Investors pile in on post-lockdown betting frenzy

post-lockdown betting frenzy
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With lockdowns lifting across the globe and all major sports back on the menu, bookmakers are hoping for a splurge of withheld spending. Although much depends on the speed and shape of economic recovery.

 

Bookmakers are hoping to reap the rewards of pent up demand as lockdowns are lifted across Europe and the US, and most major sports leagues resume their seasons.

Shaking off a slashing of stock prices in March, London-listed bookmakers have performed better than most of the FTSE through the coronavirus pandemic. Shares have climbed continuously throughout, and a furry of investor activity in June has left most firms somewhere around or above pre-covid trends.

All told, the loss of sports and the forced closure of high streets has not been as devastating as many had predicted (potential for second waves notwithstanding). Morgan Stanely estimates betting volumes fell only around 65 percent due the lack of European fixtures (compared to the near hundred percent drops seen in destination casinos such as Nevada and Macau) as many bettors sought out atypical events such as esports and minor foriegn leagues.

Moreover, traditional sports fans have been happy to switch to casino, poker, bingo and other digital products to pass the time.

The Stars Group noted a 92 per cent year-on-year increase in revenues between the end of March and mid-May as isolated players turned to its poker brands. While 888 reported daily revenue increases of 34 percent.

As GBGC’s Warwick Bartlett put it: “You could say that the e-gaming business has had quite a good virus. For want of a better expression.”

Even the retail-heavy and sports-centric GVC said its online gaming businesses “continued to trade strongly, and as we see the resumption of sporting events across our business our sport volumes are returning in-line with expectations.”

“Our retail outlets in England have now been open for a little over a week, albeit with extensive social distancing measures in place, and we are encouraged by the early signs as customers return to the high street,” said chairman Barry Gibson.

sketchThe macro picture has not been as positive, with the future recovery of major casino spots depending heavily on the continued spread of the pandemic and how governments respond. Nevertheless, market analysts at H2 Gambling Capital revised their projected loss for 2020 down for the first time since the crisis unfolded (albeit from 24.1 percent to 24 percent) marking the first signs of rebound after five months of decline. A better than anticipated return of the Chinese Lottery and Italian yield added $360m to the figures for May.

In the US especially, investors are feeling buoyed by the twin impact of lifting restrictions and the potential acceleration of gambling liberalisation by lawmakers looking to shore up funds and pay for the pandemic.

Many state budgets were already causing concern before the crisis. Now the Center on Budget and Policy Priorities estimates covid19 will cost the states’ coffers a cumulative $615bn in the coming years. Given the American Gaming Association estimates around $150bn is still bet illegally each year, the speedy regulation of sports betting (and online gambling) could be a common antidote.

In European markets the recovery could be hampered by the inverse: political pressure is mounting for a dramatic tightening of regulations online, most notably in the UK, where recovered losses are most likely to be found. Meanwhile an economic recession could take the wind out a widely anticipated splurge of withheld spending.

“Will they have the cash to gamble?” asked Bartlett. “If you look at the rising stock market as an indicator you would say yes. If you look at the job numbers, empty shops, and liquidations of businesses you would say no.”

“Even if we presume the recovery will be V-shaped, other ill winds are blowing in the direction of the UK gambling industry.”


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