The Effect of the Global Pandemic on iGaming
Covid-19 has made a deep dent in the global economy. Many businesses have been forced to suspend operations or, in some cases, close their doors for good. Even though many businesses are suffering, there are still a few that are doing well. For instance, the online gambling industry is still thriving. While brick-and-mortar establishments have taken a hit over the past several months, their online counterparts have enjoyed increased revenues.
For example, the closing of New Jersey casinos in mid-March led to a 61.7% revenue drop compared to the previous year. Conversely, online casinos in the Garden State saw an increase of 65.7%. A similar pattern was seen in Pennsylvania and other states that allow online gambling. Not surprisingly, this is happening all over the world.
Now, these increases apply to online casinos. The pandemic has affected sports betting differently. Because so many professional leagues were forced to either suspend or outright cancel their seasons, there weren’t a lot of sports to wager on. One of the toughest blows dealt with bookmakers was the cancellation of the NCAA Basketball Tournament.
According to the American Gaming Association, March Madness generates about $8.5 billion in wagers. The college basketball tournament is critical to a bookmaker’s bottom line. The cancellation of college football had to sting too, while the shortening of the MLB, NBA, and NHL seasons also added to the bad news.
It’s not difficult to understand how online casinos benefited from the Covid-19 pandemic. People get bored in isolation, and they can only watch so much Netflix, read so many books. Social distancing isn’t a factor in cyberspace either. And it’s not like online casino gambling wasn’t already popular and easy to do.
In the United Kingdom, 25% more people are playing online slots while there has been a 38% increase in online poker participation. It’s safe to say that a good chunk of those upticks can be attributed to idle sports bettors looking for other ways to get their gambling fix. For many, betting on a virtual football game or a virtual basketball game at an online casino is better than no sports betting action at all.
Ray Marino is the head trader at an extensive sportsbook, and he is amazed at the number of people who are willing to wager on sports simulations. “It’s insane,” he stated before theorizing that it’s proof that sports betting will never truly stop. “The Action that is going on is mind-blowing.” he further said.
He claimed that the number of wagers on simulated football matches during April came close to the average take for an early-season MLB game. Marino figures that to be around $150,000. Nevertheless, Marino estimated that his company’s revenues are only 10% to 15% of what they were before major sports went into hiatus.
Some people may not realize that sportsbooks have had to lay off a lot of workers too. While William Hill CEO John Asher acknowledges the financial challenges facing sportsbooks, he feels more concern for the over 600 workers he was forced to scrap. He appears to be sincere as he is donating his salary to the William Hill Foundation, which was established to help those impacted by the Covid-19 pandemic.
Fortunately for bookmakers, many major sports have returned to action. The truncated MLB, NBA, and NHL seasons provided a much-needed shot in the arm, while the NFL season is sure to help heal some of the financial wounds that the bookmakers have suffered. With any luck, the NFL and European football schedules will play out as planned while the next NBA and NHL seasons could commence as early as January 2021. Even though new NCAA football and basketball seasons are several months away, their return will go a long way to making up for all those lost profits.
But what if things don’t go as planned? We have just passed the quarter mark of the NFL season, and we’ve already seen a couple of games postponed as more players test positive. There certainly aren’t any guarantees that the NFL will be able to finish the season. What if the NBA, NHL, and NCAA are forced to postpone or cancel their upcoming seasons? It’s possible. This isn’t just a worst-case scenario for sports fans, but it would be a disastrous situation for bookmakers. Sports betting will once again be limited to sports like table tennis and Nicaraguan football. At least they’ll have a growing and lucrative eSports betting market on falling back on.
Let’s not feel too bad for the struggling bookies. After all, in many cases, online betting sites consist of a sportsbook and an online casino. So, even though the sportsbook side may take a beating, the operation's casino side can more or less make up for a good portion of those losses.
We must also understand that many brick-and-mortar casinos also offer their services online, especially in the United States. If your favourite casino is closed, you can always play on its online platform while continuing to enjoy benefits such as bonuses, promotions, and rewards programs. You can even immerse yourself in live casino games if you want to experience real casino action.
We should also consider that many people prefer online casinos to land-based venues. There are a few reasons for this, including convenience and the special offers online betting sites advertise. However, perhaps a more significant reason is that online casinos generally offer players a much better variety of games. Your local casino might have a Roulette wheel, a few Blackjack tables, and a handful of casino poker games.
We mentioned payment processors earlier on. Simply put, online casinos couldn’t survive without them. They are the ones that make it possible to fund your online betting accounts and withdraw from them. Your local bank may have closed down or limited their hours during this pandemic, but not the payment providers. They are as busy as ever processing the transactions for a steadily increasing number of people that want to play their favourite casino games.
While isolated, loads of people currently rely on Skrill, PayPal, and other providers to pay for food deliveries and other goods and services. Sure, payment processors have been affected by a downturn in things like airline tickets and other travel-related payments they handle, but they are still going relatively strong. So, as long as online casinos continue to prosper during these unusual times, the payment processors will keep moving huge sums of money.
But, as you could imagine, it’s not all sunshine and rainbows for the payment processors. Instead of revenues growing by 6 % as forecast before the pandemic, they could decline by 8–10%, which equals a reduction of anywhere between $165 billion and $210 billion. A similar occurrence happened during the 2008–09 financial crisis when revenues declined by about 11 %. One can only speculate how badly the payment processors would hurt if the online casino industry went bust?
This pandemic will hopefully pass sooner than later. Until then, we will live surrounded by uncertainty. We can expect to see more businesses fail, and more people are feeling the financial pinch. We can also expect that payment processors will remain busy while the online casino industry continues to grow.