Until recently, of course.
The COVID-19 pandemic has turned the entire world upside down, and the gambling industry is no exception. Financial information is starting to trickle in that will give us a clearer snapshot of just how massive of an impact the pandemic had on the industry — although it can be tricky to determine whether this data is primarily influenced by a once-in-a-lifetime epidemic or if it’s indicative of broader trends in the way the public prefers to gamble.
The UK Gambling Industry at a Glance
According to the most recent data provided by the UK Gambling Commission (which was published in May 2021), the total gross gambling yield (GGY) was £5.9 billion for the months between April and September 2020.
That number includes all forms of gambling, including lotteries, bingo, online revenue, remote betting, and more.
Remote and online betting represented the largest sectors of the industry, with total wagers of £3.1 billion, or 52.3% of the overall market. That includes all online wagers, as well as racetrack betting.
The National Lottery was the second-largest earner in terms of GGY at £1.6 billion. In-person betting was third, at £629.3 million, with machines making up just shy of half that figure at 48.5%.
These numbers represent the official government figures as reported by all industry sources. However, there are more recent totals that have been reported by casino operators; these are mainly online casinos, although there is a smattering of land-based data included as well.
While these are unofficial figures, they can be useful for providing an idea of whether there will be any shifts or surprises in upcoming Commission reports.
The most recent operator data available comes from May 2021.[2] According to these figures, the overall GGY is down 5% compared to the previous month, while the average session length increased to just over 20 minutes.
A single month’s worth of data can be misleading, which is why the Gambling Commission uses half a year’s worth of figures in each report. This is especially true in today’s climate, as the pandemic has caused brick-and-mortar casinos to have varying amounts of availability to players.
However, these unofficial findings come on the heels of back-to-back reports from January and February that showed that GGY across the industry decreased by 19% compared to the months immediately preceding.[3]
While this may seem to be troubling for the industry at large, it should be noted that land-based casinos were in varying degrees of lockdown. Also, session length increased by 4% from December to February, indicating that the desire to wager was still strong among the gambling public.
Another factor that could be influencing May’s downturn is the Grand National Horse Race, which spurred account signups and GGY in April.[4] It may have been inevitable that the industry would suffer a bit of a gulley following such a high-profile sporting event for gamblers, especially since other forms of wagering (like slots) remained relatively flat over the same time period.
How 2020 Stacked Up Against Previous Years
2020 was a bad year for the gambling industry in the United Kingdom, at least when compared to previous, non-pandemic years. Things were bad for the industry all over the world, though, with American casinos being hit hard as well.[5]
The total GGY for the industry in 2019 was over £14 billion; while we don’t have the official numbers for 2020 yet, the fact that a half-year’s worth of data pegs the GGY at around £6 billion doesn’t make it likely that 2020 will meet or exceed last year’s numbers.[6]
This is where the operator data from late 2020 and early 2021 is especially valuable. The fact that unofficial reports indicate that revenues are down month-to-month indicate that the tail end of 2020 may be even worse than the first few months, dragging GGY down even further.
GGY isn’t the only metric we can use to evaluate the health of the industry. According to HM Revenue and Customs (HMRC), tax receipts from gaming establishments dropped precipitously in 2020 as well.
From April 2020 to March 2021, the total tax revenue driven by gambling establishments was £2.83 billion, which is a drop of £182 million (6%) compared to tax revenue from the previous fiscal year.
This isn’t all the fault of the gambling industry, however. COVID-19 has forced the cancellation of several high-profile sporting events, each of which would have driven a substantial amount of betting revenue.[7] The Grand National Horse Race was a notable exception, and the revenue driven by that event shows just how much of an impact a popular sporting event can have on the gambling industry.
With the exception of April’s bright spot, 2021 may not be much better for the industry. As the pandemic and ensuing lockdowns loom large in the public consciousness, more bettors are staying home and saving money as opposed to venturing out to a casino, if they can even find one open in their area.
Of course, brick-and-mortar casinos aren’t the only option available to UK-based punters, and their loss has seemingly been the online industry’s gain.
Is Online Gambling Ready to Overtake Brick-and-Mortar Gambling? Or Has It Already Done So?
Online and remote gambling represented over half of all the revenue garnered by the industry from the tail end of 2019 into 2020, representing an 8.1% increase from the previous report.[8]
The fact that lockdowns have prevented many land-based casinos from servicing players at all has driven those same players towards online alternatives. According to data from Google Trends, more people in the UK searched online for the term “casino” in May 2020 than at any other time on record.[9]
Slots are, by far, the most popular game in online establishments in the UK. Slots account for as much as 69.3% of all the money wagered on internet sites, which makes up as much as £2.2 billion of the total GGY.[10]
Roulette and blackjack were also popular with online gamblers, representing 14% and 6% of the online GGY, respectively. However, besides slots, bingo enjoyed the most growth, garnering nearly £177 million in 2020.[11]
Online and remote gambling has enjoyed significant growth in recent years — as much as 20% in some years — but they haven’t been immune to the effects of the pandemic on the industry. Their revenues were down .6% in terms of GGY — but again, there is likely more to those numbers than meets the eye.
