The United States, Europe and Asia (in LatAm, there are no numbers yet) have already calculated significant losses in 2020 for their gaming and entertainment industries’ revenues, with a pandemic whose international progress seems uncertain and difficult to contain.
The total closure of gambling halls (casinos, bingos, lotteries and other betting shops) and the cancellation and postponement of major sports events in different markets around the world in order to prevent the expansion of COVID-19 is wreaking havoc on the gaming industry, especially to the land-based segment. According to recent general calculations by consulting firm H2 Gambling Capital, global gambling revenues will decrease by 11 percent to US$421 billion during this year, compared to 2019. H2 added that, as the pandemic continues to spread across the planet, it expects a final impact on 2020 revenues of at least 12.5 percent. The Asia-Pacific region, where the epidemic originated and forced the closure of destination gaming markets in Macau, Singapore, South Korea, Philippines and the Chinese lottery, has been assigned the highest downgrade of 15.5 percent, while Europe will suffer a 9.4 percent hit to revenues this season.
MAIN MEASURES IN THE U.S. AND EUROPE
But what are some of the major markets doing to alleviate these harsh effects of the virus on local economies? In the United States, the American Gaming Association (AGA) considered that, if casinos remain closed for the next eight weeks, the country’s economy activity will be affected in US$43.5 billion, and the direct consumer spending will be reduced in US$21.3 billion. Regarding tribal gaming (there are around 460 Indian casinos employing 700,000-plus people directly and indirectly and generating over US$37 billion), the Native American Gaming Association sent a letter to the White House asking that tribes receive a federal aid of US$18 billion to pay tribes and staff, since the casino industry is lockout. For many tribes, casinos are the sole source of commercial revenue and tribal governments will not be able to provide health and education services. In the same line spoke the Nevada Resort Association. The trade organization said the recovery time from a 30-to-90-day shutdown of all tourism activities due to the COVID-19 pandemic could take up to a year-and-a-half, with an economic impact reaching almost US$39 billion. That’s why they asked for the gaming industry to be included in a US$850 billion to US$2 trillion federal economic stimulus package that is being considered by Congress.
Similar situation is happening in the United Kingdom. In the last days, UK Chancellor of the Exchequer, Rishi Sunak, announced a total fiscal stimulus package valued at £330 billion (US$385 billion) to help UK business through these difficult times. This includes an easing of business rates and paying 80 percent of the salaries of employees who might otherwise have been laid off by companies because of the coronavirus shutdown. Gambling industry body, the Betting and Gaming Council, applauded that measure, but also urged the Government to provide emergency help to save thousands of jobs across the gambling industry. Local bookmakers have esteemed the amount of damage to their finances due to the total closure of casinos, betting shops and other gambling venues. GVC indicated it will receive a £150 million (US$184.6 million) hit to earnings in 2020, while William Hill and Flutter Entertainment both revised their guidance by up to £110 million (US$134 million). Some companies, such as Bet365, have launched internal plans to help their employees in this complex situation. Bet365 communicated a multi-million pound package of support for its 4,389 workforce. They will receive guaranteed earnings for at least the next five months to mitigate the effects of COVID-19. The bookmaker also promised that there will be no job losses and no employees will be laid off until the end of August.
About Italy, one of the countries that is suffering the virus the most in terms of the number of dead and infected, due to the growth of the Coronavirus emergency that led to the suspension of the operation of gambling and bingo halls, the Government is trying to help companies with a series of measures that include: a) the postponement of the term for the payment of gambling taxes and license fees for AWPs and VLTs to May 29th, 2020, with the possibility to pay it in installments subsequently; b) the cancellation of the license fee for bingo halls for March 2020 due to the suspension of their operation is terminated; and c) the extension of 6 months of the tender for new AWP and VLT licenses for bingo hall and betting shop licenses and for the establishment of the register of gambling operators and suppliers.
The restrictions imposed by the Government to stop the COVID-19 epidemic have severely compromised land-based gaming verticals’ revenues. In the first weeks of March 2020, the AWPs income lowered by about 22 percent compared to the same period of the previous year, while VLTs’ numbers dropped by 33.3 percent. In terms of its global situation, Italian Government adopted an emergency decree to inject €25 billion (US$28 billion) to support an already weak economy battered by the worst outbreak of Coronavirus in Europe. The decision allows a provision of €3.5 billion (US$3.9 billion) to help the hard-pressed health service and €10 billion (US$11.15 billion) to sustain families and workers.
THE ASIAN GAMBLING LANDSCAPE
When it comes to evaluate Macau’s gaming market, figures are also disappointing. Coronavirus casinos shutdown (mainly, during February) cost Macau’s gaming industry about MOP$793 million (US$100 million) a day. As a consequence of that, the Government affirmed that it expected 2020 gross gaming revenue (GGR) to decline by more than 55 percent year-on-year to around MOP$130 billion (US$16.4 billion). For the full year 2019, GGR reached MOP$292.45 billion (US$37 billion), with the Government collecting gaming taxes of MOP$113.51 billion (US$14.32 billion). It had previously estimated GGR for 2020 of around MOP$260 billion (US$33 billion) with gaming taxes of MOP$98.21 billion (US$12.39 billion). Instead, the Government now anticipates a budget deficit for FY20 and will use MOP$38.95 billion (US$5 billion) from its financial reserves to cover the deficit. Besides, a series of stimulus measures worth a combined MOP$27 billion (US$3.4 billion) have been launched to revitalize the local economy, including tax cuts and MOP$2 billion (US$250 million) worth of e-coupons for residents.
In the Philippines, the economic landscape is much more stable and solid. This country witnessed a sustained economic growth of 6.3 percent between 2010 and 2018, while the ascent slowed down to 5.5 percent in H2 2019. The ongoing Coronavirus impact is expected to result in a subdued development for the economy in 2020. Ruben Carlo Asuncion, chief economist for Union Bank of the Philippines, noted that the Coronavirus outbreak could cost the Philippine economy US$600 million or 0.8 percent of economic growth if it lasts for six months. With more than 400 economic zones under lock-down, approximately 700 factories have been shut down displacing hundreds of workers. The Philippines Government has recently launched a stimulus package of approximately PHP200 billion (US$3.93 billion) to protect the citizens and businesses from the shock of the virus. Moreover, the Central Bank announced its decision to reduce interest rate on reverse repurchase (RRP) facility by 25 basis points to 3.75 percent. The interest rate on overnight lending and deposit facilities was also cut to 4.25 percent and 3.25 percent, respectively. The projected gross domestic growth rate of 6.5 percent to 7.5 percent for 2020, however, has not been revised.
Regarding gambling, situations seems to be opposite from the rest of the above mentioned territories. Here, the Philippines casino regulatory body (PAGCOR) donated PHP2 billion (US$39 million) to its federal government to help combat the Coronavirus pandemic. Current gaming moment of the jurisdiction is so positive in this territory that Andrea Domingo, PAGCOR Chairperson, had projected to fulfill a 2020 gross gaming revenue (GGR) target of PHP290 billion (US$5.66 billion). That’s a nearly 17 percent increase on 2019’s casino and online gaming win, which totaled US$4.85 billion. Now, after the effects of COVID-19, those ambitious numbers will surely decrease.