Global gambling revenues fell by over one fifth through the pandemic, according to a new and comprehensive report from Global Betting and Gaming Consultants. Although the $100bn shortfall was not split evenly across the board – and the fiscal fallout may spur growth in other areas too.
GAMBLING’S $100BN COVID HIT
Global gambling took a $100bn hit to its revenues in 2020, as a result of governments’ measures to tackle the COVID-19 pandemic. That is the headline finding from the 16th edition of GBGC’s Global Gambling Report.
Global gambling revenues fell from $455bn in 2019 to $355bn in 2020. But some gambling sectors fared worse than others. The gaming sector – casinos and gaming halls – was especially hard hit because venues were closed for long periods and international travel was limited.
But the pandemic restrictions and lockdown did provide a boost for the igaming sector, which saw its share of the market leap to almost 17 percent.
There have been signs of recovery in some gaming markets – as measured by visitor numbers and revenues – in 2021, but the situation remains fluid because restrictions and capacity limits continue to be re-imposed in some jurisdictions, as new outbreaks occur.
IGAMING HELPED BY 2020 LOCKDOWNS
Lockdowns and restrictions on socialising in many countries meant that people clearly turned to igaming as a form of entertainment in 2020.
Global igaming revenues rose to almost $60bn in 2020, with each sector reporting a net increase over 2019.
Casino games were responsible for most of the increase, but poker also made a significant contribution. The picture was more mixed in betting. Most international sport was cancelled in early 2020 but horseracing and greyhound racing did continue in some key markets. When other sports returned in Q2/Q3 2020, there was certainly pent-up demand.
The most interesting sector was online lotteries. Prior to the pandemic, state lotteries had generally been reticent to promote digital sales, with some notable exceptions. But the pandemic has required lotteries to introduce or expand online sales because many of their retail outlets were forced to close for prolonged periods. Overall, online lottery gross win increased by $0.9bn in 2020.
The combination of rising igaming revenues and falling land-based revenues also means that igaming’s share of the global gambling market jumped to almost 17 percent in 2020.
MANY LOSERS FROM BETTING SHOP CLOSURES
It is notable how resilient the number of betting shops in the UK has been since 2004, in spite of rising costs, and the ever-increasing burden of regulation. But now the decline is quite sharp and is likely to continue when the furlough scheme ends, and life resumes to some normality.
At the same time, online gambling has been growing. Growth has accelerated in recent times due to the COVID-19 pandemic, with people under lockdown and retail outlets being closed.
Bookmakers are a resilient bunch, the industry demands it. They are innovative because they must be. With rising costs, new products were sought, hence the introduction of FOBTs, which were not illegal. The restriction on stakes has made them worthless, causing an acceleration in the decline in the number of shops.
While some are cheering the decline of betting shops, spare a thought for the thousands of jobless staff, the landlords who will not receive any rent, the horseracing industry that will have to close racecourses, and the local governments who will not collect property rates. HM Treasury will also collect less tax.
The media and politicians should really think things through before they start campaigning.
EXPANSION CAN UNLEASH JAPAN’S BETTING MARKET
Japan’s sports betting market could more than treble its revenues, if regulation allowed it to expand beyond the current range of sports.
Away from horseracing, betting is currently only available on three sports: motorboat racing, cycling and motorcycling. Of these three sports, betting on motorboats is by far the most popular. It accounts for almost 70 percent of betting revenues in a sector worth almost JPY570bn ($5.2bn).
But the potential revenues of the Japanese sports betting market are so much greater, if betting regulation was expanded to include the more popular sports of football (J League) and baseball (NPB).
Over the last year, Japanese sport has seen its income fall because of restrictions to tackle the COVID-19 pandemic, in common with many other countries. On top of that, the Tokyo Summer Olympics were postponed in 2020 and the delay is said to have cost several billion dollars.
Betting tax and a possible sports levy on expanded betting activity would be a welcome source of new income.
The process of regulating casino resorts in Japan, however, does not suggest it will be a quick road to any expansion of sports betting. But it is noticeable in other jurisdictions that the economic damage done by the COVID-19 pandemic has hastened the pace of regulatory change. It is a factor that might force Japan’s hand too.
In a low-tax, competitive market which allows fixed-odds betting, GBGC estimates the sports betting market could be worth JPY2.1trn ($19.3bn) in its first year.
Over the first three years, the market could raise JPY650bn ($5.9bn) in betting tax and sports levy.