It’s no secret that gambling revenue has nosedived across the globe during the COVID-19 pandemic. In fact, it’s been one of the hardest-hit sectors, rivaling the automotive and travel industries, according to analysts at H2 Gambling Capital.
However, according to new data from H2, while the retail sector has been hard hit, online gambling revenues have been relatively unscathed. Per a press release from the company, “H2 figures show that global revenues have dropped 39% for retail gambling outlets but only 7% for online, compared with H2 forecasts 12 months ago.”
At the Sports Betting USA Conference, David Henwood, Director of H2 Gambling Capital, made the case that despite the gambling sector as a whole falling back to 2010 levels, online gambling has been a real bright spot. That bodes well for the future of the industry as a whole.
“The good news is we believe it will bounce back.” Said Henwood. “Primarily because of the phenomenal rise in the percentage share of online (as shown by the red line graph below), which in the space of a few months has jumped from 13% of all gambling revenues pre-COVID to 19% – possibly reaching 20% by the end of the year.”
Online Gambling Picks up the Slack
The growth of online gambling should come as no surprise considering the closures of and, where casinos are open, restrictive policies in place at land-based gambling venues as COVID-19 continues to spread.
Of course, online, reaching 20% of total gambling revenue by the end of 2020, comes with the caveat that it’s not widely available in large swathes of the US and other markets worldwide.
Bottom line: Online gambling’s percentage of total gambling revenue in 2020 would be far more if it were more widely available, and if the US markets were more mature.
As H2 notes, “With a current total addressable market of around 20% of the US population and relatively slow take-up of live in-play betting, to which can be added a resilient and growing offshore market that H2 values at $17bn in 2020, there is still much more room to grow for the US sports betting market.”
US Will Become the Key Driver of Sports Betting Growth
Fortunately, legal online gambling is spreading in the US.
H2 forecasts US sports betting operators will reach $1.4bn-$1.5bn in GGR by the end of 2020. It expects that number to nearly double in 2021 and approach $10 billion by the end of the decade.
“Going forward, we can see that resilience playing out and we are now looking at the US as the world’s fastest growing sports betting market,” Henwood added.
The Online Casino Opportunity
And that’s just sports betting.
Legal US online casino and poker markets are lagging well behind sports betting legislatively. Michigan on the precipice of launching online gambling sites, which would make it just the fifth state in the country offering legal online casino games. Delaware, New Jersey, Pennsylvania, and West Virginia are the other online casino states, while Nevada offers online poker.
That lag could slow or even disappear in 2021.
States across the country are scrambling to find revenue and ways to support their land-based gambling industries during the pandemic. The sports betting well has already been pumped in many places, leaving online casino and online poker as the only options. And in statehouses already exploring sports betting, there will likely be an appetite to double-dip and consider online gambling at the same time.
That could lead to a flurry of legislation in early 2021, with states cashing in on upfront licensing fees and tax revenues kicking in when those industries come online in 2022.
Suppose online casino legalization can catchup to sports betting. In that case, the US online casino industry could swell from just over $1 billion in 2020 to well over $10 billion by the end of the decade. Online casino offers a larger revenue opportunity than sports betting alone, and the two work even better in tandem.