Published: 14.04.2020, 15:31
5 min read
The COVID-19 pandemic is affecting the lives of people all around the world. Not only individuals suffer from the novel coronavirus, but also some businesses and entire industries are facing huge revenue losses. The negative impact of the outbreak is already evident in most spheres of daily life, while the situation intensifies with the number of cases of contamination rising.
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Global Crisis Due to Coronavirus
Many countries around the world had to introduce mandatory safety measures to their citizens. Cutting physical contact, following social distancing procedures, and travel restrictions are just the beginning of the long list of steps that the authorities had to implement to stop the spread of the disease.
Every business that offers products or services that require people to leave the safety of their homes is currently experiencing a substantial hit on the financial side. The service industry, including restaurants, taxi operators, hotels, and airline companies, were the first ones to experience the unmerciful effect of COVID-19. As unessential businesses are going through a temporary closure, employers have to lay off thousands of workers.
As it is still impossible to forecast the duration of the pandemic, entire industries remain on hold until further notice. In these times of instability, a lot of companies are searching for financial relief and appealing for governmental support and tax breaks. For some local businesses, a bailout is the only option to stay afloat at this point, especially if the pandemic will extend.
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Impact of COVID-19 on the Gambling Industry
The gambling industry has taken a hard hit to its revenue and operations because of the coronavirus. Casinos shut down across the globe, with such iconic locations as Las Vegas, Macau, and Atlantic City being no exception. As of now, Macau is slowly recovering from a two-week closure of its gambling facilities, with travel restrictions still being in force. Las Vegas currently is experiencing a state-wide shutdown, and will not be able to welcome visitors back any earlier than the 17th of April.
The Canadian Gaming Association (CGA) is about to publish a survey that will aim to address the critical needs of the gambling industry during the mandatory closure. According to the CGA’s data, 200 bingo halls and 114 land-based casinos in Canada had to close to wait out the outbreak. All these shutdowns occurred in a span of 72 hours, resulting in a national shock.
The closure of Canada’s offline casinos is not only a massive disappointment for regular players but also an event influencing up to 183,000 workplaces. Every month, The Canadian gambling industry generates products and services worth $1.2 billion bringing $765 million in revenue for the state and charity organizations. Gambling facilities also bring approximately $1 billion in revenue from their theatre shows, restaurants, conference venues, hotel rooms, and so on.
These numbers reveal the immense impact that COVID-19 is causing within a single country’s gambling industry. The crisis is profoundly affecting the big established brands of the industry, while smaller operators will most likely have to close their businesses for good. For the employees and their families, it will result in long-term financial difficulties.
The current situation is forcing businesses to adapt their services to new environment. Companies have to come up with new formats and find solutions in order to recoup some of their revenue loss. For casinos, one of the possibilities to generate income is online gambling. This method of gambling has been rising in popularity even before the COVID-19 pandemic.
Online Gambling as an Alternative to Land-based Casinos
Nowadays, online casinos seem to be the only viable option for gambling service providers, as well as for their customers. Apart from the comfort and high level of user experience that the best online casinos provide, the rising demand in their services is a result of the realization that the world is still vulnerable to new pathogens. Pandemics such as Ebola, SARS, swine flu, Zika, MERS, and the novel coronavirus were a wake-up call for many businesses and individuals alike.
For those operators who are wise enough to invest in digitalization, the potential virus outbreaks will not be as critical as they are now for land-based casinos. Even though the modern age is all about the transition into webspace, no one could ever predict such a drastic increase in the demand for online gambling services as we are currently witnessing. Since most gambling service providers did not prepare for such changes, it will still take more time for online gaming to become a predominant segment of the industry.
Transition to Online Gambling
In order to switch to online services, licensed operators have to solve some legal issues. A gambling website has to comply with a set of rules and regulations that applies to online gaming businesses. At the moment, companies will encounter various complications when conducting such a transition due to the limitations that countries and states are imposing. Jurisdiction and taxation issues would be very likely to come up from the very beginning.
Besides, a general set of definitions does not exist. In the USA, for instance, 17 of the states do not even provide business owners with a clear idea of what “gambling” is by law. International differences also complicate the task, as the operators must carefully decide which jurisdiction applies to users. For example, which law would govern a player from Florida with his server in New York? What would his tax rate be?
These and many other issues are awaiting land-based casinos that end up deciding to digitize their services. For gambling service providers that consider making a shift towards web solutions, it is crucial to realize that this process requires a lot of investments. However, it may be very well worth the struggle, as online gambling is a promising way to create a “financial airbag” for gambling businesses. As the current crisis shows, online operators, even though facing certain challenges, manage to keep their revenue relatively stable.
