Europe, US Industry Heads Say Casinos Face Major Challenges

February 7, 2023
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Casinos in Europe and the United States are facing a host of significant challenges, according to representatives from the European Casino Association and the American Gaming Association.

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Casinos in Europe and the United States are facing a host of significant challenges, according to representatives from the European Casino Association (ECA) and the American Gaming Association (AGA).

Illegal gambling, regulatory tightening and employment difficulties must be addressed, ECA chairman Per Jaldung told the International Casino Conference (ICC) in London on Monday (February 6).

These challenges have created an increasingly complex business environment over the past few years, Jaldung said.

In addition, the casino sector in Europe “has not returned to normal” since the onset of the coronavirus pandemic, with around 80 casinos closing out of around 1,000 operations, Jaldung said.

Jaldung said the challenges are made more difficult because of rising energy prices, the ongoing war in Ukraine and rising supply chain costs.

To address this long list of challenges, Jaldung called on stakeholders to more actively engage with supervisory authorities to promote positive aspects of the industry and fight against negative perceptions.

In particular, Jaldung called on ECA members to fight advertising prohibitions and municipal land-based gambling bans that have become more popular in various countries in recent years.

The ECA chair also wants governments to ensure that tax rates on land-based casinos stabilise during these turbulent times, and to introduce “sufficient” Europe-wide anti-money laundering rules.

Jaldung supports the licensing of online casinos as one way to address some of the challenges. Some 62 percent of ECA members currently offer online casino games.

In particular, the ECA wants countries that do not regulate online casinos to replicate the licensing systems in Switzerland and Belgium, which require online casino licensees to be attached to a land-based casino.

However, Ismail Vali, founder and CEO of intelligence platform Yield Sec, said that tackling the black market is not as simple as introducing a licensing system.

Vali said Yield Sec research found that 97 percent of affiliates in Switzerland only advertise for illegal operators, which helped the black market increase its market share to 47 percent in 2022.

“You need a fair and safe industry that benefits commerce and community but does not benefit crime. The next two decades are key to stopping the gambling industry from slipping into illegality,” he said.

In a separate panel, Holland Casino CEO Petra de Ruiter said employment challenges “will be around for a long time” and that the industry “must pay attention to it”.

“We need to be able to attract and retain new talent and explore what roles we can digitalise. Our industry reputation is not very good with regard to responsible gambling so it's important to show what we are already doing to tackle these concerns,” she said.

“Existing employees are our best tool; we have a buddy system for new starters to share what we do,” Ruiter said.

Michael Pollock, managing director of Spectrum Gaming Group, said the challenges facing casinos in Europe are “90 percent” identical to those facing the US.

When it comes to illegal gambling, the AGA estimates that $511bn is wagered in the US annually but that $13.3bn is lost as potential tax revenue.

Pollock explained that multiple US states are battling the proliferation of black-market gaming machines in gas stations and restaurants throughout the country.

“These establishments threaten regulated gambling businesses as they erode and change the dynamic of trust,” he said.

AGA director of research Anton Severin revealed that gross gaming revenue (GGR) records will likely be set when data for the month of December 2022 and the fourth quarter are released.

He estimates GGR in 2022 will exceed $60bn, or more than $100bn if tribal gambling revenues are included.

Land-based operations are accounting for around 80 percent of GGR, or 90 percent if tribal operations are included.

For the first 11 months of 2022, commercial gaming revenue stood at $54.93bn, 13.5 percent ahead of the same period in 2021, and surpassing the annual record of $53.04bn from 2021 with one month of gaming revenue left to report.

Despite this growth, Severin revealed the results of a straw poll of CEOs of AGA member companies on the factors most limiting their operations.

Respondents were most concerned about supply delays (65 percent), interest rates (62 percent), economic uncertainty (50 percent) and labor shortages (50 percent).

Severin also warned that older customers, who have been the backbone of casino spending, have not returned to pre-pandemic levels, unlike younger customers.

Only 84m US adults visited a casino over the past year, compared with 44 percent of all adults in 2019. Average customer spending on gambling products is up, he said, but “this does not mean they are spending more in the rest of the casino".

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