It’s not a good period for the land-based gambling industry at the moment. While online casinos are thriving, traditional markets across the globe have seen big losses. But, some of the greatest hits to the industry just happened to the Hong Kong market. Let’s see.
Disruption in the Hong Kong market
Just a year before Macau’s lucrative gambling licenses are going to be put up for rebidding, there was an incredible disruption. Lei Wai Nong, Macau’s secretary for economy and finance, announced a 45-day consultation period, in regard to the gambling industry. This includes nine areas to be discussed, such as employee welfare, government supervision of day-to-day casino operations, number of licenses, and better regulation in general.
Even before this announcement by the secretary, investors were very worried because of the increased scrutiny of the government towards casinos in recent years. And the reaction in the market was not good.
On Wednesday, the biggest gaming providers on the Hong Kong market, such as Wynn Macau, Melco Entertainment, and Sands China, lost about $18 billion in value. The day after, their shares continued to fall, and new losses were as high as 13%.
Land-based casino industry is in trouble
But things are not going well for the land-based casino industry for quite some time now, and this is a global phenomenon.
Commercial gaming revenue in the US, for example, fell by 30% in 2020, according to the data gathered by the American Gaming Association. Nevada posted its worst annual GGR since 1996. In December 2020, Las Vegas had its worst month in 27 years. For the first time since 2014, a similar drop has been seen across the US: New Jersey gaming revenue fell 17%, and Pennsylvania saw a drop of 22%. Not surprisingly, if we consider that from California to Iowa, casinos were forced to lose 27% of their working hours, all due to the changes and restrictions the last few years imposed on businesses.
Compared to 2019 levels, European gambling operators lost $10.6 billion. In March last year in the UK, Boris Johnson ordered the closing of casinos, and they remained closed for almost five months. The reopening was constantly pushed more and more into the future, and this resulted in Genting UK permanently closing down casinos and all live poker rooms.
In Canada, the annual income for gambling in 2020 was only $200 million, according to the Ontario Lottery and Gaming Commission. This is a huge decrease compared to the income made in 2019, which was $2.3 billion.
But losses in the European and North American markets are dwarfed when compared to what happened in Macau, where casinos suffered an incredible 79% year-on-year decline. The market was down for a staggering $28.93 billion!
Online casino industry has seen a big rise
On the other hand, the online casino market has been thriving the whole time and witnessing incredible growth. What is more, it is expected that the global online gambling market will grow even further, from $64.13 billion in 2020 to $72.02 billion in 2021. This means that the CAGR (compound annual growth rate) will be 12.3% in just one year. According to these predictions, the market will reach $112.09 billion in 2025 at a CAGR of 12%. Quite staggering numbers.
The online casino market is growing on all continents, and it is constantly finding new markets to develop. Two crucial factors enabled this growth: the spread of the internet, on the one hand, and of mobile phones, on the other. And today, the internet is luckily becoming available to a larger and larger population. It is also becoming cheaper, and fast internet connections are becoming standard for many. In a parallel process, mobile phones are also conquering not only developed markets like America or Europe, but markets such as the Middle East, Africa, India, and South America. In addition to this, online games are constantly improving and applying new technologies that can bring authentic experiences to users who can enjoy them from the comfort of their homes.
This means that, unlike traditional gambling, the online casino industry is fresh, rich, and thriving. It gathers people from literally all corners of the world, and even socially conservative areas such as the Middle East have guides to help players find a way to discreetly enjoy online casino games. Take as an example ArabianBetting, a big platform where players can find out everything about online casinos, like what are the safe methods to use when joining a casino website, placing bets and withdrawing winnings, or what are the most popular games to indulge in, etc. It’s truly a new world out there. On top of it, this trend doesn’t stop only in this region but is spreading all over the world, meaning that we will see more providers and more prominent websites of this kind.
The hits that the land-based gambling industry took since 2020 seem to confirm and accelerate what was already evident before they came. The development and spread of the internet and mobile phone technology, across the globe, will result in a new order in the world of gambling. One that will be dominated by various online and mobile options, which are getting more advanced and diverse each year.
Although land-based casinos won’t disappear, it is clear that online options are the future of the gambling industry.
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