The global outbreak of the novel coronavirus /Covid-19/ is expected to bring the gambling revenue to 2018 levels in the optimistic, or worse, to 2017 levels in the pessimistic scenario, H2 Gambling Capital, the gambling industry data specialist company suggests.
Global Decline Forecast
A decline of up to 8% in gross global gambling revenue in 2020 is very much on the cards already, with total number of coronavirus cases reaching the 90,000 mark and hitting the gambling revenue in a number of key jurisdictions, threatening to make the year only the second one in the last 20 where revenue in the gambling industry falls.
Macau, the Chinese autonomous region largely popular with its land-based gambling facilities, is one of these key destinations where gambling is severely impeded by the virus outbreak, as there has been a temporary suspension of casino operations for 15 days, in an attempt to halt the virus spread and consequently, gambling revenue has plummeted already.
Gross gambling revenue sank 87.8% year-on-year to MOP3.10 billion in February, coming after already poor January results, 11.3% down to MOP22.13 billion, bringing the revenue down 49.9% to MOP50.31 billion for the year to date.
The results from the first two months of 2020 came after the gambling market in Macau had struggled in 2019, with annual revenue down 3.4% to MOP292.46 billion.
In addition, Executive Order 39/2020 shut down on February 5 not only casino operations, but also facilities such as cinemas and theatres, nightclubs and discos, fitness centres, steam baths and beauty salons, and other public venues, and hit the tourism sector, with total number of visitors sharply declining due to cancelled flights from international carriers such as Vietnam Airlines, Philippines Airlines and South Korea’s Jeju Airand, and cancelled ferry trips from mainland China.
In China, lottery market has also been affected, and the impact of the virus is expected to be greater than the last major outbreak, the Severe acute respiratory syndrome-related coronavirus /SARs/, as by that time China accounted for only 3.5%, $9 billion, of the global total, while in 2019 Chinese gambling industry represents 16% of the global total, $71 billion of gross revenue.
Best Case vs Worst Case
As there are severe outbreaks of the virus in other markets, Hong Kong, Italy, Japan, Malaysia and South Korea, H2 revised revenue forecasts for these jurisdictions, too, with its best-case scenario a year-on-year decline of around 1.0% to $452 billion, bringing the market to the 2018 level.
If other key locations witness the virus outbreak, the company warns a further 3% of global gambling revenue could be lost, bringing the market down to the $430 – $440 billion bracket, or the revenue reminiscent of 2017.
Online Gambling Offset
On a positive note, the hit on land-based operations that are expected to fall by 2.4% to around $386 billion may see a rise in online activities, with estimates between 13.4% to 14.7% rise, with even the knock-on effect extending beyond the 15% in case the virus outbreak continues in the second half of 2020.