That is the impact that sports has on millions in the UK and billions across the world. So when the announcement was made that all the major sporting events, including the top European football leagues, were postponed – with Euro 2020 and the Olympics cancelled until next year – a thought occurred to me; what devastating impact will this have on operators, with no sports betting?
To me, sports betting was always, and still is, the first vertical that comes to mind when I think about the gambling industry. Sport and betting go hand in hand, whether it’s sticking a fiver on the big game with your mates, or a well-informed bet with a bookmakers. To me, operators wouldn’t be able to exist without live sports betting.
Instead, that’s not exactly the case. When looking at business updates from operators and suppliers in response to the impact the coronavirus outbreak will have on them, it’s clear they’re profitable enough to offset any losses due to the lack of sport.
From their update in March, William Hill expected the impact of the coronavirus outbreak to reduce group EBITDA by £100m ($123m) to £110m, considering that in 2019, 53% of its revenue was generated through sports betting.
GVC Holdings, who owns Ladbrokes Coral, predicted EBITDA will be reduced by £130-150m, while Paddy Power Betfair-owned Flutter Entertainment estimate reduction of group EBITDA of £90-£110m, with 78% of its 2019 revenue coming from sports betting.
However, in relative terms, a £100-£150m reduction of EBITDA doesn’t on the face of it, seem like a considerable amount, when you factor in the percentage of revenue it makes from sports betting.
That’s especially true when you look at 2019 total revenue. GVC’s Net Gaming Revenue (NGR) for 2019 was £3.66bn on a reported basis. Flutter’s revenue for last year was £2.14bn and Stars Group recorded revenue of $2.53bn.
This demonstrates that despite what you would automatically assume would be a catastrophic impact of having all sporting events suspended or cancelled, operators will still thrive.
That sentiment goes further for suppliers who don’t rely on sports betting nearly as much. Evolution Gaming stated in March that daily operations were largely undisturbed, and many players had switched to online casino games. While affiliate Net Gaming only makes 9% of its total revenue from sports betting.
Despite once thinking sports betting was the main vertical in the gambling industry, the coronavirus outbreak and the subsequent suspension has categorially proven that it’s just one of a handful of offerings in this day and age. Operators and suppliers will continue to excel in their esports, live casino, poker or virtual offerings, just to name a few.
In an era where the speed and engagement of the game is what appeals to a newer audience, in particular a millennial or Generation Z consumer, the likes of online casino and virtual sports can offer what the new player wants.
That’s exactly what virtual sports offer, with Newgioco saying it’s a great alternative to a lack of live sports, where customers can engage more with virtual events. It also expects the lack of live sport to have a surging effect on the long-term future of virtual sports.
It’s obviously a tough time for the industry, as the world tries to come to terms with the life-changing—or ending—virus. Losses will naturally occur but the industry has an opportunity to cement their offering in various verticals. It’s very clear that the industry will survive without sports betting for now, but that’s not to say how desperate we are for sport to resume. And fast. But as they say, the show must go on.
