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Julie Moraine April 24, 2020 3 min read
Intralot Expects COVID-19 Impact to Let up in November 2020
Supplier of integrated gambling software solutions Intralot has said that the industry is not likely to go back to normal until November 2020.
According to the company, gambling will feel the peak of the novel coronavirus lockdown in April and May, when results are published.
A $32M Impact and Early Return to Normality in June
Based on data for March and April, Intralot expects EBITDA to be heavily impacted, measuring the impact at anything between $27 million and $32 million.
Intralot cited the almost full cancellation of sports events in some of the leading markets, including Australia, the United States, and the United Kingdom.
The company is optimistic about June, however, when the first steps towards returning to normality should be taken. In explaining the fallout from the pandemic further and how it would affect business, Intralot had this to say:
The extent of its impact will depend on its duration, government policy in key jurisdictions regarding restrictions implemented and the current and subsequent economic disruption that the pandemic will cause.
According to Intralot, the United States has proven one of the most resilient markets owing to the fact that a large portion of the retail network has remained opened, based on April and March data.
However, the cancellation of sports events has bitten into the overall profit margin. Nevada has sought a solution by introducing bets on electronic sports, adding to an ever-growing list of esports events and competitions. Yet, Nevada is also one of the states that are prepared to stay shut down indefinitely – until COVID-19 has been dealt with.
Intralot has also sought to mitigate the impact of the coronavirus pandemic, shifting 80% of its operations online to avoid infections. The company cautioned that the pandemic may have a direct impact on how quickly it delivers new products and equipment to markets in Asia.
Intralot is also retaining the services of Allen & Overy, financial and legal advisors respectively, to look for ways to further mitigate the impact and implement new business strategies, the company explained.
Gambling Market to Lose 18.6% of Revenue
The impact on gambling has been measured by various analysts, among which H2 Gambling Capital.
According to the company, revenue globally should fall by at least 18.6%. In factoring the revenue dip, H2 said that it had factored the International Monetary Fund’s own expectation for economic growth reducing it to 3.0% from 4.9% previously.
The total impact on the industry has also been revised. Previously, H2 estimated just 11% drop in overall gambling revenue, cited by The Financial Times, but this figure has been updated since.
The 18.6% forecast by H2 seems in line with Union Gaming Securities LLC own analysis for Macau’s gambling industry. According to the analyst, Macau should reach around 80% of 2019 Gross Gaming Revenue (GGR) numbers Union said in a note on Thursday.
However, for a full recovery, the brokerage noted that EBITDA will start reaching 80% of 2019’s benchmarks throughout 2021.
Macau was also one of the places to be most heavily affected by a complete two-week shutdown of casinos in February.
Previously, Instinet LLC, the research arm of Nomura, said that GGR could start showing signs of recovery from early June, once again in line with H2 and Intralot’s own forecasts for returning to normality.