Industry Insight: The Curtain Falls on an Era, Brick-and-Mortar Casinos Will Eventually Be "Replaced"

As an innovative product of the digital age—online gambling, it has rapidly developed and continuously evolved globally in recent years.

With the continuous advancement and popularization of internet technology, from traditional offline gambling games to real-time online sports betting, online gambling platforms offer a variety of choices that better meet the needs of different users.

Therefore, as users increasingly shift their battleground, the conflict between offline and online gambling is becoming more severe.

From many indications, the "replacement" of offline casinos seems to be a foregone conclusion.

The Decline of Offline Casinos

In recent years, the news of numerous offline casinos closing has been incessant: South Africa's Carousel Casino, Macau's Rio Casino, Australia's Crown Resorts, and Cambodia's NagaWorld have all made significant layoffs.

The external world might attribute this industry disaster to the impact of the pandemic; indeed, the impact of COVID-19 has been severe across all sectors.

Especially for offline businesses, where people cannot move, naturally, business cannot continue.

But to say that the decline of offline casinos is solely due to the pandemic, I would disagree. Let's look at some data, taking the globally renowned gambling city of Macau as an example:

The following chart shows data from 2012-2019, before COVID-19 began its global rampage. We can see that even if we ignore the anti-corruption phase of 14-15 years, starting from 2018, the revenue from Macau's VIP business began to gradually decline, from $5.727 billion in the first quarter of 2018 to $4.309 billion in the fourth quarter of 2019, with the growth rate decreasing year by year.

Since VIP business revenue has historically been the major contributor to offline casino revenue, when the main business revenue begins to shrink and continues to decline annually, we can realize that problems have already begun to emerge.

Perhaps some might wonder, if the revenue from casual players in the middle field could significantly increase, could it compensate for the decline in VIP business revenue, thus maintaining the overall casino revenue?

Similarly, we find data on the revenue of casual players in Macau from 2012-2019, which indeed was a bit more resilient than the VIP business, until it began to gradually decline in 2019.

But as long as the middle field business does not grow significantly, the overall casino revenue continues to decrease.

And the overall casino revenue, after reaching its peak in 2013, began to continuously decline, especially during the COVID-19 phase, experiencing a cliff-like drop.

Despite Macau still heavily investing in infrastructure-related tourism facilities, the opening of The Londoner Macao in 2021 brought a one-to-one custom-made Big Ben to Macau, and a 1:2 scale replica of the British Parliament, fully restoring the British style and streetscape.

And the newly built Londoner Hotel with about 600 luxury suites and The Londoner Court with over 300 suites larger than 130 square meters, even inviting world celebrities to collaborate, including the British interior design company David Collins Studio and David Beckham to create the "David Beckham Suite."

Even so, from the data below, we can clearly see that this move has had little effect on the gambling industry, and even if there is a rebound, the industry trend is set, and the downward path has just begun.

Of course, not only Macau, but the gambling industry around the world has been affected, but Macau, as the most famous gambling city besides Las Vegas, its data is more representative.

Of course, we can see two special cases in this chart: Singapore and the Philippines. Post-pandemic gambling revenue is almost the same as before the pandemic, but let's leave that as a teaser for later discussion.

We return to the beginning, the VIP customers of the casino determine the life and death of the casino, this group of top customers, colloquially speaking, are the leaders, their choices will largely determine the overall user's choice.

After they gradually leave the offline casinos, where do they go?

Technology Explosion, Online Gambling Begins to Show Its Edge

According to a 2022 report from the Journal of Gambling Studies, a survey was conducted on the same group of males over 12 months of online and offline gambling activities.

The results show that compared to offline gambling, online gambling generates more frequent gambling activities.

In fact, about 25% of respondents gamble online at least once a week, while the proportion of offline gamblers is 12%, with the number of online gamblers in 2022 already double that of offline.

The study shows that depending on the form of gambling, the types of games played also differ. Scratch cards dominate in offline games (65.9%), followed by roulette (52.3%), sports betting (36.6%), and blackjack (31.4%).

Lotteries (26.2%), poker (24.2%), and slot machines (22.7%) are also popular single-player games among this group.

Lottery outlets (65%) and casinos (64%) are the most frequented gambling venues. Bars, restaurants (19.6%), and private venues (18.1%) are also often visited.

And cash is usually used as a payment method (93.8%). About one-sixth of gamblers use credit cards, the frequency of using prepaid cards is lower (6.9%), and the choice of other payment methods is negligible.

As for online gambling, sports betting is the most popular online game (62.3%). Roulette (28.9%), blackjack (22.3%), and poker (17.5%) are also relatively popular online casino games.

Moreover, since online gambling seems to generate a more diverse range of gambling types, in fact, about 44% of online gamblers play three or more different types of games, while the proportion of offline gamblers is just over 15%.

Most online gamblers gamble on smartphones or tablets (73.4%), and about half of them (51.2%) gamble on personal computers.

From this report, it should not be difficult to see that online gambling better meets the needs of modern people.

