How Covid-19 paralyzed the industry—and what gaming is doing to cope
by David McKee
It was the week that changed everything. On March 11, the National Basketball Association suspended its 2020 season after Utah Jazz player Rudy Gobert tested positive for Coronavirus. That same day, the National Association of Broadcasters pulled the plug on its Las Vegas convention and the dominos started to topple. The next day the National Hockey League suspended its season as well. College basketball games played to empty auditoriums, then March Madness was canceled entirely. Major League Soccer first banned spectators, then games. Major League Baseball pushed back the start of its season by at least two weeks. The Masters golf tournament was postponed until November, and the Kentucky Derby pushed back to September. NASCAR canceled its season, the PGA nixed golf tourneys left and right, and even the Monte Carlo Grand Prix was scrapped.
Sports betting was kneecapped. Especially in states like Illinois and Michigan, where it had just gone live on March 9 (Illinois) and March 11 (Michigan). Not only did Covid-19 fears empty out sports books, there was precious little to bet upon anyway: Australian-rules football and rugby, Mexican football, the Brazilian UFC. As South Point Casino sports book director Chris Andrews told USA Today, “in our racket, people like to have action, so they’re getting some there.” Turkish football was said to be blowing up, too.
Pretty soon people didn’t have the leisure of sports books, either. On March 13, Montgomery County in Pennsylvania closed Boyd Gaming’s Valley Forge Casino Resort, the first private-sector casino to go dark in what would become a tsunami of closings sweeping most gambling-enabled states. Nevada tried to hang tough for a while but, on March 17, Gov. Steve Sisolak bowed to the inevitable and shut down the state’s casinos for 30 days, a move that would ultimately last almost three months. In a week, U.S. gaming had gone from a boom era, with double-digit revenue increases in many states, to a ghost industry.
In the meantime, punters were encouraged to stay how and try Internet gambling. Unfortunately in the United States, this is just a Band-Aid. Only 10 states have it and it is mature in virtually only one of them, New Jersey. In March, online casinos in the Garden State grossed $52 million, with Tilman Fertitta’s Golden Nugget bagging more from online play than terrestrial action. Whether that’s the start of a trend remains to be seen. In the meantime, Casino Life huddled with two experts, 888 Holdings Senior Vice President for Business Development Yaniv Sherman, and veteran sportswriter and author Jeffrey Goldberg. Here’s what they had to say about our not-so-brave new world.
What was it like out there?
Sherman: These are very troubling times. We’re seeing a lot of things for the very first time and we are focused, first and foremost, on protecting our operations. We made sure that our employees are safe and healthy, and now we have the organization on a pretty new itinerary. We can now look at adjusting our operations. Sports betting has been essential to us now and will be for the foreseeable future so these are very troubling times.
How has the Coronavirus outbreak impacted the betting industry as a whole?
Goldberg: Obviously it’s taken just an enormous toll. There’s not a whole lot for people to bet on. The most interesting development was that Bovada, the betting Web site, was offering bets literally on the weather. That was all that was left to bet on: Whether it’s going to be rainy or the over/under on the temperature. From a betting perspective, you had to search pretty far and wide to find anything to actually bet on. There’s some international soccer that’s being played. But you look at a site like DraftKings or FanDuel, the daily fantasy sites. They were down to offering only e-sports because there were no physical sports left to be played other than an occasional Turkish soccer match. Everything was wiped out. So from a sports-betting standpoint, it’s really a difficult time.
Sherman: You can separate that between retail and online. The vast majority of operators online are predominantly sports operators. So if you follow the market, there’s been a host of announcements from the larger operators about the potential impact of the situation on them, which could be quite negative if it persists. We are in a special situation because while day-to-day sporting is our second-biggest vertical, our biggest vertical is casino gambling. We are a gaming operator by nature so the effect will probably not be as dramatic. The land-based operators are at the center of the current storm. Atlantic City closed, Pennsylvania closed its casinos and Las Vegas was closing down pretty rapidly. They’re suffering from a much bigger problem, between the conventions and the casino floor. The toughest impact would be on land-based operators, then on retail and online, then on online. In that regard we have sport revenues but we’re working as much as we can to mitigate that and ramp up our gaming division.
Goldberg: The betting industry has been just looking for alternative ways to find ways to keep their clientele engaged because there were not a lot of options for them to have betting. Even the political sites are idle right now because the Democratic race is pretty much over. You can’t even bet on that anymore. There’s not a lot going on! And that makes it a really, really difficult challenge to try and stay afloat.
Are you seeing movement from sports betting over to online casino gaming?
