Shut downs forcing land-based casino operators to look online

It goes without saying that no one is happy about the COVID-19 pandemic. But it is what it is. Now the world must collectively figure out how it is going to recover once the virus has died out. In the gambling industry, land-based operators are losing revenues by the millions. Mounting losses are forcing some of them to take a serious look at embracing online gambling.

To be fair, there are plenty of land-based operations that already have online operations to look to. The combination of willing game developers and sports betting has seen to that. Yet a majority of land-based casinos rely exclusively on revenues from those casinos to fuel their businesses. Close the doors and revenues dry up.

Devastation in Macau

As we have reported multiple times over the last few weeks, COVID-19 has had a devastating impact in Macau. The Chinese resort city whose lifeblood is casino gambling faced an industry-wide shut down from mid-February through mid-March. Even as casinos are now reopened with limited hours and other restrictions in place, they are trying to earn back at least some of what COVID-19 took from them.

Some estimates suggest it could take months for the casinos to get back on track. Analysts are also saying that the regional government will have to pump billions into the gambling industry to help it recover. Time will tell if all of that is true. Nonetheless, the devastation in Macau would not have been nearly as bad if land-based operators had online operations to fall back on.

A spike in the U.S.

Online gambling could ultimately turn out to be the industry's saviour. Take the UK, for example. Online gambling there is as popular as anywhere else in the world. So while closing land-based casinos is inconvenient, UK gamblers are already comfortable with the idea of playing slots and table games online. The loss of sports betting aside, online gambling sites are doing just fine.

A more dramatic difference is being observed in the U.S., where online gambling is severely limited. There are only four states that allow online casino games (think slots and table games) and poker. They are Delaware, Nevada, New Jersey, and Pennsylvania. Most other states allow sports betting, but we all know that has dried up in recent weeks.

Multiple news reports suggest that the online outlets in those four states have done very well over the last few weeks. One particular operator says online operations have doubled just within the last week. FOX Bet says that the disruption in sports betting has led to twice the number of new online casino players, compared to normal operations.

Rush Street Interactive and Resorts Casino have also noticed a significant increase in online play since land-based casino started closing their doors. Even New Jersey's Golden Nugget casino - easily the state's most well-known and most profitable - has been able to cushion some of its losses in land-based play by expanding its online audience. The number of new players has increased 20% since the start of the month.

Lawmaker reaction is key

It is completely reasonable to expect land-based operators without an online presence to seriously reconsider their business models in the wake of COVID-19. Those without online operations will undoubtedly see that their online competitors are doing well even while casino doors remain shuttered. No land-based operator with any amount of forward thinking will continue dismissing the online model.

The question on the minds of many is one of how lawmakers will react to all of this. U.S. lawmakers have already made it clear that they are not big fans of online gambling. Yet they now watch the gambling industry in their country bow to the COVID-19 pandemic. Just like in Macau and elsewhere, U.S. casinos are losing millions by the day.

If the Golden Nugget can offset a significant portion of its losses through online gambling, can lawmakers really ignore that reality and continue to clamp down? They can, and perhaps they will. Here's hoping they figure out that restricting online gambling is only hurting the economy by eliminating another avenue of growth.

China is in much the same position. Gambling of all sorts is outlawed throughout most of the country. Macau is the exception. However, the rise and fall of Macau might make it abundantly clear to Chinese officials that the gambling industry can contribute a significant amount to the nation's economy if they would just take the shackles off.

Who knows? Maybe Chinese lawmakers will open the door to online gambling if for no other reason than to help Macau get back on its feet. Macau is an important resort city the Chinese government cannot allow to fail. They may have no choice but to legalize online gambling in order to save it.

Online operators and self-regulation

Even as land-based operators and lawmakers take a good, hard look at online gambling, online operators have the opportunity here to achieve significant growth. Whether or not they do lies in how well they play the hand they have been dealt.

It is imperative that online operators understand why regulators work so hard to control what they do. There are two things that genuinely concern regulators: fairness and the potential for online gaming to promote problem gambling. The industry could go a long way toward alleviating those concerns by making a concerted effort to self-regulate.

In terms of fairness, there are plenty of suspect operations out there. These are operations whose games do not pay out as much as one would expect. They also give players a hard time about making withdrawals. Unfortunately, they give the rest of the industry a bad name.

Provably fair games and withdrawals

A good place to start in rectifying the issue is to come up with a way to prove fairness. Developing a blockchain platform could be the solution. A blockchain like Bitcoin SV would make provably fair games a reality by creating an immutable digital ledger of every single play of every single game. The ledger would be open and ready for inspection by anyone who wanted to take a look.

Demonstrating provably fair games is one of the strongest arguments in favour of a blockchain gambling platform. A secondary argument suggests that a blockchain platform would also force online operators to be more transparent about their financial transactions. They would essentially be forced to prove that they honour withdrawal requests in a timely manner.

Fighting problem gambling

Online operators could better make their case to regulators if they also took a more proactive stance toward fighting problem gambling. For example, online operators in the UK must meet certain minimum requirements toward minimizing problem gambling in order to maintain their licenses. But they can do so much more.

Around the world, online operators are known to put statements on their websites claiming to want to prevent problem gambling. Many of them also include links to resources that problem gamblers can utilize. But is that the best they can do? Absolutely not.

Gambling websites can be built with embedded technology that automatically limits the amount of time a gambler can play. Limit that time and you also limit the risk of a gambler racking up big losses by playing for hours on end. Along those same lines, online casinos could voluntarily implement hourly, daily, and weekly betting limits.

Another area of concern is bonus play. Such play is often facilitated by casino bonuses given as rewards for signing up or betting so much in a given amount of time. These bonuses are offered for one reason and one reason only: to get gamblers to play more frequently.

Casino bonuses are an invitation to problem gambling. Thankfully, some operators in the UK have voluntarily started scaling back. Some have eliminated bonuses altogether.

Looking at VIP programs

Like casino bonuses, VIP programs are designed around the concept of catering to high rollers. The UK Gambling Commission has already made it clear that they are not fond of VIP programs as they believe these programs only encourage players to gamble more. So what's the solution?

Operators can do with VIP programs what they would do with casino bonuses: either scale them back or eliminate them altogether depending on their jurisdiction of course.

More online gambling to come

There is no doubt that the COVID-19 pandemic is wreaking havoc on the gambling industry worldwide. Likewise, the amount of money being lost by land-based operators is staggering. All of that money is being taken out of the economy as well. Promoting online gambling might be the only way out at this point.

Some land-based operators also have companion online operations. Their losses are not as heavy. Those without online operations are being forced to rethink their business models. If you are a gambler, you might want to put your money on the possibility of more operators turning their attentions to online gambling. By this time next year, the online industry could be a lot bigger than it is today.