on markets in North America that have regulated or are close to regulating and the Company intends to launch its products on these markets if the conditions are right.

Online market penetration