Quarterly Lottery Sales Indicator
In this special edition of the WLA Quarterly Lottery Sales Indicator, we again report on the rapidly unfolding regional and global developments in the fight against COVID-19. Lockdowns imposed in Asia, Europe, and the US from March to May successfully ‘flattened’ the epidemiological curve in many of the nations and territories affected by COVID-19 at a tremendous cost to societal wellbeing and economic activity. Over 75% of countries are now reopening even as the pandemic is intensifying in several countries, including the US and the emerging market economies of Brazil and India (Figure 1). With 14 million plus confirmed cases – including 3.8 million plus confirmed cases in the US alone and more than a million new confirmed cases worldwide in just the past five days – it appears the SARS-CoV-2 virus pandemic still has very far to run (Figures 2, 3).
In this special edition of the WLA Quarterly Lottery Sales Indicator, we report on the rapidly unfolding regional and global developments in the fight against COVID-19. The unprecedented shutdown of non-essential business put in place over the past 10 days around the world to slow the COVID-19 pandemic is having a stark impact on the global lottery and sports betting industries, and on the gaming industry more generally. In short order, the sector has been hit by a triple whammy that has seen entire populations going on lockdown, the cancellation or postponement of major sports and horse racing events, and the widespread suspension of lottery and sports betting sales and the closure of casinos and gaming halls as well as clubs, restaurants and other venues offering VLTs, EGMs, and similar products.
Coupled with the sharp dislocation caused by the cessation of large swathes of economic activity – Morgan Stanley forecasts a drop in U.S. GDP of 30.1% in Q2 2020 as well as an increase in the U.S. unemployment rate to 12.8% – projections for the lottery, sports betting, and wider gaming sector estimate a severe contraction in gaming-related activity over the course of 2020, with H2 Global Gaming's 2020 total gambling forecast in particular now downgraded 12.1% on pre-outbreak estimates.
Asia Pacific, where the COVID-19 pandemic originated, has been more successful than many other parts of the world in containing the virus, perhaps thanks to previous experiences with the SARS epidemic of 2002-2003 and the MERS outbreak in Korea in 2015. In consequence, lottery operations appear to have been less impacted across the region as a whole than in other places, although specific figures outside China are not yet available.
Apropos the strong Asia Pacific reaction, the mainland Chinese lotteries of China Welfare and China Sports suspended operations for 49 days from January 22, 2020 as part of a national response by the Chinese Government to the coronavirus crisis. The shutdown of lottery operations across mainland China caused January’s aggregate lottery sales to fall 43.3% year-on-year. The Chinese Ministry of Finance (MoF) is yet to issue sales figures for February, but they are expected to come in at zero.
In a rare piece of good news concerning the pandemic, a directive was issued by the MoF on March 11, 2020 permitting the orderly restoration of sales on a rolling province-by-province basis. The redemption of prizes is still suspended as the authorities wish to avoid the mass reclaim of prizes from draws prior to the shutdown of January 22, 2020. VLT halls are also still closed. In the directive, the MoF stated it could take six weeks or more for sales at China Welfare to resume their post-shutdown levels. However, sales at China Sports are not expected to rebound to forecast levels owing to the postponement of the UEFA Euro 2020 football tournament and other major sporting events.
Thanks in part to strong pre-emptive actions including travel restrictions and the now-familiar social distancing, the explosive growth of coronavirus in Hong Kong has been largely contained, with the special administrative region recording just 714 cases of COVID-19 through to March 31, 2020. The early measures taken in the territory have allowed horse racing to continue, albeit with a reduced schedule and under closed-door conditions. While online betting on horse races at HKJC has continued apace, the club has shut down its brick-and-mortar betting offices around Hong Kong and suspended all entertainment facilities and large banquets as part of a broader package of coronavirus safety measures.
South Korea has enacted similar tough measures throughout the country. The country’s pro-active posture with its emphasis on mass testing and track-and-trace efforts have helped curb the spread of the virus, enabling some sporting and other facilities to remain open. Typical countermeasures found at such venues include body temperature checks and other checks for symptoms of infection through thermal imagery and non-contact thermometers, the mandatory use of masks for client-facing employees, and hand sanitizer and similar hygiene measures. There is also a strong emphasis on positive messaging such as preventive tips. All horse racing in South Korea has nonetheless been cancelled indefinitely.
