The experts warned us it was coming. And now, as a second wave of coronavirus infections are starting to pop up in pockets around the world, it appears as though the experts were right. An already decimated land-based casino industry is bracing for a rough winter. Meanwhile, online operators are hoping for a new bump in business.
Such is the case in a year that has seen more ups and downs than a roller coaster. Against the backdrop of coronavirus, U.S. elections, Brexit, and so much more, global economics are having to shift to accommodate a strange new world. If things do not get back to normal within the next few months, we could witness a complete transformation of the entire gambling industry. Whether or not that would be good probably depends on your perspective.
Canadian casinos shuttering again
Canada is one of the countries now starting to see an up-tick in coronavirus cases. Prime Minister Justin Trudeau and his government are not quite ready to impose another nationwide lock down, but they are looking at targeted restrictions where necessary. Quebec is one of the areas now on red alert. Many businesses, ranging from bars to casinos, are closing in Montreal and Quebec city.
This has forced Lot-Quebec to shut down most of its regional operations for the second time this year. Having reopened in July after several months off, the company's casinos were just beginning to see a steady stream of customers on the floor. Now they have shut the doors again. On a positive note, Lot-Quebec is still operating its video lottery terminals and limited floor gambling in a few small pockets of Quebec not covered by the red alert.
Lot-Quebec's online gambling segment has however done very well this year. Apparently, other online operators in Canada have experienced measurable increases too. People still love to gamble, so they will do so online if they cannot get to the casinos.
Revenue trouble in the U.S.
As we profiled in a previous blog post, land-based casinos in the U.S. are struggling as well. And in a country where gambling is heavily restricted, cities like Las Vegas, Atlantic City, and Detroit cannot afford casinos that are not operating. Las Vegas and Atlantic City are especially vulnerable. Why? Because their entire economies depend on casino gambling.
These land-based casinos want to get up and running online as quickly as possible in order to start generating revenue needed for survival. Unfortunately, it could be years before regulators make a decision.
China could cripple Macau
Half-way around the world, China is taking a hard line stand against all things gambling and cryptocurrency. There have been recent news stories of government officials cracking down on Bitcoin gambling by going after merchants who set up fake online storefronts as a means of helping gamblers make deposits at online casinos.
Government officials have also made it clear they intend to go after exchanges and other crypto-based businesses in order to prevent average citizens from obtaining cryptocurrency and then spending it outside the country. They have gone one step further to announce new restrictions on overseas operators who seek to attract VIPs to gambling junkets that take them from the Chinese mainland.
Anyone who pays attention to Chinese politics is probably not surprised about the cryptocurrency crackdown. China loses billions every year to BTC transactions between consumers and overseas merchants. However, the government going after gambling junkets operators is somewhat surprising.
It is true that gambling junkets take VIPs to places like the Philippines, Australia, South Korea and even Vietnam. But junkets operators bring VIPs to Macau as well. Shutting them down will almost certainly result in a decline in Macau tourism, especially among gamblers who have money to spend. This could further damage the local casino industry and ultimately mean less revenue for China. However, it seems they don't care.
Online operators ready to step up
With land-based casinos facing so much turmoil these days, online operators find themselves in a much better position. They are ready to step up wherever demand for their services exists. Is it any wonder that so many online properties have popped up in 2020?
It would be curious to know how cryptocurrency plays into the decision to gamble online. If you live in someplace like the UK or Canada, where online gambling is legal, there isn't necessarily a compelling reason to deposit BTC at an online casino. You can if you want to, but you can just make your deposits using pounds or dollars.
People living in China do not have as many choices. They already have to gamble at an offshore website using a VPN or some other means of masking their IP addresses. Gambling with fiat might be neigh to impossible. This explains why Chinese entrepreneurs are willing to take a risk at setting up fake online stores as a means of giving gamblers access to cryptocurrency.
It would make sense that online operators would specifically target Chinese players by accepting BTC. They might even promote BTC deposits with bonuses and other incentives. That is one way to get into markets that are otherwise heavily restricted.
5 Reasons casino should bet on crypto
An in-depth analysis of the current environment suggests that change is coming to the gambling industry. Land-based casinos will likely never be eliminated completely, but they are going to face stiffer competition from online operations in the years to come. This suggests that online operators take the lead on cryptocurrency.
Here are five reasons online operators should bet on crypto moving forward:
1. Rise of digital currencies
So many countries working on their own digital currencies is compelling proof that we are headed in that direction. Within the next 5 to 10 years, do not expect to see paper bills and minted coins any longer. Everything will be digital. Knowing that, private cryptocurrencies will become even more important as payment systems. Online operators would do well to begin implementing cryptocurrency payments as soon as possible.
2. Access and restricted countries
China's attempt to crack down on gambling will ultimately fail, as will similar efforts in other countries. People are going to gamble if they wish to. Getting on board with cryptocurrency gives online operators access to those markets that are closed to land-based gambling.
Access is equally important in countries where gambling is not so restricted. Getting back to Canada momentarily, how many Canadian gamblers will simply stop gambling because certain portions of the country are on red alert and closing casinos down? Not many. The fact that Lot-Quebec's online revenues are up makes it clear that gamblers are active online. Crypto gambling only increases access by giving players more options for deposits and withdrawals.
3. The need for privacy
Along with access is the need for privacy. Consumers the world over are more attuned than ever before to privacy, especially now that contact tracing is here. Cryptocurrency deposits offer at least some measure of privacy in the gambling space.
Another one of our recent blog posts talked about self-sovereign identity (SSI) as a better alternative to know your customer (KYC) obligations. This is something the gambling industry ought to be pressing for. Combine SSI with crypto deposits and you have about as much privacy as you can get in online gambling.
4. Emergence of blockchain casinos
Blockchain showed a lot of promise for online gambling even before the coronavirus crisis hit. This time last year people were talking about its potential. But with coronavirus now on the scene, it makes sense to press forward in developing entire blockchain casinos with cryptocurrency or a dedicated gambling token at their core.
Blockchain solves a lot of problems for casino operators. It allows them to prove their games are fair without the need for independent, third-party testers. Blockchain makes accounting easier and more accurate. It can help root out fraud and reduce operator expenses by eliminating charge-backs. Blockchain brings so much to the table that it makes no sense for the industry to ignore it.
5. Gamblers want it
The gambling industry normally responds to market demand quite well. As such, the biggest reason operators should bet on cryptocurrency is the fact that gamblers want it. Online gamblers want as many options as possible for depositing and withdrawing. Give them the option to use BTC, ETH, etc. and they will do so.
The environment is not looking so good for land-based casinos right now. Hopefully things will rebound sooner rather than later. In the meantime, online operators are hoping for another bump over the winter.