Gathering to talk about the issues

Gathering to talk about the issues

  • Ken Adams, CDC Gaming Reports
September 25, 2022 10:00 PM
  • Ken Adams, CDC Gaming Reports

Autumn is gaming conference time. As one season ends and another begins, it is a time to pause and reflect on the changing gaming industry in a post-pandemic world. The conferences offer the perfect opportunity for industry leaders to do just that.

The season began in August with the Oklahoma Indian Gaming Conference in Tulsa and G2E Asia in Singapore. In September, TribalNet was held in Reno, SBC Barcelona Summit in Spain, and the East Coast Gaming Congress in Atlantic City. The grand finale is G2E in October in Las Vegas.

Each event is different; each has its own sponsor, unique perspective, and tradeshow. Still, they have a lot in common. After two years of events impacted and restricted by the pandemic, this year’s gatherings are fully open for business. With attendance back to normal, the sponsors have been eager to put on panels and symposiums featuring leading experts and executives addressing the key issues of the day.

Among those issues discussed so far are the operating challenges that have surfaced post-COVID, sports betting’s dramatic growth and ubiquitous presence, and the increasing importance of igaming and its social implications. The unexpected increase in retail gaming revenue, coupled with an equally unexpected labor shortage, is getting top billing.

In the aftermath of the shutdowns, casinos experienced record revenues and profits. The revenues were driven by government spending and pent-up demand, while the profits were helped by decreased payrolls and the closing of unprofitable food and entertainment outlets. The East Coast Gaming Conference panel on the subject agreed that the industry would be leaner and meaner than before, but it would also struggle with the problems created by a national labor shortage.

Sports betting is probably the most discussed topic in gaming these days — at gaming gatherings, by the media, and around the campfires at home. Sports betting was not born during the pandemic; it was the outgrowth of a Supreme Court decision in May 2018. Sports wagering was just getting off the ground when the pandemic hit; however, it is now hitting its full stride. Nearly two-thirds of the states have legal sports wagering and five more are on track to begin offering it by the end of the year or early in 2023. According to Legal Sports Report, since 2018, $150 billion has been wagered legally on sports in the United States and the books have won $10.8 billion of that, for a hold of 7.2 percent; they have also paid $1.6 billion in taxes. Those numbers are big enough to get everyone’s attention. Panels have discussed, and will continue to discuss, the advertising and bonusing that have driven sports betting and limited its profits. The advertising is also threatening to bring more scrutiny and possibly regulation to gaming in general. More oversight in an already heavily regulated and taxed industry is not a popular idea.

Although not as much of an attention-getter as sports, igaming is becoming more important. The handle is not reported, but the win over the last two and a half years is estimated to be more than $8 billion. New Jersey has generated $4.7 billion in online-casino gambling revenue in the nine years igaming has been legal in the state. The $8 billion in two and half years is more significant, because only New Jersey, Pennsylvania, Michigan, West Virginia, Delaware, and Connecticut currently offer igaming. Those six may be joined by Indiana, Illinois, Iowa, and New York in the next 12 to 18 months.

The speakers at the East Coast Gaming Congress saw a bright future for igaming for several reasons. States with online and mobile sports wagering already have the infrastructure, the tax revenue generated is significant, and most importantly, the potential market is much larger than the market for in-person casino gamblers. No one in Atlantic City seemed concerned over the potential cannibalization of casino revenues, although clear trends in Detroit, Pennsylvania, and Atlantic City already show that igaming is cutting into brick-and-mortar casino revenues.

The potential to cause harm is another concern; in time, it may well become the most important issue facing gaming. That possibility is not going unnoticed. On September 22, six companies involved in sports wagering and igaming announced a collaboration. Bally’s, BetMGM, DraftKings, Entain, FanDuel, and MGM Resorts have agreed to a 12-point program to protect vulnerable gamblers. The program is a little short on details and measurables, but it is a start, an important start. And a start is needed. The addictive character of gambling has been noted, measured, and discussed for a very long time. In general, it is estimated that between 5 and 10 percent of the population is at risk for developing a “gambling problem.”

The high side of that estimate is threatening, but as long as gamblers had to leave home and travel to gamble, the actual at-risk population was relatively small, particularly in the era when only Nevada and New Jersey had casino gambling. But even today, when at least one casino is situated within a 100- to 200-mile radius of nearly every adult in the country, it still takes an effort to gamble. Online and mobile gambling changes that. At a recent NFL game, a total of 7,300 gamblers were tracked accessing a wagering app 66,000 times. During that game, any gambler with a phone could make a bet.

As William Shakespeare said, therein is the tale. There are an estimated 295 million smartphones in the country; 85 percent of the population owns one, up from 35 percent 10 years ago. Now, that 10 percent of the population being at risk acquires a new and pressing importance; as many as 33 million people could be in danger of developing a gambling problem.

It is too early to press the panic button. However, it is not too early to begin to discuss the subject seriously. It should be on the agenda every time casino executives gather to talk about the issues of the day.