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The Effects of the Economic Shutdown on the UK Gambling Industry

Companies / Gambling Jun 08, 2020 - 11:40 AM GMT

By: Submissions

Companies

               It comes as no surprise that the COVID-19, also known as the novel coronavirus, crisis has caused worldwide problems in the health, business and economic sectors, due to lockdown restrictions imposed in countries on a global basis, starting from mid-March of this year. With the economic shutdown, there have been several consequences on the gambling industry in the UK. This article details the points in which the industry has been affected.


Land Based Casinos Are Running on a Loss

Since the UK is one of the most heavily inflicted countries, measures have been taken to increase social distancing for the betterment of those who are more inclined to fall sick during this period. Closing of social venues where there are chances of larger crowds gathering do not only extend to bars, cinemas and restaurants, but also to land based casinos. With gambling being a largely developed sector in the UK, restrictions based on limiting social interactions to casinos results in a huge loss for the country. Land based gambling in the UK are responsible for bringing in as much as £10 billion a year. Licensed casinos, when faced with severe restrictions, are losing profits. Due to the unpredictable nature of the virus and the likely knowledge that a second wave might hit at any time, it is impossible to know how long, and to what extent, the economic shutdown will be in place. This means that the likelihood of casinos continuing to lose revenue is on the rise.

Sports Betting Has Declined

Sports events have been shutting down to stop spectators from gathering in proximity in order to comply with lockdown restrictions. Apart from the Euro 2020 being suspended, there are only a few leagues at the moment that are active and playing. It is possible that even those might stop, depending on how the situation escalates and what restrictions might be needed as safety measures. With all kinds of sports events getting cancelled, the sports betting sector has taken a hit. People are unable to place bets on games and shows which are not allowed to take place, and bookmakers are losing profits as a result. And it is not just the bookmakers: even large companies are suffering from limitations imposed on sports betting. When the lockdown first started, gambling firms were asked to impose only a £50 cap per day, which evidently caused them to incur losses.

The Recession Could Impact Gambling

Thinking positively, there is a chance that globally, we will eventually get out of this crisis, but it is important to remember that with the economic shutdown, there is the recession to follow. Many have lost their jobs as a result of the shutdown, and for many of whom who were lucky enough to continue working, salaries have been reduced in several fields. With people short on cash, they are less likely to spend money on non-essential items and needs, and the gambling industry is categorised as non-essential. So, even with the opening up of land-based gambling and the restarting of sports events once the restrictions begin to ease, everyone is less prone to invest in gambling.

A Significant Increase in Online Gambling

This does not mean that the whole gambling industry has come to a halt. As a significant part of the population is unable to leave their houses with the economic shutdown, online activities have increased according to GamblingNews.com. This can be attributed to the rise of digital gambling, where those who are missing out on land-based gambling and sports betting can enjoy the thrill of the game within the confines of their home. Gross gambling yield has increased at 4.3% for betting, 12.5% for bingo and 3.9% for remote casino operations. With jobs, social interactions, schooling all relying on online environments to keep running during the shutdown, access to online casino websites will encourage more and more people to turn to remote gambling at this time. Online gambling has been a successfully developing sector for the past decade, and with the prolonged economic shutdown in 2020, virtual casinos could be profitable for the gambling industry.

Restrictions Imposed on Spreading Accessible Online Gambling

On the other hand, boredom, as a result of the pandemic, has extremely affected those who are suffering from a gambling addiction. In order to counter this, several betting shops and gambling sites have been cancelling their adverts from the TV and radio. Officials are pushing social media sites to do the same, as people are spending more time online now more than ever and being lured by gambling adverts. While this is a good move for the ones who need help with a serious problem, it also might take away from the positive effects on the gambling industry with the removal of promotion of online sites. For users who are looking for gambling for simply recreational purposes, they will be less informed about the options available with the lack of advertisements. This can bring down the increased profits that remote gambling could have brought to the table.

               The effects of the economic shutdown on the UK gambling industry will continue as long as the pandemic forces restrictions to be put into place. So far, absolute effects cannot be predicted, but the consequences can be speculated to last for a while.     

By S N Chatterjee

Copyright 2020 © S N Chatterjee - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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