Is the Covid Bonus Over for the Gambling Industry?

Online gambling boomed during lockdown 1 & 2, but with the news that multiple covid vaccines are imminent, investors in the gambling industry are withdrawing their investments.

With little to do during the early months of the pandemic, many people turned to gambling as a way to escape the boredom. With furlough schemes and all sorts of help from the government for the self-employed, people found themselves with a lot of time on their hands and a bit of money. It gave many people ample time to sharpen their poker skills, whilst others just wanted the quick entertainment of the faster games, e.g., slots, roulette, and bingo.

The result? A massive upswing in the value of shares across the online gambling industry. Of course, it was a different matter for real-world casinos. They had to close their doors for months on end, and naturally, lost A LOT of money.

What about the 2nd wave?

By the time this 2nd wave hit, we were much better prepared. The hospitals knew how to manage patients better, shops knew how to weather the storm a bit better, etc.

So, although we had the 2nd wave, covid’s impact on the gambling industry wasn’t as dramatic this time as the 1st wave.

Nevertheless, investors have been putting their money into online casinos across Europe…until this month’s announcement of the imminent arrival of, not one, but three potential vaccines.

William Hill and Net-Ent both saw their share prices take a sudden dive:

A graph showing Net-Ents shares over the past month, with a nose dive on Nov 6th, just before the announcement of the vaccine

As you can see, there was a sharp drop in share prices for Net-Ent from the 6th of November. This was the date when we first started hearing that a vaccine may be ready soon. By the 9th of November, we knew for sure and investors began to back out of the online gambling industry. Over the next couple of days, the market steadied again, with a further drop on the 18th of November with the announcement of the Oxford vaccine (much easier to store and cheaper to produce than the other two vaccines).

It was a similar story for William Hill, too:

A graph showing William Hills share prices over the last month. They show the same pattern as Net-End, more or less. So a drop in share value around the time the vaccines were announced

Below, you’ll find a graph showing GVC’s share performance over the past month. GVC are the parent company for some of the UK’s largest online casinos, including Party Casino and Foxy Bingo. They increased share value as we went into the second lockdown, but it fell again with the vaccine news.  But as America passed 250,000 coronavirus deaths, their share price went up. This may be because GVC part-owns BetMGM with MGM, who own some popular online casinos in America.

So as we became more optimistic in the UK, their shares fell because people would no longer play online as much. But as America plunged further into its crisis, shares in the US’s online casinos went up.

A picture of the graph of GVC's share performance over the past month (the previous 2 graphs were over the same timescale). This shows an increase in share price as the vaccine was announced

Were there any winners in the 2nd wave of covid?

As you know, when it comes to gambling, the house always wins. You can’t really expect the gambling industry to lose out completely, can you? They always find a way. The offline and online markets are diverse, making them robust. Back in March, as the lockdown started, real-world casinos lost out to online casinos.

Now, as covid becomes a thing of the past, real-world casinos are starting to pick up again:

A picture of a graph showing shares for Rank group going up when the vaccine was announced

Rank Group owns the Grovesnor Casinos in the UK. You’ll find one in practically every city across the country. News of the vaccine clearly did them a favour regarding investments. Their shares started to increase from the 5th of November. That was the day the second lockdown started but also heralded the good news with our fight against coronavirus. This was the day a new at-home test was announced, allowing reduce isolation from 10-days to 5-days.

Summing it up

The online and real-world casinos aren’t going anywhere. Share prices will fluctuate according to what’s going on in the real world. As people spend more time indoors, online casinos are more popular and worth investing in. As people spend less time indoors, real-world casinos become more popular and are therefore worth investing in.

Maybe this is something to think about if you’re an investor – are there patterns that link to the seasons? Maybe winter’s a good time to invest in online casinos in the Northern Hemisphere, but real-world casinos in the Southern Hemisphere.