The novel coronavirus outbreak is already hampering some of the world’s largest gaming centers, prompting at least one research firm to slash 2020 estimates for the industry.
As expected, 2020 is going to be rough on gaming operators, according to H2. (Image: Reuters)
In a new report, H2 Gambling Capital, a data consultancy firm for the global gaming industry, said it’s trimming gaming win forecasts for this year by eight percent. That’s as the number of confirmed coronavirus cases around the world approaches 90,0000.
The outbreak is already hammering operators in Macau where gross gaming revenue (GGR) plunged by a record 87.8 percent last month after integrated resorts there were shuttered for 15 days.
H2 has now revised forecasts for Hong Kong, Italy, Japan Malaysia, and South Korea,” said the research firm in a note obtained by Casino.org. “As a result, it is now expected the best case for global gaming market gross win will fall by one percent year-over-year.”
That’s nearly five percent worse than H2’s initial 2020 projection, which was released prior to the emergence of the virus.
Not Comparable
As COVID-19 cases began mounting in China in January, the initial reaction was to compare the outbreak to the 2003 severe acute respiratory syndrome (SARS) outbreak, which dealt a blow to Asian gaming centers. Some experts have since noted those comparisons aren’t relevant, as the coronavirus could prove worse than SARS and present bigger headwinds to gaming operators.
“The SARS outbreak in China in 2002/03 did not have anywhere near the impact on the global gambling industry, as China’s (inc. Hong Kong and Macau) total gross win of $9bn at the time only represented 3.5% of the global total; however, growth in Mainland China and the deregulation of Macau means that China and its special administrative regions (SAR) generated $71bn of gross win, or 16% of the global total, in 2019,” according to H2.
Because of strict travel controls throughout Asia, including lack of access to Macau from some of mainland China’s largest cities, gamblers could turn to interactive and online gaming as alternatives to visiting brick-and-mortar casinos.
“It is expected movement restrictions caused by COVID-19 could contribute to interactive’s share of global gambling gross increasing from 13.4% to 14.7% in 2020,” said H2. “H2 could easily see this increasing to a level in excess of 15% should the outbreak last into the second quarter.”
Important Caveat
The research firm notes that its already bearish assumptions for gaming market gross win this year do not include downward revisions to global GDP.
“Our latest forecasts do not include any downgrades to 2020 GDP forecasts in other nations at this time. This could easily wipe out a further 3% (making the YoY impact c4% and the fall on 2020 expectations of >8%),” according to H2.
On Monday, the Organization for Economic Co-operation and Development (OECD) trimmed its 2020 growth outlook by half a percent to 2.4 percent, the lowest since the global financial crisis in 2008.
The OECD expects China, the world’s second-largest economy behind the US, to generate GDP growth of 4.9 percent this year, well below the original forecast of 5.7 percent released last November.