How is Covid19 Effecting Gambling?

Much like several other industries, COVID-19 has hit the gambling industry equally. The pandemic has not only impacted the gambling world in the short run but is foreseen to have strong effects in the long term as well. 

To understand how and to what magnitude COVID-19 will tell upon the gambling world, we reached out to H2 Gambling Capital (H2GC). The agency is monitoring the virus struck situation in real-time. The founder of H2 Gambling Capital, Simon Holiday and Senior Consultant, Ed Birkin joined us share their viewpoints. Note that the real figures now are different than what you find here. 

The casino establishments are closing their doors and even the sporting events earlier scheduled have been scrapped. This has had a gruesome impact on the economics of the gambling industry with operator stocks crashing like never before.

The projections made by H2 Gambling Capital are trustworthy as the agency is a front liner in managing gambling data. With its highly influential sources, H2 Gambling Capital has been able to bring out both the legislators and investor’s views on the gambling industry across the world. You can bank on the information and insider views as they have been closely monitoring the industry since the virus outbreak begun. Having them here today is an effort towards trying to understand what Coronavirus means for the gambling industry at large. 

Has the gambling sector faced such challenges before? 

As highlighted by the founder of the business, Simon Holiday, the gambling industry has never before faced such a challenge. He says that he has never come across such a phenomenon as destructive as that caused by the Coronavirus. Simon added that he has been involved in the gambling sector since the 90s decade but the never experienced such a slowdown in the gambling industry. Even the previous virus outbreaks didn’t impair the market as much. In 2015, the gambling sector had to grapple with a year-on-year fall which came as a blow. This had stemmed from travel restrictions and that imposed on high-rollers in the Macau market. 

The previous outbreaks as expressed by Simon didn’t have such a negative impact on the gambling industry. What the world is seeing now due to COVID- 19 could cost 50bn to the industry, to say the least.

While Ebola and MERS didn’t impact the prominent pockets where gambling is well-established, Holiday says, this could be one of the main reasons why the sector didn’t have to face the brunt earlier of such virus outbreaks. 

Even the SARS (Severe Acute Respiratory Syndrome) originated in China in 2003. It did impact nearly 26 countries around the world with 8000 cases. COVID 19 is being compared to the 2003 SARS virus outbreak but the overall risk was low as the rate of transmission to travellers wasn’t as high as that of COVID. 

As Simon points out the Chinese gambling sector was not much affected in 2003 as it has been in 2020. China, the Special Administrative Regions and Macau put together accounted for 3.5% of the world’s gross profit generated in 2003 whereas now it stands in the second position worldwide with 16-17% of the wins generated worldwide.

The massive global breakdown 

At the time this podcast episode was recorded, the forecast was relegated by 11% by The Knowledge, H2GC. Experts say that this was proportionate to COVID-19. Simon Holiday tells us that the figures are changing rapidly. While one closure is in the process, cancellation of the others is announced. This he says could practically lower the rate by 12.5% (as anticipated at the time of recording) as compared to the pre-virus forecast for the year.

The gross win expected at the end of January 2020 was 473 billion (considering every segment of the gambling sector) as against the figures that have reached close to 420 billion. The forecasted stats for 2019 were 457 billion which is equivalent to an 8%year-on-year fall.

Ed Birkin expressed that he had been watching the gambling market trend after the virus outbreak since the last couple of months. According to him, the H2GC has transformed their “tracking methods”. This has been done to keep pace with the impact of the virus.

It all began with the downgrade witnessed in the Asian market seven weeks ago. The rapid changes required H2GC to respond to the situation accordingly. Now they are tracking the recent developments with the help of the weekly tracker as the virus caused cancellations of events and sports activities across the world and in North America as well.

The impact of the virus on casinos establishment!

Simon expressed that the projections for the brick-and-mortar casino are going to be in negative progression. He says that “Land-based industry accounts for 87% of the business and with it being particularly hit by closures etc., as we are at present, we’re expecting land-based gambling to be down 14%.”

He also added that this 14% decline in expectations was based on the current details and data available. The way things are moving, the land casinos would have to brace for more downgrade in the following weeks and months to come.

Online gambling at this hour 

As explained by Holiday, the lockdown and stay-at-home orders could account for an increase in the online gambling industry’s gross win stats. This would be more than that predicted before the COVID- 19 outbreak.

Simon said that they expected the gross wins to be up by almost 13% globally. At the time of recording this itself, the figures seem to touch 15.8% of the gross win. He emphasized that considering an online gaming platform would be a lucrative idea for land-based casino owners. He also said that the eSports network and virtual sports market is likely to experience a new high. If you go with what Holiday pointed out, online gambling operators are better positioned than their land casino colleagues.

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