Online Gaming Could Help Offset Post-COVID-19 Economic Downturn

Online Gaming Could Help Offset Post-COVID-19 Economic Downturn
© USA Today

In the wake of the coronavirus pandemic, the U.S. gaming industry has the opportunity to adapt and pivot sharply toward online casino gaming. Such a shift could help stabilize state economies amid this world health crisis.

“If you are a licensed, land-based operator, now's the perfect time to be rethinking your policies,” Jason Ader, managing partner at SpringOwl Asset Management and former board member at Las Vegas Sands, told Gambling.com.

As in-person gaming at brick-and-mortar casinos slows amid social distancing, states with legal online gaming can recover. Online gambling is legal in New Jersey, Pennsylvania and Delaware. Online poker is legal in those states plus Nevada. West Virginia and Michigan have legalized online casinos with target launch dates of later this year.


RELATED: Coronavirus May Move US To Online Sports Betting & Casino


With revenue being lost daily, state legislatures should consider making online gaming a priority. Macau, the world's most popular gambling destination, provides a cautionary tale.

Casinos in the Chinese betting hub shut down for 15 days after the coronavirus outbreak at a cost of $100 million per day.

Online gambling is illegal in China, and the shutdown and extreme loss of revenue has leaders thinking that it’s time to add online gaming there. Ader said on CNBC’s “Squawk Box” that the coronavirus in China has pushed people to illegal online gaming — spending money in off-shore books and not in in the casinos where the tax revenue benefits the country.

“Daily online gambling is up 90% (in China) compared to last year,” Ader said. “That’s an unbelievable number, and it raises the issue of should land-based operators be converging around the world with online operators. That’s really the growing trend.

“Land-based operators are not getting any business,” he added. “I think it’s a wake-up call, not just in Asia but in the U.S.”

With more states looking for ways to fund health, education, transportation and environment initiatives, the coronavirus pandemic could prompt jurisdictions to take a closer look at the potential tax revenue generated by online gaming. Florida lawmakers have already considered it.

Land-based US Casinos Suffering

Coronavirus, also known as COVID-19, has had a profound effect on the gaming industry in North America.

Sports betting has been shut down because the NBA, NHL and MLB has postponed play for at least a month and March Madness was canceled altogether.

Gamblers aren’t betting or playing in land-based casinos. People are skittish about going into busy public spaces as they try to avoid human contact. Casinos are especially privy to such a thing, whether it be at buffets, slot machines or tables, with chips and cards passing multiple hands. Brick-and-mortar casinos are facing the real possibility that customers will stop coming until the pandemic has subsided.

Valley Forge Casino outside of Philadelphia announced Friday that it has closed for at least two weeks. Rivers Casino Philadelphia announced late Friday that beginning Sunday at midnight it would close for 14 days.

Also late Friday, four casinos and seven racinos in Ohio were beginning to shut down because the state mandated that the total number of people in buildings had to be kept under 100.

Other states and casinos are sure to follow in closing brick-and-mortar casinos. Last week in Oregon, the Wildhorse Resort & Casino closed when an employee tested positive for the virus. It re-opened by the end of the week. That might have just been the beginning of shutdowns for land-based casinos.

Will America Respond?

Online gambling is highly popular in Europe. In the U.S., states with legal online options will surely see a boost in revenue as more and more people stay home. Those living in states without it may instead search for illegal, off-shore options.

There is no doubt online gaming has been a boon for New Jersey. The state recorded $494.81 million in total sports betting handle for February, up 54.5% compared to the total handle reported for the same month last year. New Jersey's total online sports betting handle for February was $436.49 million, or 68% higher than the $258.8 million online handle in 2019. Mobile betting represented 88.2% of the total sports betting market in New Jersey during February.

With a 15 percent tax on online gambling revenue in New Jersey, that’s quite the windfall. Eventually, other states that have been slow to come around to it will.

Now seems to be a good time for brick-and-mortar casino companies to get behind it, too. And several already have. In New Jersey that includes MGM, Caesars Entertainment, Hard Rock and Golden Nugget, the latter of which owns more than one-third of the online market in the state.

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