As the pandemic resurges, will gambling businesses survive local lockdowns? By Andrew Tottenham, Managing Director, Tottenham & Co September 15, 2020 at 2:41 pm The Pandemic Resurges Sadly, countries that were doing well in controlling the spread of the virus, such as Czechia, Austria and Slovenia, are now seeing a record number of new cases. Whilst these appear to represent a younger cohort than that seen in March and April, there is concern this is temporary and that younger people may spread the virus to older age groups, where mortality rates are considerably higher. Some evidence supports that this spreading is already happening. Governments are reluctant to go back to the sort of lockdowns we had during the second quarter of this year, which were effective in reducing the spread of the virus. The downside was that the economic effects have been devastating: GGR is down more than 50% for “destination” casinos and anywhere between 15% and 30% for locals-oriented casinos. On the other hand, the spread of the virus cannot be left to go unchecked. Remember, unchecked, cases will grow exponentially. Local rather than national lockdowns along with mandates for smaller meeting sizes appear to be the next weapon in our governments’ arsenal to use against the coronavirus. What this means for the land-based gambling industry is that businesses will not know very far in advance whether they will be allowed to open or not. I see the use of local lockdowns being adopted and becoming quite common throughout the remainder of this year and next. How many businesses will be able to operate profitably under these conditions remains to be seen. Sports Sponsorship and iGaming Do Not Mix This week, we have seen two instances of gaming companies sponsoring sports, with Grand Casino Luzern expanding its partnership with FC Luzern and Gauselmann in Bundesliga club partnership. Retail betting has a long history of sponsoring horseracing and there has not been too much public concern — primarily, I believe, because children and young people were not exposed to it. They did not tend to watch horseracing on television, nor did they attend the races, so they did not see the advertising. Don’t get me wrong. I have no objection to gambling advertising or sponsorship in principle. My concern is that sports sponsorship, football in particular, means that a gambling operator’s logo is emblazoned on the team’s strip. Meanwhile, children hero worship sportspeople and want to emulate them. The result is that children become walking advertising hoardings for igaming companies. This “in-your-face” promotion of gambling and the connection of sports to gambling are red rags to the opponents of gambling and something around which they can coalesce. Despite what some might think, yes, there has been a period of growth due to the legalisation and regulation of igaming, but we have embarked on a period of contraction. Europe’s gambling industry is in retreat due to adverse changes to regulations: advertising and sponsorship bans, banning the use of credit cards for online gambling transactions, the forced closure of slot machine arcades or changes to regulations that make slot machine arcades uneconomic. Country after country is adopting these types of measures. Know Your Customer rules have decimated London’s VIP market. Can you imagine asking Saudi Arabia’s ruling elite to verify the source of their funds and wealth? In our pro-gambling bubbles, we might not see anything wrong with sports sponsorship. Some opponents say it normalises gambling, but I have no issue with normalisation; for most, it is a form of entertainment. On the other hand, the anti-gambling lobby has tasted success and is looking for further wins. What I do not want to see is that the industry gives its opponents more fuel for the anti-gambling fires that are currently burning across Europe. Hallelujah! Rationality Reigns (a Bit) Don’t worry, things are not all bad. A recent debate on gambling legislation in the House of Lords, the UK’s unelected upper house, showed signs of a degree of rationality entering into the national discussion about gambling. This debate was the opportunity for the Lords to ask questions of the Government about the review of the revisions to the 2005 Gambling Act that the Government has committed to carry out. It was also the occasion for the Lords to grandstand and pontificate on a topic about which some of them obviously know very little. The Government’s representative, Baroness Barron, the Parliamentary Under-Secretary at the Department for Digital, Culture, Media and Sport, was clearly in charge of her brief. As some of the Lords waffled about increases in problem gambling, the rise in online gambling during the pandemic and the harmful impact of advertising on young people gambling, these questions and comments were adeptly and efficiently batted back by the Baroness. She pointed out that there had been no increase in the rate of problem gambling for quite a few years, that contrary to one of the noble Lord’s view, the data show that there was no rise in online gambling between March and June and that there is no clear link between the amount of advertising and the level of problem gambling in the young. Rather, the research tends to show that the behaviour of parents and peers influence young people’s gambling. Lord Stevenson of Balmacara asked, “Is one of the great problems the lack of statutory control of advertising, which largely lies in the hands of the industry”? I know Balmacara is a small village on the northwest coast of Scotland, but it does make me wonder what planet this man lives on. The industry is subject to the strict rules laid out by the Advertising Standards Authority and the License Conditions and Codes of Practise (Provision 5), which sets out provisions for marketing and advertising to which all licensed operators have to adhere. Non-adherence leads to fines and extreme cases could mean the loss of their license. As far as gambling is concerned, the UK Government has finally grown a spine.