‘I don’t think some casinos are going to fully come back’: Pandemic Forces Gaming Industry to Confront its Digital Future

More than 900 casinos nationwide have closed their doors as part of the COVID-19 shutdown. While some companies are already making plans to reopen, others question if it’s time to make a full jump to the digital world. Without a doubt, people will want to go out and celebrate when things return to normal. What happens after that, however, is still up for debate. 

“I don’t think some casinos are going to fully come back,” said Dr. John Connaughton, professor of economics at the University of North Carolina at Charlotte. Connaughton, who is an expert in both sports economics and economic impact, added it can take years for certain industries to bounce back from a situation like this. 

“History tells us there is often not an immediate recovery,” Connaughton said. “Look at the response after 9/11. It took 10 years for the airline industry to offer the same number of seats as before. I don’t think this will have the same impact, but it takes time. People take time to slowly go back to the way they were before something like this.” 

He also pointed to the hotel industry after the Sept. 11 attacks. According to data from the Las Vegas Convention and Visitors Authority, the typically packed hotels never climbed above 82.6 percent for the rest of 2001. In fact, it would be 2007 before the hotels even made it back to 90 percent occupancy.

This virus recovery has the potential to stretch out even longer due to the timeline involved. The attacks happened on a single day, allowing people to process their feelings and start to rebuild almost immediately. Virus outbreaks are different in that it often takes time to determine symptoms, figure out best practices and work on a vaccine. Until the current outbreak is under control, even if ‘stay at home’ orders are lifted, it’s questionable how many people will feel like going to a casino.

That’s where the real concern for casinos comes from. If people get into the habit of gaming through an internet browser or an app, what’s going to change their mindset later on? 

Looking to the Future

Even before the pandemic, the gaming industry found itself examining the future. A study presented at the 2019 East Coast Gaming Congress predicted that 90 percent of all sports bets will be done online within the next 5 to 10 years. As an example, the group pointed to New Jersey. By mid-2019, the state had collected $3 billion in sports bets and 80 percent of those were done online.

If you want more evidence, look at this year’s Super Bowl. According to the American Gaming Association, nearly 5 million people bet on the game online or through an app. By comparison, less than 4 million placed a bet at an actual casino or sportsbook, marking the first time online wagers came in higher than physical bets. 

Why is that? There are two reasons. First, online sites typically offer larger payouts. There’s no physical property to maintain or pay taxes on, so the groups can focus on ways to bring in customers. And there’s very little that does the trick like the potential for a bigger prize. Also, it’s because younger gamblers focus on things other than physical casinos.

For example, a recent study by Time shows that those in the 18-24 age group check their phones an average of 74 times a day. If you go up one level to the 25-34 age group, that number only drops to 50 times. The focus for this group is more on instant activity than a physical experience. Even now with most physical sports shut down, websites like MyBookie are drawing people by offering bets on everything from the stock market to what the weather will be on a given day. 

Taking the Next Step  

So if digital gaming is on the rise, how do you keep casinos relevant? Multiple companies offer their own concepts. Colonial Downs in Virginia and Encore in Boston expanded the rest of their operations, making it so gaming is just a part of what they offer. People aren’t just coming to gamble but because they see both as entertainment venues more than casino operations.

But the stability of that idea depends on the economy, as Dr. Connaughton points out. If the U.S. comes out of this quarantine without a recession, there’s a good chance people will go out and celebrate. But if the economy keeps struggling, Connaughton said businesses like these might have problems attracting enough support. 

“In a down economy, one of the first things to get cut is travel tourism,” Connaughton said. 

Another option comes from Penn National. The shift to digital is something Penn CEO Jay Snowden acknowledged in a January 28 media call. Admitting the average customer at his 41 casinos has “been aging up, not aging down,” Snowden said that was a driving factor for signing a deal with Barstool Sports. Out of the 66 million people who follow Barstool, Nielsen data shows 62 percent bet on sports and 44 percent play at least once a week.

By using the Barstool brand on casinos and promoting them through the company’s multiple media channels, Snowden hopes to cash in on that audience’s loyalty. Will it work? Possibly. But like all other options, success will depend on what the economy looks like after the outbreak is over. And right now, that’s not something we can predict.

About the Author

Brian Carlton

Brian Carlton is an award-winning journalist who has covered casinos, the gaming and finance industries for more than a decade. His work has been published by the BBC and a variety of newspapers across the U.S.