Hedge your bets: online vs. offline gambling in 2024
Friends or foes? The relationship between online and offline casinos and sportsbooks has never been easy, but lately things seem to have taken an unexpected turn.
For a long time, online and offline gambling services have been considered at odds, with traditional land-based operators fearing cannibalisation from their web-based counterparts. However, the last couple of years have taught us an important lesson about the symbiotic relationship between the two, and we’re perhaps witnessing the beginning of a long-term convergence.
If you want to know more about the state of the gambling industry’s two souls as we approach the end of 2022, keep reading.
Paradise lost: offline casinos’ fall from grace
Far from Las Vegas’ neon-tinted, casino-lined Strip and the glitz of Monaco — shining jewel of the French Riviera and home to the legendary Monte Carlo Casino — lies the true gambling capital of the world: Macau.
Macau is one of China’s special administrative regions, and the only place in the People’s Republic where gambling is legal. This tiny peninsula on the Pearl River Delta houses over 40 casinos, which generated a mind-blowing gross gaming revenue of MOP 292.46bn (EUR 31.34bn / USD 36.45bn) in 2019. To put things in perspective, the combined GGR for all the establishments in the Las Vegas Strip during the same year amounted to “just” USD 6.58bn, while the Monte Carlo Casino raked in EUR 239.8m.
But that was then, and this is now. In 2020, Covid-19 swept across the planet, forcing extended lockdowns, travel limitations, and closures throughout much of the year.
Unsurprisingly, this caused the collapse of land-based casinos’ revenues.
Macau establishments, which cater primarily to tourists from mainland China and the rest of East Asia, saw their GGR fall by nearly 80% in 2020, down to MOP 60.44bn. Las Vegas Strip casinos fared better, recording revenues for USD 3.73bn — a 43.3% year-on-year decline. And on the glitzy Riviera, the Monte Carlo Casino had to deal with a 48% fall in GGR.
Standing tall: online casinos’ resilience
According to EGBA (European Gaming and Betting Association) data, revenues for the industry on the continent fell from EUR 98.6bn in 2019 to EUR 75.9bn in 2020. While the GGR from land-based establishments declined by over 30%, revenues from online gambling grew by 7%. This means that, in the space of a single year, online GGR went from a third to just over half of land-based revenues.
But that’s not the whole story: EGBA’s numbers don’t distinguish between revenues from casino gaming and sports betting. What we’ve witnessed in 2020 was an impressive surge in online casino GGR during the months of lockdown, both in absolute and relative terms.
Take Italy — the largest gambling market in the European Union — as an example. Online casinos’ GGR registered a 50.8% year-on-year increase in May 2020 (at the height of Covid-19’s first wave in the country), and of 80.6% in December 2020 (peak of the second wave). Meanwhile, online sportsbooks registered 73.6% and 18.37% decreases during the same periods.
The collapse of online sports betting — particularly in May 2020 — reveals another truth: brick-and-mortar establishments aren’t the only part of the industry which is susceptible to disruption. Due to their dependence on real-life sporting events, betting services are equally at danger. Granted, sportsbooks adapted by pushing esports as a betting alternative, but the numbers don’t lie.
While not the most lucrative in absolute terms, online casinos have proven to be the most resilient form of gambling service on the market. In April 2020, sports betting’s online gambling market share in Italy was 30% below its one year running average, while poker tournaments’ and online casinos’ were up 11.7% and 15%, respectively. Meanwhile, land-based establishments had their doors firmly shut.
Pedal to the metal: online sportsbooks’ time to shine
While online gambling has been growing steadily for years, it must be acknowledged that the emergence of Covid-19 — and the forced closure of brick-and-mortar gambling establishments it brought — marked a watershed moment for the industry.
There’s something that needs to be stressed. The pandemic sparked an acceleration in signups to online platforms; but, in the early days of Covid, it look like much of the explosive growth of online casinos specifically could be ascribed to the reduced activity of sports betting platforms, with bettors somewhat forced to try their hand at alternative products, and not to the closure of brick-and-mortar establishments.
Some numbers: according to reports shared by British authorities, the number of gamblers that started using online services in the United Kingdom during lockdown is estimated at 2.2%. Meanwhile, around 17% of online sports bettors reported using other gambling products during the same period.
And yet — going back to Italy — the ratio of online GGR share between casinos and sportsbooks was back to pre-Covid levels by July 2020, and both were raking in all-time record revenues by October-November 2020.
This means that yes, online casinos did experience a bubble during the early days of the pandemic, but this was then replaced by overall growth for the sector.
Sportsbooks experienced something similar during Covid-19’s second European wave in winter 2020, when real life sports had resumed, but protracted lockdowns meant that brick-and-mortar locations remained closed. In December 2020, Italy’s sports betting GGR was EUR 177.1m — 85.9% more than the pre-pandemic record monthly revenue.
But, once land-based establishments reopened in mid-2021, things changed once again.
Merry-go-round: offline casinos resurgent… or not?
What is crucial for operators to understand, is that gamblers are creatures of habit. When sports events restarted, bettors dropped casinos and returned to sportsbooks. Similarly, when the lockdowns were lifted, players went back to brick-and-mortar locations.
In May 2021, the state of Nevada registered USD 1.23bn in gaming revenues. This was the highest monthly GGR ever recorded, surpassing the previous record of USD 1.17bn from October 2017. During the same month, casinos in Macau raked in a similar amount (MOP 10.44bn), making it the best month of 2021 and a 492.2% year-on-year revenue increase.
Is this it then — are land-based casinos back on track to industry dominance? Not exactly.
First, it’s important to consider the concept of pent-up demand: after a year of closed doors, brick-and-mortar establishments are being flooded with players keen to re-experience their magic, but it remains to be seen whether these levels of engagement can be sustained in the medium term.
As we said, gamblers are creatures of habit, so they’re going back to what they know — but they had a full year to get used to online gaming. We may still very well witness a rebound if and when the excitement of in-person gaming wears off and players remember the convenience of online services.
The second issue is physical casinos’ continuous vulnerability to external circumstances. For example, while Nevada has recorded revenues above USD 1bn for 6 months in a row, Macau is struggling once again due to new restrictions imposed in China.
August’s revenues of MOP 4.44bn were the lowest in 2021, and September was only slightly better; forecasters predict a 65% yearly reduction from pre-pandemic GGR levels — better than 2020, but still far from past splendours.
As we’ve seen, the situation is still very much in flux, but there are some takeaways. In short, we expect to see a prolonged period of fluctuation — with the online and land-based sides of the industry taking turns in a boom-and-bust cycle — until the end of this period of disruption. And the longer this lasts, the better it is for online operators, as players will get more and more accustomed to their product, leading eventually to lower churn rates upon brick-and-mortar reopenings.
While offline gambling isn’t going to disappear any time soon, online services offer a hedge against disruptive events like a global pandemic. For this reason, we’re seeing that more and more land-based operators seeking to enter the online market to diversify their revenue streams.
How can Slotegrator help?
If you are interested in taking your business online, Slotegrator can help. We offer widely customisable turnkey and white label online casino solutions that allow you to enter the market without the hassle of creating a platform from scratch. And if you plan to run a sports betting service, we have you covered with Sportegrator, our dedicated bundle with access to quality odds and live data feeds.
To learn more about our products, get in touch with our sales team for a free consultation.