Will coronavirus affect the gaming industry?

Humankind is facing an ongoing COVID-19 pandemic crisis, and the situation is more than severe. Across the globe, governments are making a great number of decisions, with the aim of slowing down and stopping the spread of the novel coronavirus.

Some are declaring health emergency states, cancelling social gatherings and introducing strict measures such as home-office work and school closures. Public health care professionals constantly warn and appeal for people to follow instructions and avoid any unnecessary social contact.

The impact of COVID-19 on the gambling market in Russia and Australia

The global economy and the financial market is not only under threat, but is already being badly affected by the coronavirus.

The Summit Ascent Holdings in Russia’s Primorye gambling district might be a good gambling investment opportunity, with liabilities mostly denominated either in US dollars, or Hong Kong dollars, and taking into consideration that the ruble is the only hard paper currency worldwide.

Russia has been slowly but surely enlarging its gold reserves, whilst simultaneously rising ruble supply. This means that even if Summit Ascent Holdings crashes, Putin will be able to bail it out with cash.

However, a bail-out of Summit is most probably not going to be required. As soon as the currency market situation improves, the buying power of the Russian ruble will increase, thus enabling Summit Ascent to settle its dollar debts. With its governments’ support, Summit Ascents Holdings is probably one of the only casinos, which is prepared for what is coming.

Australia is in a similar predicament. Despite not having a hard currency, its gaming stocks are likely to get through the crisis, due to the fact that Australia is one of the largest gold exporters, which places is in a better starting position. This, of course, will only occur if the government backs the Australian dollar.

The impact of COVID-19 on the gambling market on the rest of the world

It’s quite simple. The more stable countries, with a smaller debt, will remain. The less stable and therefore, the less fortunate, with a greater debt, will crash. It’s just a matter of time. One thing is for sure: the industry will indeed have a hard time recovering from the market crash.

According to the recent Drudge Report, some casinos have already reached out for support, following the closure of Las Vegas. It is safe to assume, therefore, that they will eventually be acquired by competitors, who did not join in the central bank’s race in the last 50 years.

As the situation appears today, Penn (-45%) and Eldorado (-25%), will continue to fall, as well as MGM (-33%), Boys-history (-30%) and GVC. With regards to stocks, they are oscillating on day to day basis. Some days they are collapsing, other days they improve.

For the Stars Group, Ceasers, IGT and Scientific Games, there is little optimism. The question is – under the given circumstances – would declaring bankruptcy be a solution for these companies? The only thing that matters for shareholders is the capital which, in this case, will be more or less worthless.

To put it in perspective: banks and casinos are not the only ones who will require support from their governments but other organisations too and the only one capable of providing support will be the Federal Reserve. In laymen’s terms, any organisation with a greater debt, may have to declare bankruptcy.

There are also good chances that NetEnt, Rank Group, Summit Ascent and others could make it, despite the tendency of stock losing their value. Though land-based casinos are closed, the Online Casino industry is expected to see an increase in the number of players and profits, according to experts, which is related to people staying and home and trying to kill the boredom.

Bankruptcies will probably hit less-prepared, smaller operators and begin once the situation settles, due to the bond market. As soon as the monetary system restarts, a run on bonds will be kicked into action.

However, amidst all the coronavirus chaos, there might be a couple of benefits, especially related to climate change. The atmospheric C02 levels are very likely to decrease over time. After all, every cloud has a silver lining, doesn’t it?