Amid the Great Depression, picture the scene.
A down-at-heel punter, facing ruination, walks into a casino for one last throw of the dice – or it could be a shop to buy a lottery ticket.
They’re betting their all on elusive Lady Luck breaking their way, for the life-changing draw that will end their worries.
It’s a playbook straight out of Hollywood, or Bollywood, or a thousand soap operas.
And it begs that perennial question: “When the chips are down, do people gamble more? Or do they gamble less?”
It’s an existential query that in these economically blistered times is going to deeply impact our industry, as we face a perfect financial storm of post-Covid pay-back, war in Ukraine, rising interest rates and climbing inflation.
If it hasn’t already happened, the United Kingdom, potentially like several other countries around the world, seems to be heading for a long and deep recession.
Most experts, The World Bank and The Bank of England among them, predict that of all the major economies in the so-called G7, Britain is going to be the hardest hit.
With inflation nudging 11 per cent, its highest rate in 27-years, spiralling energy prices, an unpopular government that seems to have run out of ideas, widespread labour unrest and near-zero growth, the immediate and medium-term fiscal future looks bleak.
With the national British economy still not back to even pre-Covid levels, what does this mean for the gambling industry?
A Tale Of Two Industries
Research suggests that a sustained economic down-turn, or recession, affects the gambling business in two very different ways.
Skill-based gambling, such as poker and sports betting, takes a definite hit; while luck-based games, like the lottery, are boosted.
A classic example would be the notorious and illicit “Numbers” racket, which thrived in the United States during the years of the Great Depression (1929-1941).
Studies, nevertheless, remain sketchy and, as in life itself, there are some notable exceptions to what can be termed this natural truth.
For example, during the last major international recession, triggered by the myriad sub-prime mortgage lending scandals and subsequent banking failures, gambling across all verticals in both Iceland and Italy, two of the hardest hit economies, grew and, if anything, prospered.
Taking a closer look at the Italian phenomenon, data amassed by the country’s regulatory gambling body, the Amministrazione Autonoma dei Monopoli di Stato, Autonomous Administration of State Monopolies (AAMS), over four-years, between 2009 and 2012, showed that luck-based gambling activity increased in tandem with rising unemployment and falling national wealth.
Looking at more traditional casino-based betting around the “2008 recession”, French casino revenues fell by 6.9 per cent in 2009, while the country’s GDP only fell by 2.7 per cent. In Spain over the same period casino takings plunged by 14 per cent, against a GDP decline of 3.7 per cent.
Statistics, of course, in time-honoured fashion can be used as a drunken person uses a lamppost, “more for support than illumination”.
iGaming To The Rescue
And the gambling industry, particularly in the United Kingdom, has shown itself to be remarkably resilient through thick and thin — and, most recently, Covid lockdowns.
Other major transitions and innovations have transformed the gambling landscape since the last major international economic recession: the iGaming revolution, the explosion and application of data mining, regulation and, not least, the growth of responsible gaming.
The recent impact of Covid, moreover, has battle-hardened the contemporary generation of betting industry workers.
While the UK’s traditional retail gambling sector was hammered by enforced lockdowns, and kept on life-support by government furlough schemes, iGaming came truly of age. Staying in became the new going out, and all things Internet prospered.
Today, around the world, we are further witnessing the boom of betting on esports and the phenomenal growth of legalised sportsbooks across North America. Old hands, like William Hill, are re-inventing the traditional high street bookies by turning them into high-tech digital hubs.
A flutter will always be seen as an affordable indulgence and thus the lottery, with its relatively small stakes and massive potential winnings, will always, accordingly, remain recession-proof.
Technology, innovation, regulation will offset many of the impacts of the coming economic hurricane.
Buckle up, it’s going to be a bumpy ride. But the mantra “Who Dares Prospers” has never rung truer.
Amid the Great Depression, it has to be you.