Gambling was recovered from Covid-19, but can now be reduced by legal obstacles. Online casinos had a good time as bored players in the quarantine signed up in droves.
Gambling was recovered from Covid-19, but can now be reduced by legal obstacles
Which is true that the casino always wins, even in the midst of a pandemic. In the early days of the close, when the stock market was reeling from a stomach-turning free fall, the prices of British gambling powers’ shares also plunged.
The cancellation of sporting events cut off the steady stream of income that many had come to enjoy, not only from horse racing but, increasingly, from football betting, which typically involves small bets but extremely high volumes.
With no certainty about the return of sport, and the cash cow of football in particular, the immediate future looked bleak. Since then, two things have happened.
Firstly, football has returned behind closed doors and match fans are making up for lost time by scheduling games more or less every day, with more of them televised than ever before.
Second, online gambling sites with a strong offering in areas such as online poker and casino games have enjoyed a significant increase in website traffic, as the boredom of the shutdown helped stimulate new player registrations.
These days, the world’s largest online gambling company, Flutter Entertainment, will update the market on its performance in the six months to the end of June.
Not everything is rosy in the garden of gambling. The year 2020 could be one of the most important in the history of the UK gambling industry
Flutter Entertainment is the owner of Paddy Power Betfair which has been one of the most resilient players in the industry, thanks to its scale and the diversification of both geography and products that it can boast since its $6 billion mega-merger with Canada’s The Stars Group, which includes Sky Betting and Gaming.
While some UK rivals, such as William Hill, continue to rely too heavily on UK sports betting players, Flutter has a number of impressive ideas in its possession. The agreement with The Stars Group allowed Flutter Entertainment to acquire PokerStars, one of the world’s leading brands, as well as a considerable presence in Australia and an improved range of casinos.
This, according to Russ Mould, investment director for the brokerage firm AJ Bell, made Flutter one of the firms “best suited to help or entertain the population of the UK while it was in quarantine”. And if that wasn’t enough, Flutter Entertainment also owns FanDuel, a fantasy sports betting site used by over 8 million sports fans in the rapidly expanding and recently liberalized US market where Flutter like all British betting companies is trying to establish an umbrella on the gambling beach.
“Covid-19 will probably lead to a faster pace of legalization of sports betting in the United States, followed potentially by the legalization of online casinos, in our opinion,” say Jefferies analysts. All of this helps explain why Flutter Entertainment is valued at over 40% more now than in early March, while rivals GVC (owner of Ladbrokes Coral) and William Hill have struggled to make up for lost ground during the closing.
Industry insiders say Flutter’s management has also performed more impressively than its rivals, particularly after GVC’s veteran boss Kenny Alexander announced his intention to retire. Any sign in Thursday’s figures of a stronger than expected recovery in sports betting could provide a new opportunity, not only for Flutter but also for some of his more sports-focused colleagues.
However, not everything is rosy in the betting garden, and 2020 could be one of the most important years in the history of the UK industry, a sector that is truly a world leader. So far, companies such as Flutter and casino-centric rivals such as 888 have skilfully navigated the troubled waters of the pandemic.
But this year will also see the start of the 2005 Gaming Act review, the legislation introduced by Tony Blair’s government that gave Britain one of the world’s most liberal gaming markets, and created the industry we see today. There is a broad consensus among the parties that the regulatory pendulum must now swing in the other direction.
If that happens, as with the pandemic, Flutter’s size and diversification will serve it well. But it will also make the stakes for its expansion in the U.S. much higher, and with no shortage of competition for American customers, it will be a fierce battle. Flutter, and the industry in general, have eliminated the coronavirus quite well, but the real dangers are yet to come.