A global gaming analyst kicking off this week’s ICE North America conference said he expects an initial surge in demand as U.S. casinos reopen from COVID-19, but that a full recovery could take years, as people are reluctant to fly and continue to suffer from the financial blow of the shutdown.
Simon Holliday, the founder of London-based H2 Gambling Capital, added that he expects a bounce-back in global gaming in the fourth quarter, but 2020 global revenues will be down 20 percent.
“It could be much worse,” Holliday said. “At the moment, we aren’t assuming a second or third wave. We assume the reopening will happen with no pullback, but Johns Hopkins (research university) said there may be a further spike in the beginning of June with the openings (of state economies) in the U.S. If these events happen, these forecasts will go down further. We’re assuming we will return to normalcy in most markets by (the fourth quarter), which at the moment might seem a little ambitious.”
Holliday said that his firm’s prognosis — based on the International Monetary Fund’s forecast of a 5.7 percent increase in global GDP in 2021 — is that 2021 revenues could bounce back to 2015-2016 levels, but wild cards are still in play over how long social distancing lasts. When the Spanish flu pandemic hit in 1918 and ended 12 months later in spring 1919, it took more than 18 months in some areas, he said. Researchers say it could be another 12 to 18 months or longer before there’s a widely available vaccine.
“When casinos and betting shops reopen and people reboot the economy, I think we will have a completely different operating system,” Holliday said. “Initially, we expect to see a surge in land-based properties, because there will be a lot of pent-up demand. People will want to get out of their homes and get into other social environments. But don’t be fooled. This pent-up demand is still a minority of people and in the longer term, more people will be hesitant to go to public spaces than those who won’t be. It could take years, if ever, before we can get back to the same type of air travel we have now. That is going to keep customers further away and have an impact.”
Holliday also indicated that with casinos restricting capacity, number of players at tables, and slot devices and enforcing social distancing with large gatherings discouraged, people may not enjoy the experience and make repeated visits. In addition, a deep recession would mean less consumer spending to go around and that will hurt casino profitability.
Despite his concerns, Holliday said some good news will come out of the pandemic. For one, the U.S. gaming industry has been more successful with expansion and regulation during downturns and that means more states adding sports betting and expanding iGaming — the latter is in place only in New Jersey, Pennsylvania and Delaware. Regulations are being developed in West Virginia and Michigan.
“We expect to see an acceleration of sports betting and online gaming because states need taxes and operators need to return to profitability to save jobs,” Holliday said.
It’s the opposite in Europe, where there’s been a push for greater regulation to curb online gaming, which could continue, Holliday said. Although iGaming revenues have increased during the pandemic, it’s still a small percentage of overall revenues and shouldn’t be viewed as any panacea.
The downturn will result in more consolidations in the industry and also serve to encourage regulators around the world to create new market opportunities in Japan, Latin America, South America and India, Holliday said.
Tom Mikovits, the former Las Vegas casino marketing director, who on Monday helped emcee Clarion Gaming’s conference that runs through Friday, sarcastically said afterward, “There’s nothing like starting off the week with cheery news.”
Mikovits said he knows locals-based Las Vegas casinos like South Point where he worked will be busy but won’t be “10,000-people-a-day busy.” The U.S. jobless rate is 15 percent and even higher in Nevada, he said.
“There’s a day every good gambler goes bad,” Mikovits said. “We used that saying for people who ran out of money and some people may run out of money for the locals market.”
Michael Caselli, non-executive chairman of Clarion Events, agreed that social distancing will have an impact, with people reluctant to leave home. If they do travel, it would be locally to a casino rather than get on a plane, he said.
“It looks like it’s going to take years for our industry to recover from this virus,” Caselli said. “There are two pandemics. The one when the virus goes away and the one when people’s perception of the pandemic changes.”
