All bets are off
Covid-19 has driven American gamblers online
With casinos shut and sports disrupted, gambling addicts have still got their fix
LAS VEGAS has awoken from its pandemic-induced slumber. Hundreds of Nevadans continue to come down with covid-19 every week, and every night demonstrators march through the city to protest against the death of George Floyd. But none of that deterred Americans from across the country from defying shelter-in-place orders in their home states to descend on Las Vegas in anticipation of its partial reopening on June 4th. Photos from some of the 30-odd casinos that welcomed visitors for the first time in nearly three months showed gaming tables surrounded by guests, some wearing masks.
Their thirst for a gamble is understandable. In quarantine, American high-rollers have struggled to find substitutes for the real thing. Whereas, say, British gamblers have been able to bet legally online under lockdown, Americans face a patchwork of state laws that give limited options for lawful remote betting. The industry is still small, and in its infancy. Delaware legalised online table games in 2012. Neighbouring New Jersey, home to Atlantic City, the east coast’s traditional casino capital, followed in 2013. Pennsylvania rolled out its own online-gambling market last year. Nevada has permitted online poker since 2013, but still bans other casino-style virtual games.
Stuck at home in April, gamblers in those four states took advantage of the permissive local laws. Virtual wagers by Pennsylvanians were up by some $500m over March. Delaware’s online casinos boosted their revenues by two-thirds. New Jersey’s intake soared by 23%. Nevada’s online-poker rooms reported soaring traffic just after the shutdown. These states, however, make up only 8% of America’s population. And online gambling is illegal across state lines—a law online casinos try to enforce. They use “geofencing” technology, collecting Wi-Fi and GPS data and the IP address, to make sure the would-be gambler’s phone or computer is inside the state. So gamblers in states that still ban the pastime must look elsewhere to get their fix.
Betting on sport is an obvious option. Two years ago the Supreme Court scrapped Las Vegas’s monopoly on this. Eighteen states now have established markets, allowing 100m Americans to bet legally with their local bookmakers. A nascent industry has sprung up. Since the Supreme Court’s decision, DraftKings and FanDuel, two firms which once combined elements of fantasy sports and pure wagering, have started taking bets on sports across the country. Last September Fox, the Murdoch family’s media conglomerate, did the same. Traditional casino companies, like Caesars Entertainment, have expanded their sports-betting operations beyond Nevada.
The gambling industry as whole, however, has taken a big hit from the pandemic. With most North American professional-sports leagues inactive, bookmakers have taken bets on South Korean baseball and Belarusian football. E-sports, which have attracted a rocketing number of viewers during the pandemic, have become popular flutters as well. None of these, however, commands the same weight of betting as Major League Baseball (the season for which would in normal years now be in full swing), the National Hockey League or the National Basketball Association (both normally deep into their post-seasons by now). Wagers on sport at bookmakers in New Jersey fell by 68% in April.
Still, investors are optimistic. The price of DraftKings’ shares has doubled since they were listed in April. Sports betting may yet have its moment later this year. Baseball, hockey and basketball leagues are all discussing returns this summer, and the National Football League still plans its usual autumn kick-off. Gamblers still wary of lingering in crowded casinos may turn to sports betting as an accessible form of socially distant gambling. Fans, probably unable to watch games in person until 2021, may lay casual bets to stay connected to their favourite teams.
It may become easier for them to do so. With state governments’ coffers depleted by reduced business activity and increased spending, legislatures may turn to the time-worn revenue-raising tactic of legalising a black-market industry and taxing it. They have done it before: fiscal stress brought on by the recession in 2008 led eight states to loosen gambling restrictions, leading to the opening of a number of new casino and horseracing tracks and millions of dollars more in tax revenues. This time, many are keenly interested in allowing sports betting, no doubt enviously eyeing the $36m New Jersey’s authorities collected from this last year. Washington state, Virginia and Oklahoma have all legalised it in some fashion since the pandemic began. Legislation to do the same is being considered in Ohio and Massachusetts. Most notably, California may legalise the practice for its 40m residents. Other states that have already done so may go further by permitting broader online betting.
This may make things harder, however, for those for whom habitual gambling is a problem. The pandemic has brought them little relief, despite the closure of casinos. In fact, it may be exacerbating their addictions. “Almost all of the factors that are believed to contribute to gambling harms now exist in enhanced or increased measures,” says Alan Feldman, a former casino executive who now chairs Nevada’s problem-gambling advisory committee. Mass layoffs and stockmarket declines create pressure to win back lost income and savings. In addition, many already struggle with substance abuse. The isolation brought on by lockdowns has served as a roadblock for those striving for recovery. Public-health budgets, stretched tight by collapsing tax revenue and redirected to the fight against covid-19, are struggling to finance support services for gambling addicts.
Even though local online casinos are mostly illegal and sports leagues are shut down, other outlets remain available. Offshore online casinos, often in the Philippines or Gibraltar, skirt American regulators and rake in billions in bets from Americans every year. Others turn to social-media games with in-app purchases. Local lotteries have surged in popularity. “Those who are truly addicted to gambling,” said Kody Kinsley, who oversees mental-health treatment at the North Carolina Department of Health and Human Services, “are going to find a way to gamble regardless of the situation.”