Ever since the coronavirus pandemic swept across the globe in early 2020, nearly all industries have felt the impact of COVID-19 (good or bad) in one way or another. The gambling industry has been no exception. Land-based gambling establishments – from casinos to betting shops – were hit hard, suffering large profit losses due to having to shutter their doors during lockdowns. However, this negative impact hasn’t been the case across the board for the global gambling industry throughout the pandemic. In fact, although their brick-and-mortar counterparts suffered, many iGaming businesses have managed to thrive.
With the vast majority of people spending more time inside than usual, internet use has skyrocketed during the pandemic. In fact, in the UK alone, 87% of the nation’s online consumers have spent more time connected on devices throughout the pandemic, especially mobile. More internet time has also increased the number of online gamblers worldwide. With nothing else exciting to do, people who didn’t typically engage in real money online gambling began to try their luck at betting, slots, bingo, lotteries, and live dealer games. These newcomers, coupled with the industry’s regular players, marked a paradigm shift in the way the traditional gambling industry once functioned.
In this article, we’ll take a look at the positive and negative impacts of COVID-19 in specific relation to the online gambling industry as well as future industry predictions.
COVID-19’s Positive Effects on Online Gambling
In addition to the revenue benefits resulting from the surge in online gamblers over the past year and a half, COVID-19 has forced many gambling businesses to make changes in order to remain competitive and profitable. Here are some of the main ways that the pandemic has served to benefit online gambling businesses.
Businesses learned to diversify
COVID-19 forced many gambling businesses to make changes to their offerings. This didn’t only apply to land-based companies that discovered the downside of not having a digital presence, but also to online sportsbooks whose markets were affected by sports matches and other live events being cancelled or postponed during lockdowns. As such, online bookmarkers had to offer casino table and card games, slots, scratch cards, bingo, live dealer games, etc. to meet the needs of bettors searching for suitable entertainment alternatives.
eSports, Fantasy Sports and Virtual Sports boosted in popularity
In spite of the hit that bookmakers took during the 2020 lockdowns, sports betting remains one of the most profitable gambling businesses worldwide. According to a Technavio report, the global sports betting market size is expected to grow up to US$106.25 billion at a CAGR of 9.70% during 2021 – 2025. This growth won’t only be the result of betting related to traditional pro sports events, but also likely due to the increase in popularity of betting on eSports, fantasy video sports and virtual sports. Each of these types of events gained popularity during the pandemic, and not just among Millennials. With both fantasy sports and virtual sports being fully digital, non-live events, and eSports tournaments taking place online, they filled the void for bettors who would normally bet on traditional pre-match and live sports events, further helping bookmakers to retain and acquire customers.
New markets emerging
COVID-19 impacted the gambling industry on an international level. As a result, some markets saw businesses migrate from offline to online gambling activities, expanding their iGaming offerings and even introducing new regulations. For instance, in the United States, since the pandemic, online gambling in the country has increased. It is expected to grow with more states introducing regulations to legalize remote gambling to add more revenue streams to their overall gambling market. In fact, according to a Mordor Intelligence report, the US online gambling market was worth US$1,978.57 million in 2020 and is forecasted to register a CAGR of 17.32% during 2021 – 2026.
The Not So Positive Impacts of COVID-19
iGaming may be thriving, but not all the pandemic’s effects have been positive in the gambling industry. Beyond notable downsides, such as the cancellation and postponement of sporting events, the most worrisome impact is the negative effect that increased online gambling could have on players.
Increased risk of gambling addiction
An estimated 51% of the global population partakes in some form of gambling each year. Consumers spending more time engaging in real money gaming online may be good for casino profits. However, online gambling isn’t always the healthiest pastime, especially for certain individuals who are at risk of developing or who have developed problem gambling habits.
According to a study posted in the Journal of Addiction Medicine, the COVID-19 pandemic has the potential to worsen mental health problems in the general population. Among these health problems is the increasing engagement in addictive behaviours, such as gambling addiction. Online gambling, specifically, may contribute to the increasing development of these behaviours, especially during the pandemic crisis while people are confined to their homes and are facing worrying situations, such as sudden changes in working conditions, anxiety, depression and psychosocial stress. Other issues associated with iGaming and addictive behaviours include ease and availability, relief from boredom and escapism, all of which are relevant during the COVID-19 pandemic.
Worsening gambling habits among players impacts iGaming businesses negatively as well, including raising the risk of fraud and chargebacks. Moreover, as problem gambling grows among players, regulators further tighten restrictions to ensure their licensees adhere to the strictest responsible gambling protocols. For instance, in June 2020, the Gambling Commission prohibited both brick-and-mortar and online gambling businesses in the United Kingdom from accepting credit card payments from UK consumers for gambling. This was done to reduce the risk of harm from gambling by not allowing people to gamble with money they may not have.
What Does the Future Hold?
Researchers have forecasted that the pandemic will accelerate the impending digital transformation of many gambling companies. It will allow them to tap into growth areas where brands that already have digital offerings are enjoying the opportunity of unprecedented acquisition. The lockdown has seen consumers spending more time engaging with all types of in-home media, and this isn’t likely to slow down anytime soon. The increasing number of mobile phone users who play games at home and on the go drive the market, and it is probable that this will be the case for the foreseeable future.
According to a Grand View Research report, the global online gambling market size was worth US$53.7 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 11.5% from 2020 – 2027. There are a number of factors that have and will likely continue to contribute to this market growth. Among these factors include the aforementioned high internet penetration and increase in mobile phone usage for playing games as well as ease of access to online gambling, cultural approval and legalization of remote gambling, corporate sponsorships, and celebrity endorsements. Evolving technologies that provide more immersive experiences, such as virtual reality, social gaming and skill-based-style games, could also play a role.
The reality is, regardless of how long the pandemic may stick around, the growing availability of cost-effective mobile applications around the world will help to fuel market growth. Traditional land-based gambling is likely to take a backseat to its digital cousin. In short, it is highly anticipated that the iGaming industry will have a bright future.