The last three months have been devastating for the national economy with the gaming sector one of the hardest hit but it is also one of the most adaptable and innovative in North America and has bounced back many times before.
Fintan Costello, former head of finance & igaming at Google and Managing Director of Bonusfinder.com, a network of state regulated websites aimed at finding the best bonuses for US sports bettors and casino players, explains how gaming is leading the way in bringing normality back to the casino floor as safely and effectively as possible.
Historically, the US gaming industry has faced more setbacks and milestones than most sectors of the national economy combined, but 24 hours in mid-March 2020 forever will go down in gaming folklore as the day everything simply stopped, with more than 1,000 commercial and tribal casinos in 43 states instantly bolting their doors.
The financial impact since then has been devastating with Nevada, home to the country's biggest Las Vegas properties including the Bellagio and MGM Grand, which produced $12 billion in gaming revenue in 2019, recording an April unemployment rate of 28.2%. This was the worst any state has seen since the national jobless rate was estimated at 25% in 1933 during the Great Depression. To put this into perspective, the national jobless rate stood at 14.7% with approximately 40 million Americans filing for jobless aid since the outbreak began.
However, with cases falling and business in dire need of post-pandemic recovery, if anyone was going to volunteer to jump-start the country it was this industry. In the past two weeks alone, more than 160 gaming properties have reopened in 15 states with Nevada's casino market planning to partially re-open on June 4th.
Just two months after closing, Louisiana became the first state to re-open commercial casinos on May 18th, followed swiftly by Mississippi with loyal customers seeking some form of normality said to be queuing, at a distance, as early as 5.30am.
Several tribal casinos re-opened even earlier. According to CDC Gaming Reports, the Coeur d'Alene in Idaho became the first property to switch the slots back on followed swiftly by tribal venues in South Dakota, Oklahoma, Washington (Angel of the Winds), Arizona, California, Michigan, and New York.
Innovation will emerge
The re-opening of the country's biggest and brightest casinos on the Las Vegas strip in early June, however, will symbolise a major milestone in the beginning of the recovery that Nevada and its fellow 49 states now face.
Nevada governor Steve Sisolak said last week that he is encouraging visitors to "come and enjoy themselves and have a good time" but strongly caveated his enthusiasm with "we're going to take every precaution possible". The percentage of those testing positive may have fallen for 30 consecutive days, but as we all know, just one major incident would be enough to spark a second wave of closures. Despite a public-facing eagerness to open, casinos are treading with extreme caution.
Every state law differs, but each property will almost certainly have to abide by state and locally mandated health and safety guidelines that will include restricted capacity (likely 50% or less), the use of personal protective equipment, enhanced cleaning procedures, and limited facilities.
Re-opening a casino during a pandemic is unchartered territory, however this has and will undoubtedly create more innovation both within land-based properties, across the sporting world that so many properties rely on to run sportsbooks, and also online – a segment of the industry that has grown rapidly since the repeal of the PASPA legislation in August 2018 allowing states to determine their own online sports betting and igaming parameters and taxation regimes.
Within properties, innovation including new ways of operating and new ways of playing are already appearing. Walk into a casino today and thermal imaging cameras are likely to track your movement, looking for signs of a high temperature and immediately alerting staff if levels are above 100.4 (degrees recommended by the U.S. Centers for Disease Control).
Head to your nearest poker table and your chips will be regularly sanitized, the same with slot machines, and all card games while you will be asked to remain at a much further distance away from your rivals with regulators capping this to three per table for blackjack and four for poker.
It remains to be seen how players respond, and how casinos manage this, but there will reportedly be little to no touching cards in games such as blackjack, instead these will be handled by a dealer in full PPE using cards coated with antimicrobial protectant. Not your average everyday game but perhaps the new normal, for now.
Looking online to mitigate losses
While the odds maybe stacked against an instant recovery, in my experience this industry is more than capable of bouncing back and innovating quicker than most, particularly due to a shift towards online and mobile betting and gaming.
The last decade of global online gaming growth, for example, has been nothing short of spectacular with the sector valued at more than $50 billion in 2019 and, pre-pandemic, expected to grow at a compound annual growth rate (CAGR) of 11.5% from 2020 to 2027.
Since the repeal of PASPA in August 2018, 17 US states have regulated sports betting with five, including Delaware, Michigan, Nevada, New Jersey, and Pennsylvania opening up igaming, largely made up of online casino.
Pre-pandemic combined sports betting and online casino 'handle' across those US States was more than $1.7 billion in February 2020. Looking at igaming alone, New Jersey generated $482.7 million in igaming Gross Gaming Revenue (GGR) in 2019 and $52 million in February 2020.
However, due to the shutdown and postponement of major live sporting events, nationwide sportsbook handle dramatically shrank by 65% in March compared to February with sports betting revenue falling 58% in March from February to $37.8 million.
US sports are also planning a safe road to recovery, and the likelihood of all four major sports including football, baseball, basketball and hockey potentially simultaneously re-launching and crossing over for the first time in history could be the boost both the industry and consumers need, however states could seek both more immediate and longer terms ways to mitigate losses. One solution could be igaming.
BonusFinder.com research in April this year found a 100% rise in internet searches for 'online casino' across North America, due the closure of major US land-based gaming venues and cancellation of live sport.
The latest figures from the Pennsylvania market, for example, also suggest that sports bettors have been directing their spend elsewhere with online gaming revenue hitting a record $43m in April, almost doubling March numbers.
This surge in online casino interest, could spark lawmakers to consider fast-tracking igaming in states that have already regulated betting. Industry trade group, iDevelopment & Economic Association, is urging states to allow online casino games to replace disappearing revenue, including exploring how governors can use emergency powers to quickly allow the vertical.
The five states that have opened igaming have seen month-on-month revenue rises with New Jersey leading the way. The state has a robust and responsible framework in place to protect players and has shown that online and offline casinos can operate together within the same territory and consistently generate very healthy returns.
The demand for igaming is likely to increase as this unprecedented situation continues and even as land-based properties re-open, therefore now is arguably the time to focus on providing best-in-class, regulated real-money online casino games that players can enjoy responsibly and that can also help state governments make up revenue shortfalls.
As the country and the gaming industry continues to gradually re-open and adapts to a new way of operating, and consumers a new way of playing, the coming weeks will be a huge test. All bets are off as to what success looks like, but if any one industry can acclimatise quickly to new surroundings and turn it into a positive it's gaming, and I look forward to being part of that revival.