A look at the mixed fortunes of retail casinos and online casinos during the coronavirus pandemic: how the regulators have created a new order.

casino industry during coronavirus

Bells chimed, and fireworks lit up the night sky as billions of people around the world celebrated the beginning of 2020.

Little did they know that within a few short months, their lives would be literally turned upside down by the coronavirus virus - COVID-19 - that was already spreading throughout the Chinese city of Wuhan.

On the 9th of March, Italy was the first European country to impose a national lockdown. Its citizens were told to stay at home. All sporting events in the country were cancelled, and all entertainment venues, cafes, restaurants and non-essential shops were ordered to close.

One by one, nearly every other European country, and many others around the globe, followed by enforcing lockdown measures of varying degrees. The world, outside of our homes, had virtually come to a complete standstill.

This article looks at the impact that the coronavirus has had on both the offline and online casino industry.

Land-based Casino Industry Hit Hard by Covid-19

Along with all other forms of entertainment, the retail casino industry had its lights turned out. Everywhere from Vegas to Macau was closed. Globally, retail casinos generate hundreds of billions of dollars every year, and tens of millions of people are employed directly (or indirectly) within the industry.

It didn’t take long before the damaging effects started to show:

  • in mid-April, the Australian casino operator Crown Resorts announced it was laying off 11,500 employees;
  • Sands, one of the world’s largest casino operators, announced a 94.3% drop in operating income for Q1 of 2020;
  • Macau’s casinos’ year-on-year revenue for April plunged by nearly 97%;
  • Penn National Gaming lost $600 million in the first quarter of 2020;
  • New Zealand casino operator SkyCity sacked 900 staff;
  • Nasdaq-listed Melco Resorts lost $364 million in Q1 of 2020;
  • Okada Manila laid off more than 1,000 staff.

Of course, there’s a massive trickle effect from these mega-corporations having their revenue decimated by the coronavirus. PlayAGS, a land-based casino gaming equipment supplier, reported grim quarterly figures. This forced the company to sack 10% of its staff and furlough those remaining. TransAct, a casino rewards company, suffered a similar fate.

Essentially, every country with a strong retail gambling sector, ranging from Sweden and Denmark to Switzerland, South Africa, and the Philippines has spoken about the devastating effect this virus has had, and currently continues to have on the industry.

Entering the New Normal

The reset button has been hit, and retail casinos in many countries have either opened or have plans to within the coming weeks and months. The neon lights of the mecca of gambling - Las Vegas - are slowly but surely starting to light up the night sky once more.

However, we are now entering the phase of the ‘new normal’. For the foreseeable future, things are going to be somewhat different from the pre-Covid-19 casino days. In Nevada, there are now new rules that must be adhered to on the grounds of health and safety:

  • player numbers are strictly limited to a maximum of 50% of a gaming area’s full capacity - defined by the existing building and fire codes;
  • casinos must redesign their slot machine areas to ensure safe social distancing between players;
  • Blackjack tables will be limited to a maximum of three players. Previously, they could seat between five and seven players;
  • Roulette and casino poker games are allowed to seat four players;
  • the craps table is allowed up to six players. Although, this will be supervised to ensure the participants don’t congregate around the shooter;
  • other areas of the casino, such as keno lounges, bingo rooms, sportsbook areas, restaurants, and bars will also be forced to limit seating, and forming of groups is prohibited.

Although the new rules and policies listed above are for Vegas casinos, it is likely that most other land-based establishments around the world will have similar measures, so this is a good measure to go by.

Online Casinos Prove Covid-19 Resistant

Understandably with half of the world’s 7.7 billion population under some form of lockdown, certain online industries flourished during the global coronavirus virus pandemic. One of those was the online casino sector.

  1. Evolution Gaming - the world’s leading online live casino games provider - announced a first-quarter (2020) increase of 54% in operating revenue;
  2. LeoVegas announced a 10% EBITDA rise in Q1;
  3. the online Gambling market in Australia has grown by 67% during Covid-19 according to data provided by AlphaBeta and Illion (an Australian credit company);
  4. online Casinos in New Jersey witnessed a 39% increase in year-on-year online revenue in March;
  5. Flutter Entertainment - the parent company of Betfair Casino and Paddy Power, among other brands - saw a 16% rise in revenues.

Several other casino games developers and online casino operators have also highlighted a surge in activity. This was backed up by a BBC report that showed search interest in online casinos hit an all-time while the UK was under lockdown.

Regulators Get Tough

Fears started to grow that being locked down was the nightmare scenario for problem gamblers, so several regulators began imposing restrictions upon online gambling operators.

In addition to banning gambling advertisements on television in the UK, the UK Gambling Commission also instructed operators to:

  • remove all reverse withdrawal options;
  • stop offering promotions to customers who may be showing indications of harm;
  • reach out to players that have been active for 1 hour in a single session;
  • review limits and thresholds for new players.

Other countries went even further. The Belgian Gaming Commission introduced a €500 weekly deposit limit for online casino players, with the threat of fines and sanctions if licenced operators were found to be flouting this new law. Sweden has followed this with a SEK5,000 deposit limit and a maximum cap of SEK100 on bonuses.

Latvia took the dramatic step of banning all online gambling with immediate effect on the 6th of April. This drew fierce criticism from Latvian operators who took the matter to court claiming that the ban was unconstitutional. As from the 9th of June, legal gambling - land-based and online - returned to the country.

It deserves to be noted that despite the rise in online gambling; there hasn’t appeared to be an increase in problem gambling, according to the UK Gambling Commission.

Also, and rather interestingly, a new study from the International Gaming Research Unit at Nottingham University highlighted a decline in casino activity from customers who are regular sports bettors. This goes against the notion that the lack of sports would push these bettors to become more frequent casino players.

Conclusion

Have no doubt, the gambling industry as a whole has been badly rocked by the coronavirus. Even with the uptick in online gambling, operators that run land-based casinos have suffered heavy losses.

What remains to be seen is will gamblers return to retail casinos - and in what numbers? The virus is still among us, and at the moment, no vaccine is in sight. We are not saying that Las Vegas or Macau will crumble into oblivion, but these are clearly worrying times for small, local casinos in your towns and cities.

This leads to online casino activity in the post-Covid era. Will they manage to retain the surge of new players that have joined over the past several months? Will regulators continue to beat them with restrictive laws and legislation?

Like many industries, it’s time to adapt as we transition into the ‘new normal’. There will always be a love of gambling - the thrills, excitement, and entertainment it provides is unrivalled, so we have little doubt that it will bounce back - in time.

Last update: 10-06-2020
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