How the US gambling industry recovers from coronavirus

How the US gambling industry recovers from coronavirus

Steve Ruddock from shared with Focus Gaming News his thoughts and he assessed the impact the Covid-19 pandemic has had on the US gambling industry and how it can come out the other side.

The reopening of US states has begun, but a return to normal will take time; if it happens at all. The novel Coronavirus doesn’t appear to be going away anytime soon, so as states move forward with their phased reopenings, setbacks are not only possible, they’re expected. 

This careful and phased reopening process will take a severe toll on the US casino industry. Casinos will undoubtedly force it to evolve to the new normal and deal with the dirtiest word in the gambling industry: uncertainty.  

Forced changes at land-based casinos 

There’s no magic switch to flip, so like the rest of the economy, casinos will reopen in phases, with each dependent on meeting the benchmarks of the current phase before then next phase begins. 

For casinos, it will start with social distancing measures that severely limit capacity and increase overhead. If all goes well, more of the gaming floor will come back online, and amenities like restaurants and spas will see initial restrictions eased. The final step is the return of high-traffic areas like theaters, nightclubs, and pools. 

Even if everything goes smoothly, or treatments and a vaccine for Covid-19 emerge, the memory of the pandemic will linger for years to come. People will be nervous in crowds, and the newly adopted social distancing and hygiene measures are likely here to stay. 

Casinos that can adapt and embrace innovations like cashless gaming will thrive. Casinos that cling to the “old way” are likely to wither and die over time. 

These new, costly policies and innovations mean casinos are likely to suffer through some very lean months. That could be the final straw for casinos already on shaky financial footing before Covid-19. These properties are unlikely to see a path to survival given the burdens of operating in a post-Covid world, and some may never reopen their doors. 

Customers will have to adjust to these more rigorous standards too. 

As was the case with airline travel after 9/11, high-traffic areas like casinos will require guests to succumb to everything from temperature checks to 100% identification to perform contact tracing if necessary. 

Online gambling has been a lifelineduring shutdowns

Even before Coronavirus, the argument for the legalisation of online gambling was already a convincing one. Whether it’s online lottery, casino, poker, or sports betting, the addition of legal online gambling has proven beneficial in the smattering of states that have gone down that road. 

Even before Covid-19 shuttered land-based casinos, online gambling was already proving its worth. As New Jersey and other online gambling states have established, cannibalisation fears were not only overblown; they were entirely unfounded. 

The truth is online revenue has been incremental. Online gambling revenue has been growing at an incredible clip since it launched in 2013, and New Jersey’s land-based casino revenue has grown alongside it in each of the last three years.

Online gambling has also given land-based operators a pipeline into a heretofore unknown customer segment. 

As former Caesars Senior Vice President David Satz told a Pennsylvania committee hearing in March 2017: CIE’s New Jersey experience was that 80% of online players were new customers. Of the 20% that were already in the company’s Total Rewards program database, 42% were inactive customers who re-activated after signing up online.

And Caesars’ experience is far from unique. Tropicana, Borgata, Golden Nugget, and Resorts have made similar statements about their New Jersey online gambling operations, and the early indications from Pennsylvania tell a similar tale. 

A new attitude towards online gambling?

The shuttering of land-based venues provides proponents of legal, regulated online gambling with more ammunition going forward. Not only does online gambling incrementally increase revenue and future-proof a state’s gambling industry, but it also helps lessen the impact of Act of God events like a pandemic or extreme weather that can shutter land-based facilities. 

While states like Connecticut and Mississippi watched their gaming revenue drop to zero during the Coronavirus shutdowns, Pennsylvania and New Jersey managed to keep gaming tax dollars rolling in, at a lesser amount, of course. 

The same holds in online lottery states. States that are exclusively reliant on retail sales have watched revenues shrink. States that have embraced online sales have managed to weather the storm, offsetting declining retail sales with increased online sales

Covid-19 has exposed the casino industry’s shortcomings. But will that affect change? The jury is out on that, and there are plenty of unanswered questions.

Will Sheldon Adelson and other casino operators who’ve fought against online gambling realise they’ve been on the wrong side of the argument? 

Will operators, commercial and tribal, have their come to Jesus moment and stop trying to stack the deck in their favor and accept what they would previously have deemed an imperfect online gambling proposal?

Only time will tell. 

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