Sherman: We’re seeing a bunch of it on the casino-gaming side, both poker and casino. We were starting to see a shift there. You can’t fully compensate for the absence of sporting events. It’s basically a whole vertical that ground to a halt. We’re trying to carefully adjust our operation accordingly.
How much of a spike in online-gambling activity has there been and where is it happening geographically?
Sherman: You mean globally? It’s pretty much across the board. We don’t see much of a difference in the territories in Europe. Overall, Europe is slightly like the U.S. in terms of the severity of the situation. Roughly 90 percent of our revenue used to come from Europe, so naturally the effect there, in the territories that we’re looking at, is more apparent. But there’s a bigger issue that we’re looking at right now, making sure that our employees and their families are safe. Places like Italy and Spain seem to be suffering more than places like the U.K. or Denmark, or the other territories that we’re operating in. So we’re just making sure that we provide business continuity and any help that our employees or players are looking for.
Goldberg: It’s hard for me to say. I write for a sports-gambling Web site, so we don’t do a lot with online gaming per se. But I imagine it has to have, just because with everyone being forced to work from home, anyone that’s a casino player you really have no alternative now. We see what’s happened in Vegas. That’s obviously the most extreme example of casinos closing but casinos had been closing across the country before Las Vegas made their closures. So if you are a casino player, you really had no choice but to go online to play if you want to play at all. Just by default the online-gaming situation has probably increased pretty dramatically—as opposed to the betting aspect of it, where there’s really nothing. Now you’ve got all kinds of choices for online-casino gambling, whether it’s blackjack or poker or slots. Those options are pretty plentiful. I imagine they are definitely seeing a spike.
With so many events postponed, suspended or cancelled outright now, what was there for the sports bettor to bet upon?
Sherman: The short answer is, not a lot. The only things that are out there were the Russian soccer league, which wass still active, and futures betting, where you’re betting on events that are months away, into the NFL season and so forth. The offshore books are not bound by the same constraints and are offering weather and political betting, but it doesn’t really matter because people want to bet on current events and the more popular ones.
In terms of online gambling in the United States, there are a few jurisdictions like New Jersey that are mature. That may be the only one. Are we going to see movement toward the online sector in America?
Sherman: What this demonstrates to the physical casino industry is that online is important and will grow in importance. Something that we’re looking to see in five or 10 years is online business being expedited and that it’s important to develop a digit strategy, not least for these situations. The legislation is probably slowing down due to bigger issues, because the administrations and the states are now very busy with the virus and the crisis itself. But I can only see online regulations being expedited when we’re done with the current crisis. It’s pretty apparent that it is only helping the physical casinos and also providing additional tax dollars to the state.
Goldberg: California is interested in legislation to make it legal but of course no one’s working on that right now. Any states that were in the process of doing it, I would imagine at this point any sort of legislation of that caliber is probably being put on the back burner while the states are dealing with the obvious, ‘We need to figure out how to keep our people alive.’ Online gaming and online-gaming legislation is just not important right now, and probably won’t be for some time. If a state does not have it I don’t think you’re going to see them getting it anytime soon, just because it’s so not a priority. But there are other states: I want to say Missouri recently passed legislation to make it legal. There are a handful that are. But I would think from a national standpoint any sort of legislation involving that … you can just imagine the look. ‘Why are you focusing on making sports gambling legal when hospitals are filling up with patients?’ It just would be a bad look.
What about states that were banking heavily on sports betting as a source of tax revenue? What’s the outlook for them?
Sherman: Depending on how many products they licensed and what is the tax scheme, states like New Jersey are going to collect a fair amount of tax dollars. The rest have a balance of taxes imposed, regulations and how competitive the landscape is. The states that would enable or allow for more competition will see more tax dollars. Those that are limiting the products or imposing higher taxation or entry barriers will see less tax dollars. More competition means more dollars invested in the market and yields more taxes.
What are your expectations for the balance of 2020?
Sherman: Right now, I would hope—being realistic—that we would be able to resume with sporting events in late summer. Now with the Euros being postponed into next year, I would hope we would get over the hump, and we will curtail and contain the Coronavirus, so I hope that we will have more clarity. Within a few weeks we’ll have a better view of what the rest of the year will look like and, to be optimistic, to have the premiership in the U.K. and the NFL in the U.S., if they resume their original timing—I have no idea if that’s feasible or not. That’s my point about clarity: The main thing that we’re looking for over the next few weeks is that we’ll have more clarity if the end is in sight of this current situation, because we’re at the height of uncertainty, which is not good.