The problem is that the UK Gambling Commission lumps both remote and online gambling together. While online revenues are almost certainly up significantly, the numbers are likely being dragged down by COVID-19-related closures of bookies and other remote gambling establishments. The aforementioned cancellation of sporting events likely plays heavily into this as well.
Online casinos may or may not overtake their land-based counterparts for good in the years to come. Regardless, though, it certainly appears that online gaming is here to stay, at least as far as the average UK gambler is concerned.
Has the Increase in Online Gambling Caused More Problematic Behavior?
While the opportunity to gamble online is undoubtedly convenient, many experts worry that the ability to wager 24/7 — without even having to leave home — could give rise to a massive increase in problematic gambling behavior.
According to a study released by the House of Lords in July 2020, there are over 300,000 problematic or disordered gamblers in the UK.[12] These gamblers can have a far-reaching effect on their communities, as it’s estimated that each disordered gambler harms six other people by their actions. This harm can come in the form of family breakups, crime, loss of home, and more.
Adding a pandemic to the equation is simply adding fuel to the fire. Problem gambling is linked to depression, a lack of social interaction, heightened anxiety, and poor physical health — all issues that are also exacerbated by a global pandemic and its related lockdowns.[13][14]
While the pandemic has undoubtedly made things harder on existing problem gamblers, there are some who worry that it may also be creating more. According to one MP, factors like boredom, extra money due to mortgage holidays, and aggressive online advertising have all been “absolutely disastrous” for new and established problem gamblers, and may even be responsible for relapse in some who had previously overcome their addiction.[15]
It doesn’t help that, thanks to the power of the internet, gamblers can wager anywhere in the world at any time. All they need is a VPN and a smartphone or other device, and a gambler with a problem can be capable of placing a bet anytime, anywhere — even at work or during family gatherings.
Most of the concern about a rise in problematic gambling behavior due to online casinos is theoretical or anecdotal, however. To date, there haven’t been many reputable studies performed on the internet’s effect on troubling gambling behavior, much less how gamblers behave online during a crisis like COVID-19.
One of the few studies we do have shows that even most problematic gamblers were able to reduce their addictive behavior if their medium of choice (like sports betting) suddenly became unavailable.[16] However, those who continued to find a way to wager in the face of such challenges were likely to have much more severe problems.
All in all, the existing data seems to show that those with a gambling problem will find a way to feed it, and making it more convenient for them to gamble may not have a sizable impact on their behavior. Still, many experts warn that online gambling — especially during a pandemic — has created a ticking time bomb whose effects may not be fully felt for years to come.[17]
Tax Revenue Generated by Gambling in the UK (and What It’s Funding)
When the gambling industry suffers a dip, it’s not just the casinos who suffer. Taxation of gambling revenue is a significant revenue generator for the country, and all casinos (including those online) must pay a 15% levy on their income.[18]
As mentioned above, tax revenues from casinos were down 6% from April 2020 to March 2021, but that number doesn’t begin to tell the complete story.
Taxes on land-based casinos plummeted a whopping 62%, and in-person machine gaming duties were also down 44% over that time period.[19] The fact that the industry was still able to cobble together a respectable £2.83 billion in tax revenue is a testament to the power of the online and remote industries.
Tax levies generated by online and remote establishments rose by 25% from the previous report, and those establishments contributed over £885 million in revenue. That number represents 31% of all duties collected by the HMRC over that time frame.
Meanwhile, lottery duties remained remarkably steady, seeing a 1% rise in tax contributions over that time span. This amounted to £980 million in tax revenue.
Where does all that tax money go? It’s difficult to track down where all of those duties go; chances are, they’re mixed together in the government’s annual budget and spent on whatever the government needs to spend them on.
We do have detailed information for the money generated by the National Lottery, however.[20] The National Lottery keeps 1% of the revenue as profit, while 4% goes to funding operating costs.
The rest is distributed to winners or used to fund worthy causes in the country. Over £43 billion has been spent on “Good Causes” to date, with more than 635,000 individual grants having been parceled out.
The distribution of funds is broken down by category, and those categories are as follows:
- Health, education, environment, and charity: 40%
- Sports: 20%
- Arts: 20%
- Heritage: 20%
The Future of Gambling in the UK
The UK has long been filled with enthusiastic gamblers, and despite the impact of the COVID-19 pandemic, many are still finding ways to wager on their games of choice.
For many, this means transitioning (at least partially) to online or remote establishments, where they can play in both comfort and safety. It’s likely that many of these punters will continue to play online well after lockdown conditions have been lifted, and some may choose to play on the internet exclusively.
While that may be bad news for land-based casinos, it may not have too much of an impact on the industry as a whole. Gambling revenues should continue to rise slowly and steadily, and if brick-and-mortar establishments can develop ways to compete with their online counterparts in terms of variety, value, and convenience, the entire industry could be buoyed by the results.
The gambling industry has undoubtedly suffered in the wake of the COVID-19 pandemic, but there are signs that the desire to gamble remains strong in the British public. It’s likely that, once they’re able, players will rush back to their favorite casinos (both online and off) and breathe new life into the business.
