Covid-19 Impact: The UK Gambling Sector

5 min read | August 24, 2020 11:11 PM AEST | By Team Kalkine Media

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Summary

Almost every industry has been impacted by Covid-19, some positively while others negatively. Gambling has also seen a mixed response.

Flutter Entertainment has been one of the most consistent performers in the sector, because of its scale and diversification across both geographies and products.

William Hill has been struggling to make up for the losses incurred during lockdown.

The gambling sector has not been immune to the effects of the coronavirus led pandemic. In some cases, the impact has been negative like the closure of physical gambling spaces such as casinos and bars. On the other hand, there has been a positive impact with a rising trend of participation in online gambling.

The coronavirus pandemic has affected everybody’s lives, changing the way in which we live. We are learning to adapt to this constantly evolving situation, as fast as possible. None of the businesses have been spared the effect of Covid-19. This inevitably means that every industry has been affected. While for some like essential goods and services, revenues have soared, especially for the online delivery segments. For other like travel operational and maintenance costs are high while demand has totally dried up. This divergence has taken place across the gambling sector as well.

All the physical gambling sites had to close their operations to contain the virus infection, and were strictly not allowed to open by the UK government. Moreover, even the licensed online gambling industry was adversely hit as no sports and racing events were being held, which are the bread butter for online gambling firms. But each company in the gambling sector was not hurt equally badly. Their product and location mix along with their futuristic strategies decided their fate during the coronavirus pandemic period.

Now that football games are allowed at an indoor level, gambler companies are scheduling games almost daily to make up for the losses. Online gambling firms offering poker and casino games have enjoyed a hefty rise in website traffic, as people signed up from home to kill boredom while being locked down inside their homes.

Flutter Entertainment, one of the world’s largest online gambling firms, will be releasing its results for the six months ending in June, on 27 August 2020, and will be revealing its performance. The company has been one of the most consistent performers in the sector, because of its scale and diversification across both geographies and products.

On the other side are some of the UK gaming companies such as William Hill that still rely heavily on UK sports betting customers. They are obviously hit badly.

Flutter is the owner of FanDuel, a fantasy sports betting site, which is used by more than 8 million sports fans. According to the experts, Covid-19 will probably result in a faster rate of US sports betting legalisation, potentially followed by online casino legalisation. All this has led to Flutter Entertainment being valued at more than 40 per cent more now than it was at the start of March 2020, while rivals GVC and William Hill are struggling to make up for the losses incurred during the lockdown.

If the upcoming results portray stronger-than-expected recovery then the company will come out with flying colours. Not only Flutter, it will have positive impact on some of its more sport-focused peers also. Till date, Flutter and casino-focused rivals such as 888 have salied through the pandemic skillfully.

However, this year will also witness the government undertaking a review of the 2005 Gambling Act, the legislation introduced by the government of Tony Blair, contributing to Britain becoming one of the most liberal gambling markets in the world. This is expected to impact Flutter’s size and diversification positively.

Now, let us focus on the stock performance of some of the listed stocks of the gaming and betting industry.

Flutter Entertainment Plc (LON:FLTR)

United Kingdom-based global sports betting and gaming operator, Flutter Entertainment Plc (LON:FLTR) was trading at GBX 12,240 on 24 August 2020, at GMT 02:31 PM +1, down by 0.16 per cent from its previous close of GBX 12,260. It was having a market capitalisation (M-cap) of £18,976.26 million. The stock has given a price return of 29.74 per cent on a YTD (Year to Date) basis.

William Hill Plc (LON:WMH)

Betting & gaming company, William Hill Plc, was trading at GBX 160.70 on 24 August 2020, at GMT 02:39 PM +1, down by 1.71 per cent from its previous close of GBX 163.50. It was having a market capitalisation (M-cap) of £1,715.67 million. The stock has given a negative price return of 16.30 per cent on a YTD (Year to Date) basis.

888 Holdings Plc (LON:888)

Online gaming entertainment and solutions provider, 888 Holdings Plc, was trading at GBX 199 on 24 August 2020, at GMT 02:52 PM +1, up by 1.02 per cent from its previous close of GBX 197. It was having a market capitalisation (M-cap) of £726.41 million. The stock has given a price return of 19.11 per cent on a YTD (Year to Date) basis.

Conclusion

The coronavirus pandemic has boosted to the operations of the internet-enabled businesses, especially in the gaming and betting space. Many companies in this space have increased their digital delivery operations, to generate higher revenues.

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