For years already, as gaming at online casinos grew, observers predicted that visitation to land-based casino sites would fall as people moved online.
Much to their surprise, that scenario didn’t come to pass. Online gaming grew, true. But casino aficionados continued to visit Vegas to enjoy the type of atmosphere that, they felt, they couldn’t get online. They wanted the hotels, the entertainment venues, the restaurants, the shops and all the other amenities of a brick-and-mortar casino adventure. That was, they believed, only attainable in a live, physical environment.
Once COVID-19 hit the situation changed. Casinos around the world closed, even in places where casino gaming was the basis of the economy. Travel was almost non-existent. Even those few venues that were open were so overwhelmed with restrictions that few gamers were interested in taking the risk.
Now, online poker and online casinos games are, pretty much, the only game in town and the statistics show the spike in online casino gaming growth. Will online casinos continue to thrive after the pandemic subsides? Indications are that the two types of casinos will be living side-by-side.
Over the last 12 months online casino games, including online poker, have tripled their revenue. With access to real-world casinos cut off or strictly limited, gamers are turning to online casino gambling in large numbers.
The second quarter of 2020 saw revenue from online casino games – including slots and poker – total $420 million in America. That’s triple last year’s numbers. Part of that is due to the increasing number of states that have legislated for online gambling and part of that is due to gamers’ search for gambling opportunities in the face of COVID-19-related closures of America’s land-based casinos.
A report by the American Gambling Association saw revenue from online gaming surpass revenue from online sports wagering which was also booming prior to the coronavirus (fourth quarter 2019 saw over $360 million in online sports betting revenue).
Meanwhile, land-based casinos have seen their revenues fall 80% in the last 6 months. Between October and December 2019 America’s land-based casinos were open for 42,000 days. April – June 2020 saw them open for a quarter of that amount. In some states such as New Jersey, New York and Illinois casinos didn’t open at all for the entire second quarter of 2020.
America currently has a number of different land-based casino companies that operate online gaming. They include Caesar’s and MGM which expanded their land-based operations to run CaesarsCasino.com and BetMGM online. Aristocrat is a newcomer to the industry -- a game designing company that is starting to enter the operation sector. DraftKings moved into casino gaming from fantasy sports and sports betting this past July.
Industry observers see a great deal of potential for expanding the online casino market which, they believe, can expand at the same rate that online sports betting has grown. More and more states are legalizing online gambling platforms which they see as valuable new sources of revenue.
Becky Harris, a distinguished fellow at the International Gaming Institute explained, "As states rummage for funding, we can expect the interest in iGaming to rise. This new revenue stream could help fund physical and mental health services, benefits for the unemployed or underemployed, state infrastructure programs or a host of budget items. However, gaming is not the top legislative concern right now.”
Over the past year online sports wagering companies FanDuel and DraftKings have outperformed their benchmark indexes. However, the pandemic has hit the Fantasy Sports Operators hard. DraftKings market capitalization reached $12 billion since it went public in April, meaning that the company outpaced companies such as MGM Resorts and Caesars. But the shutdown of all sporting events including the Tokyo Olympics and many big league games and tournaments pushed down their revenues. There has been some cause for optimism as professional athletes return to the field but everything is shaky.
In the meantime, online casinos are filling the gap. Casey Clark, a vice president at the American Gaming Association observed that, "Consumers like convenience. There was very little competition from brick-and-mortar casinos in the second quarter."
Sports betting operators are banking on the hope that, with the return of sports – albeit in a smaller framework and in stadiums with few if any fans – the industry can benefit from pent-up demand. Baseball, soccer, hockey, golf and basketball games are being played and initial reports are that sportsbooks are seeing good action.
The operators must be prepared for a slower season, especially given the predictions that college football will deliver a weak season, if any season at all. But, says Chris Grove, partner at Eilers & Krejcik Gaming, "the industry appears to be shrugging off any concern about the long-term impact of COVID-19." Operators are looking ahead to when sports betting will be a national market, which will not happen for a few more years. Grove says that “that has insulated the industry from the kinds of material impacts you're seeing in more mature aspects of the U.S. gambling market like casinos and horse racing."
Openness to Online Betting
One optimistic sign is that, as a result of the pandemic, a number of stakeholders and lawmakers who were wavering about online sports betting have become more supportive. Last month, Rhode Island passed a bill that will allow residents to register for sports betting online. Prior to COVID-19, it was assumed that the legislation would require residents to travel to one of the state's two casinos to register in person.
Land-based casino lobbyists are still doing their best to kill online casino bills in other states but their influence seems to be waning as so much of modern life moves online.