Impact of Coronavirus on Gaming Industry
The coronavirus pandemic severely impacted the travel, hospitality, and entertainment industries, with the gaming sector facing significant challenges. Find out about the closures, revenue fluctuations, and public perception towards casinos.
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Presentation Transcript
Another Closed Industry Thankful for the Web Arguably, the coronavirus pandemic hit the travel, hospitality and entertainment industries the hardest. The American Gaming Association (AGA) reported during mid-April 2020 that all 989 commercial and tribal casinos were closed. The closing of all major sports, especially the NCAA Basketball Tournament during March, resulted in a 50% decrease in New Jersey sports bets during March to $187.1 million, compared to $372.4 million during March 2019. Although online games can t replace all casinos betting and revenues, Pennsylvania experienced a 25% YOY increase in online wagering during March. Online betting on eSports is generating some revenue, as the Nevada Gaming Control Board approved it during April.
2019 Was a Good Lead-in to 2020 The AGA s State of the States 2019 report indicated 2018 revenues (the latest data available) for the commercial casino industry increased 3.5% to $41.68 billion and generated $9.71 billion in direct gaming tax revenues for state and local governments. The US Census Bureau uses different data in its revenue reports for gambling industries and its 2019 total of $34.13 billion was a 5.0% increase from 2018 s $32.49 billion. During 2018, the US Census Bureau data revealed Q4 generated the most quarterly revenues, or $8.24 billion, while Q2 2019 was the largest quarter that year, or $8.68 billion.
States Hit the Jackpot The AGA also reported 12 of the 24 states with commercial casinos had record-setting 2018 revenues, with Nevada first at $11.92 billion, a 2.99% increase, but Massachusetts had the largest increase, or 65.71%, to $273.0 million, because of recent legalization (2015). Only two of the 24 states experienced decreases in 2018 commercial casino revenues: Illinois, -2.45% to $1.37 billion, and West Virginia, -0.14% to $623.8 million. Interestingly, Nevada didn t generate the most 2018 taxes from direct gaming revenue. The total of $850.6 million actually decreased 1.91%. Pennsylvania generated the most dollars, or $1.48 billion, a 3.16% increase, but Massachusetts had the biggest increase, or 35.55%.
Tribal Casinos Continue To Do Well According to the National Indian Gaming Commission, total 2018 revenues (latest available data) at tribal casinos was $33.7 billion, a 4.0% increase from 2017 s $32.4 billion. Revenues have increased every year since 2009 ($26.5 billion). As of 2018, there were more tribal (514) than commercial casinos (465) in the US and tribal casinos were located in more states (29) than commercial casinos (24). The largest group of tribal casinos (20.4%), by 2018 revenue range, were those generating less than $3 million. Tribal casinos face a number of challenges, because of the various tribes unique status in the US. For example, the Obama administration allocated 500,000 acres of land to tribes, some of which resulted in new casinos, while the Trump administration has allocated none.
More Americans Positive About Casinos Despite some traditional concerns about gaming (crime, addiction, etc.), 49% of Americans the AGA surveyed during 2019 said they have a favorable view of the casino gaming industry: 71% said it creates jobs and 51% said it helps local economies. This favorability is reflected in the 9-percentage-point increase of Americans who said they visited a casino during 2019, or 44% of all respondents. The AGA anticipated another 5-percentage-point increase for 2020, although now unlikely because of the pandemic. Introducing new technologies has been a challenge for the gaming industry; however, a 2019 AGA survey found 29% of respondents said the industry was advancing tech innovations, 57% mirroring overall tech trends and 14% behind the curve.
Sports Betting Will Go Boom! As one leading sportsbook stated in an April 20220 Washington Post article, sports wagers were left with Russian table tennis and Japanese sumo wrestling, but another sportsbook said major sports will return without any long-term, negative impact to sports betting. Despite the Nevada Gaming Control Board approving eSports betting during April 2020, the Las Vegas sports- wagering traditionalists are a bit wary. First, because the approval process is complex and time-consuming and most sportsbooks are unlikely to take large bets. As of January 2020 sports betting was legal in 14 states, which increased by 3 (Montana, Michigan and Illinois) by April 2020 and 4 more states have authorized it, but are not yet operational: North Carolina, Tennessee, Colorado and Washington.
Advertising Strategies Casinos need to communicate strong messages about their pandemic safety protocols to allay their customers fears. The major challenge is attracting older adults who are a primary target audience, but many are still remaining home. Casinos with the appropriate and secure outdoor space may want to move a few games outdoors, so patrons will feel safer. Create a party theme and offer incentives to promote outdoor gaming (Local laws may not allow this promotion). Recommend local casinos in states where sports betting is legal to air a flight of spots near or during the first, returning major sports broadcasts, offering an incentive targeting sports bettors to return to their favorite casino.
New Media Strategies No doubt, all casinos will communicate their reopening health & safety protocols on their Websites and social media, but short videos are more likely to be viewed, and a series that focuses on specific sections of the casino will be most helpful to returning patrons. Casinos can also ask the first returning guests to record and post short videos to social media sharing how safe they felt during their visit, what they enjoyed about being able to visit a casino again, etc. Offer a discount for their next visit as an incentive. To attract younger adults (in lieu of older adults remaining at home), use social media to update them about the casino s tech advancements while closed during the pandemic as well as future tech enhancements.
