The next crunch – Credit Card default will cost online gambling US$ 11bn
GBGC in a new report says that rising debt on credit cards will damage the online gambling industry by as much as US$1.3bn in GGY in 2009 and a further US$2.8bn in 2010 and US$ 11bn between 2009 and 2012 causing the industry at best to grow by 2% this year and 3% in 2010.
Commenting on the forecasts GBGC’ Chief Executive Warwick Bartlett said “The charge off rate is not all, credit lines are forecast to be cut by US$2 trillion for 2009 in the US alone and the average default rate has risen to 10.4% of people and continues to rise with further job losses”.
The UK is following the USA with charge offs reaching a peak in Q2 2008 at GB£929m.
In Europe unemployment is rising fast also and although countries such as France and Germany use credit cards less the same cannot be said for the other European member states.
The impact for Internet gambling will be severe because the credit card is used to process 70% of all transactions.
The credit card crunch could be the pre-cursor to the consolidation the market has been expecting. Going forward there will be fewer new customers so we expect the acquisition cost per customer to rise so it will make sense to cut costs and merge the customer base.
Contact
Warwick Bartlett or Lorien Pilling
Global Betting & Gaming Consultants
Isle of Man
01624 827138
Warwick@gbgc.com
Lorien@gbgc.com