Covid-19 pandemic shelter-in-place devastated conventional gambling, as brick-and-mortar casino locations closed and the most popular sports to bet on were suspended.  However, so-called igaming–which includes online casino, poker, horse racing, and esports–flourished.

Whether esports—video gaming competitions—are really sports is a matter of opinion.  What is not debatable is the huge growth in esports betting during the pandemic.

According to the UK Gambling Commission, with few real sports to bet on in the UK during the pandemic, handle plummeted.  By contrast, from March 2019 through March 2020, wagering on esports grew by 2992%.  In March 2020, the UK pound equivalent of $1,918,514 was bet on esports compared to a negligible $63,493 in March 2019.  By May 2020, handle soared to $5,835,764; while this is not a lot of dollars for the gambling industry, it is an impressive boost.  (Online poker handle was also up, by 50%.)  It remains to be seen, however, whether the popularity of esports holds up once real sports return and can be bet on.

In the United States, between March 2019 and April 2020, betting on real contests (the NCAA Men’s Basketball Tournament, NBA, NHL, etc.) declined by 62%, as most real sports were suspended or cancelled by late March 2020.  Meanwhile, investors were bullish on companies like DraftKings that offer cash-prize contests on fantasy sports and sports wagering for residents of Indiana, New Hampshire, New Jersey, Pennsylvania, and West Virginia.  After merging with Diamond Eagle and SBTech, DraftKings went public on NASDAQ in April 2020 at $19.35 per share.  The stock has since nearly doubled.  IPOs for similar companies are in the works.

As the number of states legalizing online sports books increases, companies like DraftKings are well positioned to quickly capitalize on the opportunity.  Similarly, prominent companies with casinos, racetracks, and online betting on horse racing have already added sports betting and are positioned to grow as more states legalize online sports wagering. Penn National Gaming is one such company, and has seen its stock increase by some 600% since it hit a low of $4.52 on March 18, 2020, when the stock market bottomed out.

When Caesars Entertainment Corp recently merged with Eldorado Resorts Inc., the CEO of the combined company said that it is considering spinning off its sports-betting and online gambling operation to shareholders to get more value out of a high-growth business.

The unanswered question for horse racing is to what extent online sports betting and exports betting will cannibalize or boost online horse-race handle.

Copyright © 2020 Horse Racing Business