With the advancement of technology, such as the popularization of the internet: more and more people are using mobile phones, personal PCs, able to gamble anytime, anywhere.

Applications of blockchain, mobile payments: users no longer need to take out a thick stack of cash, payments are faster, more efficient.

Artificial intelligence, VR, and various new programs: not only might enhance the platform's security and transparency but also might allow users to find new gaming experiences and gambling methods.

Good birds choose trees to perch, this also makes offline casino users gradually shift online; this choice has also driven the development of the online gambling industry into the fast lane.

Data source: Exactitude Consultancy

Regional Policies Empower, Traditional Acceleration Transformation

Then we return to the two special cases mentioned earlier that have recovered from the impact of the pandemic, Singapore and the Philippines.

Actually, in the Asia-Pacific region, Singapore, the Philippines, Malaysia, and other places started the legalization of gambling earlier, and the market development is also more mature;

Singapore's gambling history can be traced back to the colonial period. In 1923, Singapore had already achieved gambling legalization under British government rule. After Singapore's independence, then-Prime Minister Lee Hsien Loong, in order to promote the development of the country's tourism and entertainment industry, pushed for gambling legalization again in 2005, while also setting a series of regulatory measures to mitigate the adverse erosion of gambling on locals.

According to the financial reports of Las Vegas Sands Group (LVS US) and Genting Group (listed on the Malaysia Stock Exchange, code 3182), as of the end of 2022, Singapore's gambling revenue was $2.9 billion, approximately restoring to 77% of the pre-pandemic level (2019 Singapore gambling revenue was about $3.8 billion).

And Sands Group has already established an online gambling business and has expanded its operations in multiple countries and regions.​

Philippines' gambling industry also has a long history, according to the Philippine Amusement and Gaming Corporation data, gambling appeared in the Philippines in the early 16th century. In 1976, the Philippines enacted Presidential Decree (PD1067-A), establishing the government agency Philippine Amusement and Gaming Corporation (PAGCOR) to unify the management of the country's gambling industry. As of now, PAGCOR operates 9 entertainment venues domestically and owns 31 satellite entertainment venues, mainly located in Metro Manila, Luzon Island, and the Visayas.

According to the Philippine Amusement and Gaming Corporation data, the 2022 Philippine GGR total was $3.034 billion, 72% of 2019 (2019 Philippine GGR was $4.6 billion). From 1990-2021, the Philippine GDP always maintained a high growth rate, reaching 5.7% in 2021 even under the disturbance of the pandemic. Since the Philippines does not adopt strong regulatory measures against local gambling like other Southeast Asian countries, the strong economic growth and the resulting improvement in residents' wealth levels are also conducive to promoting the development of the country's gambling industry.

Similarly, PAGCOR (Philippine Amusement and Gaming Corporation) has also been involved in the online gambling business.

Although in recent years, due to various illegal activities, the Philippine government decided to stop all offshore gambling operations, this does not affect PAGCOR's continued online gambling business within the legal framework.​ Legal and compliant gambling business can enhance a lot of user confidence, thus choosing its services.

Whether it's Singapore or the Philippines, without exception, they are all developing online gambling businesses. The long history of gambling and the maturity of the industry allow them to adapt to the online gambling era earlier, which is also the original driving force for them to smoothly overcome the post-pandemic era and resume business revenue growth.

Apart from these two regions, gambling giants smelling the opportunity are flocking, and casinos worldwide are also beginning to transform:

Nevada's Las Vegas Golden Nugget is one of Atlantic City's long-standing casinos, and in recent years, it has successfully transformed into an online gambling platform, offering a variety of services including slot machines, table games, and live dealer games.

And Golden Nugget's online platform achieved nearly $800 million in revenue in 2019, enough to show the success of its transformation strategy.

Israel's GVC Holdings (now Entain PLC) rapidly grew into one of the world's largest online gambling and sports betting groups by acquiring multiple online gambling companies such as bwin and PartyPoker.

Canada's The Stars Group (now Flutter Entertainment), which owns several well-known online gambling brands such as Sky Bet and PokerStars.

By providing a variety of gambling services worldwide, The Stars Group successfully attracted a large number of users. In 2020, the company merged with Paddy Power Betfair to form Flutter Entertainment, becoming one of the world's largest online gambling and sports betting groups.

Conclusion

Offline casinos are also gradually realizing that only by transforming online can they continue to hold the steering wheel of the overall gambling industry, and there are countless successful cases worldwide.

Therefore, the transformation of offline casinos to online gambling platforms not only brings new market opportunities but also enhances user experience and operational efficiency. The success of this transformation shows that in the digital age, gambling enterprises can only maintain competitiveness by continuously innovating technology and adjusting their strategies.

We look forward to discussing more unique insights about the online gambling industry with our readers and sincerely invite you to follow the global get-rich industry outbound information platform PASA for more firsthand get-rich industry information.Welcome to subscribe to the official PASA channel: https://t.me/pasaqqzxzz