Abstract
The effect of the Internet and e-commerce on industry competition has been widely discussed in economic-managerial literature. Most of the studies focused on the analysis of the impact of Internet technologies on specific industry structural factors – in particular on sectoral price levels –, but no sufficient empirical evidence based on overall industry change is yet available. The aim of this work is to analyze the influence of e-commerce on the transformation of the industrial structure and competition in a regulated market, that of Italian sports betting. This market, because the effect of a process of legalization of on-line sports betting that started in 2006, has been interested by a continuous shift of purchases of sport bets, ranging from the traditional sales channels to digital ones. This has contributed in creating an on-line gambling sector among the most developed and consolidated in the world. From a methodological point of view, firstly the data from a series of secondary sources was processed in order to examine the main changes in the Italian sports betting market induced by the legalization of on-line gambling. Secondly, the data and information collected through specific empirical investigations was used to examine the impact of Internet betting on gambling operators’ business models and on players’ gambling behavior in the Italian market. The results of the analysis has shown that the development of Internet technologies and of e-commerce has had, on the one hand, a positive influence on the growth of the sales in the Italian sports betting market; and on the other hand, has impacted on a series of structural factors in the sector – entry barriers, number of competitors, geographical opening of the market, levels of pricing, average profit margins – in such a way as to determine an increase in industry competition. In particular, use by foreign companies of the electronic distribution channel as a ‘mode of entry’ into different geographical markets is causing the development of competition that goes beyond national borders, reducing the strongly domestic oligopolistic structure that has always characterized the Italian sports betting industry.
Highlights
The use of the Internet as a direct sales channel for betting has led to the development of a new industry, that of Internet gambling
Even the research that has analyzed in a broad sense the major economic trends and issues associated with Internet gambling (Gainsbury, 2012; Williams et al, 2012; Pilling & Bartlett, 2012; Gandolfo & De Bonis, 2011; Wood & Williams, 2007), did not systematically investigate how the total of the structural changes in the sector induced by e-commerce is impacting on industry competition
The use of the Internet as a gambling distribution channel has developed in Italy since the 90s, when different unauthorized foreign gambling operators entered the Italian gambling market through various web sites dedicated to on-line gambling
Summary
The use of the Internet as a direct sales channel for betting has led to the development of a new industry, that of Internet gambling. Vol 13, No 12; 2018 allowed players to access via the Internet all types of betting already provided for through the physical distribution network (except in the case where the intrinsic characteristics of the game prevented the use of the digital distribution channel) These regulations have affirmed a state-controlled management model of Internet gambling – the methods of access to the market and the gambling rules are always defined and monitored by public authorities – but characterized by a more open approach to competition than in the past (Mataluni, 2013). This has meant that even for a highly regulated market such as that of gambling, some typical effects of the use of Internet technologies on competition were verified In this regard, the economic-managerial literature highlighted that the increase in the level of penetration of the Internet and the development of e-commerce have caused profound changes in the sector structure and the level of efficiency in many industrial and service markets. The data shows that in 2017 the total on-line wagered amount reached almost 6.5 billion euros, six times the value recorded ten years earlier (Agency of Customs and Monopoly, 2017a; 2017b)
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