Social and economic issues leave their mark on various aspects of our world and the gambling industry is no exception. A study previously conducted analyzed the effects of the 2007-2009 recession and was revisited based on the 2020 COVID19 pandemic.
Dr. Byron Marlowe, with Washington State University Carson College of Business, previously worked on a study focused on the impact of casinos during economic down turns. Recently, he and his team updated the study to include impacts of the pandemic. The variables of social impact through employment impact and rural vs. urban within a non-destination gaming state and their resilience during economic impacts were added.
The original study is available here.
Q: The study has been updated to include the effects of the 2020 pandemic. Talk to us about the areas of focus.
A: The study investigates both the economic and social impact of an event that has a significant effect on gaming volumes and employment at casinos. A decade ago, it was the recession, now the pandemic.
Q: Was online gambling in legalized states considered in the study or did the team focus on activity in the land-based betting industry.
A: Online gambling was not considered as a focus of the study. In consideration of Indiana being classified as a non-destination gaming state we only looked at similar samples within the land-based betting industry. Iowa, was the state that was recognized in our first study as also being non-destination, Indiana more recently.
Q: Have certain states suffered more than others? If so, were these COVID19 hot spots such as New York, California, etc.?
A: Yes, the states of Nevada, Washington, Oregon and California to name a few have suffered more than others. Travel and transportation service restrictions and safety measure have limited guests and stay overs more in these states’ casinos.
Q: Social distancing requirements have seen casinos eliminatetable games. Does this represent a large part of gambling revenue in the United States?
A: Table games provide an “entertainment” factor, allowing for casino floors and customers to have experiences but the largest part of gambling revenue is the coin drop in or slot machines. Every part of gambling revenue is impacted but casinos have seen their most significant drop in revenue at their tables.
Q: What efforts have casinos made to reduce loss?
A: Casinos have been at the front and center of innovation around safety for guests. Several hotel casinos are taking the protection of their guests to new heights with strategies that ensure safe distance between customers and staff. A decade ago, casinos were shifting focus to revenues that the no gaming components of the casino can provide, food and beverage options, entertainment expansion and with these we’ve seen some diversification from being so revenue reliant on gaming but the significance of the losses are compounding with a complete shutdown of hotels and casinos in some areas of the country for varying amounts of time.
Q: One may assume that gambling activity would increase during lockdowns due to sheer boredom. On the other hand, considering the job losses that many Americans face, perhaps it’s quite the opposite. What is the result based on your findings?
A: 2020, has seen increased volumes of online gaming. Boredom may be a motivation, also the appetite for risk when job losses occur lessens. Accessibility is also a variable to consider. Work from home may provide just the atmosphere for activities like gambling from the home office or other remote locations without firewalls or surveillance.
Q: How has the current economic downturn compared to the 2007-2009 recession?
A: Our study found that the economic impact of the recession was not conclusive for non-destination states like Indiana and Iowa. Although, in Indiana, the recession did impact the social side of the casino, loss of employment in urban casino locations was recorded not in rural casinos. Although not conclusive, the preliminary figures now show nearly a fourteen percent decrease in year over year tax income from gaming from 2019 to 2020 for the state of Indiana with layoffs at the casinos as well shares the current economic downturn has had more severe impacts then the recession of 2007-2009. In other words, we are seeing both a negative economic and social impact from the current economic downturn.
Q: Wrapping up, please feel free to share any additional findings.
A: We’ve shared that a non-destination gaming state was recession proof in the past. What we’ve discovered as of today is that it is not pandemic proof in its current offerings. Regardless if a state is a destination like Nevada or non-destination classification like Iowa or Indiana if the hospitality component of the industry is limited or non-existence gaming is impacted negatively.