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The betting and gaming industry face further uncertainty

The betting and gaming industry faced more months of uncertainty with the second lock down with casinos and bookmakers closed following only a limited period of restricted operation. The initial lockdown introduced in March saw casinos and betting outlets among the last venues to be permitted to reopen and after just a few weeks back in business they were closed once more. The online betting and gaming industry on the contrary performed well, as consumers looked for ways to stay entertained at home. However, the decline in sports betting revenue was only partially offset by increased demand for other online products like casino, poker and esports betting. Moreover, with the legislative overhaul of the 2005 Gambling Act on the horizon and the ongoing Gambling Commission remote customer interaction consultation, the sector may see a highly disruptive period ahead.

 

Spending Intentions

Historically, betting and gaming activities saw little change with a consistent steady growth. However, in the second quarter of this year UK consumer activity dropped signficantly and only picked up when the lockdown was lifted. With the latest lockdown requiring outlets to shut down, activity are again likely to decline.1


In Deloitte’s quarterly consumer tracker in the third quarter of 2020, spending intention on betting and gaming saw a lesser decline compared to other discretionary activities such as eating and drinking out. When the first lockdown was lifted the betting and gaming sectors saw an increase in spend, moving from a low of -18% to -8% boosted by the recommencing of some sporting events including football and horse racing.2


The Gambling Commission survey conducted in the months of July to September shows that those who gambled pre-lockdown were more likely to decrease spending during the initial lockdown than increase it, with 12% reporting an increase in spend and 25% a reduction. Since lockdown has eased, the proportion of consumers changing their intended spend on gambling has reduced, with seven in ten (70%) reporting no change compared to before.3

Reasons for increased spend during or since the initial lockdown centred around wanting to alleviate boredom, having more time to spend on leisure activities and wanting to try and bring in additional money. While clearly a range of factors have influenced people who have increased their gambling spend, those involving a desire to bring in additional money or cover lost income are concerning. With the second lockdown underway, financial concerns and boredom may drive consumers to gamble more. 4
 


Among those who had decreased their gambling since the first lockdown, over a third stated that the main reasons were the loss of interest and lack of money. The absence of activities such as sporting events and being unable to visit gambling premises in person were cited by 19% and 16% of respondents respectively. The lack of activities and sports previously enjoyed was more likely to be mentioned by men (28%) and younger people aged 16-34 (32%). Younger respondents were also much more likely than those aged 35 and over to say that being unable to visit premises had influenced their reduced gambling activity since the March lockdown.


Digital shift

Looking back at the impact of the initial lockdown, relatively few people changed their gambling participation during this period, although there were elements of shifting to online products in the absence of land-based opportunities, with some of these new behaviours being maintained post-lockdown, as per the survey the months of January to September by the Gambling commission.5

The survey found that 4% of respondents that did not gamble before lockdown, went on to gamble online during lockdown, since then while most stopped gambling, a smaller proportion retained online gambling behaviours or started in-person gambling. Just over 2.2% of the respondents that gambled in-person before lockdown shifted to an online channel during lockdown, with more than half this number continuing to gamble online post-lockdown. Over 5% of those that gambled before lockdown and shifted one or more products online, for example from football betting to online slots during lockdown.

With UK consumers denied their ritualistic weekend gambling outings, some have now turned to online casinos. In terms of betting, online sports betting took a turn for the better and people have experienced the opportunity and diversity in their gambling habits. Where people were traditionally fixated on one sport, they have now turned into a myriad of other sports, including esports and virtual sporting events. With more people working from home, they also have more time to invest in studying their new sport and make informed betting choices.

The gambling commission survey conducted from the months of July to September found that the majority of UK respondents are likely to keep the same gambling habits over the next 3 months. Overall, they anticipate a decrease in their overall gambling spend (29%) than an increase (5%). While 38% of respondents expect to decrease in-person gambling, 7% said they are likely to increase spend via online channels, but about 30% likely to decrease.

While trends indicate the some behaviours are likely to remain, technology has changed the gaming landscape, with innovations making it easier and convenient for gamblers to play online, particularly via mobile. Technology also enables the online casino to track and analyse customer preferences and behaviours. That includes the record of bets, odds, and the overall betting pattern along with more behavioural data points from the customer’s journey. Analytics enables the operators to keep the history of their players and perform risk analysis. This information enables them to tweak their offering and the experience to keep the gamers coming back for more. Companies are capitalising on this capability to enhance their approach to ensuring products and customer interactions are socially responsible. Technology has also played a pivotal in compliance, including customer identification and protecting individuals who are at risk of harm from gambling. For instance, offering customers the ability to control the time they spend gambling, by sending them alerts when they enter a gambling facility or setting up a system for intervention by a friend or by the manager of the gambling facility.

However, concerns around increased gambling during the lockdown has driven regulators to move for further curbs on the sector, including a moratorium on advertising, tightening customer interaction rules around affordability checks, the prevention of reverse withdrawals, restrictions on bonus offers and tougher licence conditions on online operators. Businesses have an opportunity to communicate and engage with a new online audience and support loyal customers using digital platforms. Meaningful touchpoints, incentives, and experiences may go a long way in keeping new users engaged. The shift to digital services provide an opportunity for brands to reach a new audience by using social media and digital branding and at the same time help ensure proper measures are in place to protect users.

With the industry open to adopting the latest advanced technologies including virtual reality, augmented reality, blockchain and artificial intelligence, it is clear that technology is going to play a crucial role in redefining the gambling experience and customer interaction as well as industry operations, product lines and services.


Business impact

The betting and casino sector like all other in-person leisure activities has seen an adverse impact by the lockdowns and health precautions, the increases to the online sector is likely to only partially offset the losses in physical stores. The Betting and Gaming Council warned that the casino business, were typically running at less than sixty per cent of pre-lockdown levels in October and now with the latest closures the recovery of the industry remains uncertain.6

In the short term, with outlets and venues facing closures, maintaining profitability will be the key focus for operators. Businesses will need to take deliberate action to maintain and build consumer confidence, while trying to mitigate the cash and working capital issues. Moreover, businesses may have to concentrate on promoting their core offering to differentiate themselves in an increasingly competitive market, while managing the revenue decline in retail shops. On the other hand online betting and gaming activities will continue as a medium of entertainment while consumers remain indoors and sports stadiums are sitting empty.

Additionally, the forthcoming review of the 2005 Gambling Act that seeks to identify whether changes are required to ensure the laws are still relevant in this digital age, will bring further changes across the sector, from payments and credit to stake limits and loyalty rewards. New regulations around online gambling, advertising and sponsorships are expected. Gambling products in games such as loot boxes, live streaming services and esports amongst other products, are also likely to under the spotlight.

Even as the future remains uncertain, the underlying consumer trend towards valuing experiences means that the sector will eventually regain lost ground. Understanding how consumer behaviour has evolved and responding effectively to those changes will enable businesses to recover in a post-pandemic economy. The response of businesses to leveraging advanced technology to deliver an enhanced consumer experience in a socially responsible manner will gain the upper hand.

End notes

  1. Index of Services: Gambling and Betting Activities, ONS UK, released October 2020. 
  2. The Consumer Tracker Q3 2020, Deloitte, released October 2020.
  3. Market Overview Report, Gambling Commission UK, accessed November 2020.
  4. Consumer Research, Gambling Commission UK, accessed November 2020. 
  5. Market Overview Report, Gambling Commission UK, accessed November 2020.
  6. Submission to parliament committee, Betting and Gaming Council, accessed November 2020.

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