- US Online Poker
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There’s no denying that the global COVID-19 pandemic has had a dramatic effect on how people spend their time and money.
In the gambling media, much of the focus has been on its bottom-line impacts. Brick-and-mortar casinos and sportsbooks temporarily closed, while online casinos and poker sites have enjoyed a corresponding leap in revenue.
At the same time, however, gambling watchdogs are sounding the alarm about the risks involved with the increased play.
Roughly 1 in 4 people have reported additional mental health difficulties during the pandemic, and nearly half say they have less disposable income. When it comes to addictive gambling, that’s a dangerous combination.
A series of monthly reports published by the United Kingdom Gambling Commission (UKGC) continues to shed light on the issue. The third of these, published this week, highlights some worrisome trends that are likely materializing in US online gambling markets too.
Looking at US markets, the picture is dismal in states without any options for online gambling.
Most land-based gambling revenue disappeared from mid-March until the end of April, when casinos began reopening. Sales of lottery tickets also dropped between one-third and one-half in most states, and jackpot guarantees were scrapped as customers made fewer shopping excursions.
For states that have legalized them, online casinos and poker rooms were a saving grace.
In April, the first full month of the casino shutdown, New Jersey online casinos posted a year-on-year revenue increase of 64%, while Delaware revenue more than doubled. Year-over-year comparisons are impossible in newcomer Pennsylvania, but its revenue jumped 74% from March to April and continued to rise in May.
What these numbers don’t tell us, however, is who the additional revenue comes from. That’s where the UKGC report provides some helpful, if worrisome, clues.
The increase in overall gambling activity would be laudable if it was the result of more people gambling casually as a way to pass time while stuck at home.
The UKGC’s findings suggest the opposite is true.
According to survey data from YouGov, 8% of British adults said they had reduced either the amount of time or money they spent gambling under lockdown. A quarter of those said they’d stopped altogether. Meanwhile, only 3% said they’d increased their gambling, and very few said they had started gambling for the first time.
Looking at those who’d gambled at least three times in the past week — a group the UKGC describes as “engaged” gamblers — it’s the opposite story.
Of these, more than two-thirds reported that they began spending more time, money or both on at least one form of gambling during lockdown. They also reported higher-than-average increases in spending even on nongambling forms of online entertainment.
While gambling businesses do typically generate the bulk of their revenue from a small segment of players, these numbers suggest that the proportion may have grown during stay-at-home orders.
Indeed, the UKGC’s own data shows an increase in average revenue per active customer from March to May. The trend can be seen across all product types, with betting on virtual sports showing the sharpest increase.
There is also a second possible explanation for the disparity in the two sources of data — for why so few players report an increase in their gambling despite rising average revenue per customer.
Some players will have increased their gambling activity without even being aware of it.
It’s a commonly held belief that gamblers are bad at estimating how much they play. What few studies exist on that topic suggest that the effect is small for recent activity, but problem gamblers are provably worse at making such estimates.
The UKGC report also points out that lockdown has resulted in players branching out into new verticals, something that is also correlated with a higher risk of problem gambling.
Recent evidence does suggest caution is needed when praising the growth of online gambling during an economic crisis.
A couple of decades of experience, however, also show that regulated online gambling is preferable to the alternative. Problem gamblers are particularly likely to seek out unregulated gambling sites when they don’t have access to a safer option.
Legal sites also provide states with an invaluable secondary revenue stream when retail gambling is interrupted for one reason or another. That’s why Michigan, for instance, is scrambling to get its online casinos off the ground this fall in case of a second shutdown.
The UKGC’s findings don’t change any of that. They do, however, suggest that regulators and operators should pay attention to where that additional online revenue is coming from.