Join forces or oppose? Online and physical sportsbooks and casinos have never had a smooth relationship, but things have taken a surprising turn recently.

Online gambling services have long been seen as competing with their land-based counterparts, whom many in the industry see as potential competitors. But we’ve learned a lot about the mutually beneficial link between the two in the last several years, and maybe we’re seeing the start of a confluence that will persist.

The Decline of Offline Casinos: A Paradisiacal Tale

Macau, the world’s gambling capital, is far from Las Vegas’ neon-tinted, casino-lined Strip and Monaco’s grandeur, home to the Monte Carlo Casino.

The sole legal gambling spot in China is Macau, a special administrative area. Over 40 casinos on this little Pearl River Delta peninsula achieved a stunning total gaming revenue of MOP 292.46bn (EUR 31.34bn / USD 36.45bn) in 2019. For comparison, the Monte Carlo Casino earned EUR 239.8m in the same year, while all Las Vegas Strip businesses earned “just” USD 6.58bn.

That was then; this is today. Covid-19 forced lockdowns, travel restrictions, and closures worldwide in 2020.

Naturally, land-based casino revenues plummeted.

Macau businesses, which serve visitors from mainland China and East Asia, had their GGR drop over 80% to MOP 60.44bn in 2020. Las Vegas Strip casinos did better, earning USD 3.73bn, down 43.3% year-over-year. The Riviera’s Monte Carlo Casino saw GGR drop 48%.

Remaining Strong: The Resiliency of Online Casinos

In 2020, industry sales across the continent dropped from EUR 98.6bn to EUR 75.9bn, according to figures from the European Gaming and Betting Association (EGBA). Online gambling revenues increased by 7%, while land-based businesses saw a fall of more than 30% in GGR. This indicates that within a year, online GGR increased from one-third to slightly more than half of land-based income.

However, it is important to note that EGBA’s figures do not differentiate between profits generated from casino gambling and sports betting. The months of lockdown in 2020 saw a phenomenal increase in online casino GGR, both compared to previous years and in absolute numbers. For players looking to take advantage of online casino offers, Wildz no deposit bonus codes can be a great way to start without upfront costs.

As an example, consider Italy, which has the biggest gaming market in the EU. At the height of the first wave of COVID-19 in the nation in May 2020, the gross gaming revenue (GGR) of online casinos increased by 50.8% year-on-year. By December 2020, at the high of the second wave, the GGR increased by 80.6%. At the same time, there was a 73.6% drop and an 18.37% drop in online sportsbooks.

Another reality has come to light as a result of the downfall of online sports betting, especially in May 2020: traditional businesses aren’t the only ones vulnerable to change. The same holds true for betting services, since they rely on actual athletic events to generate revenue. To be fair, bookmakers shifted their focus to esports as a way to diversify their betting options, but the data still doesn’t lie.

Online casinos are the most reliable gaming service available, even if they aren’t the most profitable in the long run. While online casinos had a 15% increase and poker tournaments saw an 11.7 percent increase, the percentage of the Italian internet gambling industry devoted to sports betting fell 30% below its one-year running average in April 2020. At the same time, businesses located on land were keeping their doors closed.

Get Your Pedals Wet: The Moment Has Come for Online Sportsbooks to Shine

The advent of COVID-19 and the subsequent forced closure of brick-and-mortar gambling businesses was a turning point for the industry, even though internet gambling had been expanding at a steady rate for years.

It’s important to emphasize something. While it’s true that the pandemic has increased the number of people signing up for online platforms. In the early days of COVID, it appeared that the decline in sports betting activity, as bettors were compelled to try other products, was more responsible for the meteoric rise of online casinos than the closure of physical locations.

The number of gamblers in the UK who began utilizing internet services during the shutdown was assessed at 2.2%, according to information supplied by British authorities. At the same time, almost 17% of those who wager on sports online also admitted to utilizing other gambling products.

Still, returning to Italy, by July 2020, the proportion of online GGR shares attributable to casinos and sportsbooks had returned to pre-Covid levels, and by October-November 2020, both were generating record-breaking revenues.

So, although the online casino industry did indeed have a bubble at the beginning of the epidemic, the bubble quickly burst, and the industry as a whole has since grown.

During the second wave of the COVID-19 pandemic in Europe in the winter of 2020, sportsbooks went through a similar situation. In this wave, real-life sports had returned, but brick-and-mortar establishments remained closed due to prolonged lockdowns. The grand total income from sports betting in Italy was EUR 177.1m in December 2020, which was 85.9% more than the record monthly revenue before the epidemic.

Things altered again, however, when land-based enterprises reopened in the middle of 2021.

Revolving Door: Are Brick-and-Mortar Casinos Making a Comeback?

The fact that gamblers are habitual is vital information for operators to grasp. Sportsbooks saw a resurgence from casino bettors as soon as games resumed. Just as before, after lockdowns were removed, gamers returned to physical places.

Revenue from gambling in Nevada reached 1.23 billion USD in May 2021. With this record-breaking monthly GGR, we surpassed the previous high of USD 1.17bn set in October 2017. This was the finest month of 2021 for Macau’s casinos, as they brought in MOP 10.44 billion, a rise of 492.2% year-on-year.

Is this it? Are brick-and-mortar casinos finally poised to regain their former glory? Not quite.

First, think about pent-up demand: after a year of closed doors, brick-and-mortar companies are getting a stream of customers who want to relive the enchantment, but it’s unclear whether this level of interest can be maintained for the foreseeable future.

People who gamble tend to stick to what they know, which is why they’re returning to online gambling after a whole year of adaptation. Once people get over the novelty of playing in person and recall how easy it is to use online services, we could see a return to the previous trend.

The second problem is the inherent instability of brick-and-mortar casinos. Take Macau as an example; the city-state is once again facing difficulties as a result of new Chinese regulations, in contrast to Nevada, which has seen earnings surpass USD 1 billion for six consecutive months.

Revenues in August were the lowest in 2021 at 4.44 billion MOP, and they only got marginally better in September. Experts expect an annual decrease of 65% from pre-pandemic GGR levels, which is an improvement over 2020 but still a long way from the glory days.

Last thoughts

Despite the ongoing changes, we can still make some inferences. Until this phase of upheaval ends, the sector as a whole is likely to see a protracted period of instability, with both the internet and land-based sides experiencing boom and bust cycles. And the longer this continues, the better for online operators, as players will gradually get used to their offering, which will ultimately result in reduced churn rates when brick-and-mortar locations reopen.

Online services provide a buffer against potentially catastrophic catastrophes, such as a worldwide epidemic, but brick-and-mortar gaming establishments will not go away anytime soon. So, to broaden their income source, an increasing number of land-based companies are eyeing the internet market.