In Japan, the world’s largest bookmaker, the Japan Racing Association, suspended on-course betting and attendance from February 29, 2020 until further notice. Similarly, draws of the Takara-kuji lottery are taking place without spectators.
New Zealand locked down for four weeks from March 23, 2020 as part of an aggressive response to the coronavirus. While lottery draws in New Zealand continue during the lockdown, brick-and-mortar stores are closed, meaning that lottery tickets are only available to be bought online. Horse race betting has been suspended throughout the country for the duration of the lockdown.
In Australia, the Australian lotteries, keno, and racing giant Tabcorp remains one of that country’s few gaming operators still able to offer services via its lottery products – available at newsagencies and kiosks – and global racing coverage; horse racing continues in Australia under closed-door conditions as part of a soft lockdown. The conglomerate is nonetheless taking measures to mitigate the impact of COVID-19 on its 2H20 finances by reducing capital expenditure and encouraging customers to use online alternatives to available products.
Europe, which until very recently was the epicenter of the COVID-19 pandemic, has seen a swathe of lockdowns and business closures over the past two weeks. Approximately a quarter of WLA member lotteries across the continent report that their retail networks are now closed, either voluntarily or by government order; lotteries operating VLTs, slot machines, and casinos have been most directly affected by the various shutdowns. For lotteries that are unaffected by closures and suspensions, traditional draw-based games are still in operation, subject to strict safeguards; points of sale networks continue to remain mostly intact; and instant tickets are still available. For all WLA member lotteries in Europe, sports betting activities have been seriously impacted by the postponement and cancellation of major international sporting events; for details, see the Annex below. On the other hand, online sales continue to be fully operational in general. Overall, initial estimates suggest that turnover (revenue) has decreased across the board by between 15% to 30% even in jurisdictions where lotteries remain open and points of sale networks remain intact. Where lotteries are closed and activities are suspended, revenues have decreased by 95% or more in general.
Per capita, Spain and Italy have been hit hardest by the coronavirus.
On March 16, 2020 the Spanish Government declared a state of emergency in its fight against the coronavirus, with all of the country’s 47 million citizens being ordered to stay indoors for at least two weeks, excepting excursions for necessities. In response, Spanish lottery operators Sociedad Estatal Loterías y Apuestas del Estado (SELAE) and Organización Nacional de Ciegos Españoles (ONCE) suspended sales of all lottery games in the country. Redemption of prizes with a par value of less than EUR 2,000 was also suspended. Spain, together with Italy, has been among the worst-hit countries in Europe for COVID-19 on a per capita basis, as the accompany graph shows.
In Italy, SuperEnalotto (Sisal), Lotto (Lottomattica), and Eurojackpot have all stopped completely, even for online players. On March 22, 2020, the Italian government ordered the closure of all tobacco shops as well as the shutdown of all slot machines in shops throughout Italy as part of its enhanced quarantine measures. Previously, as in France, tobacconist-style shops had still been open and lottery and scratch cards were still available throughout the country. Responding to the crisis, especially in the north of Italy, the government decided to close the doors of all shops and venues that are "non-essential" in life. The losses of Italian gaming operators are expected to run to tens of millions of Euros per day.
In France, Francaise des Jeux (FDJ) said that for now around 80% of its retail points of sale are permitted to remain open amid the lockdown ordered by French authorities to fight the spread of the coronavirus. Nonetheless, FDJ forecasts a loss of about EUR 192 million in revenue overall, including EUR 72 million from its lottery vertical, which accounts for 80% of the group’s revenues. For sports betting, which accounts for the majority of its remaining revenue, FDJ estimates losses of EUR 120 million and about EUR 50 million in EBITDA core earnings, as the cancellations of many sporting events, including the UEFA Euro 2020 football tournament and the French Open, are expected to result in a very strong decline in stakes over the course of 2020; for a list of major sporting event cancellations and postponements, see the Annex below. In contrast, the Group’s iGaming revenues are already showing some increases going forward.
FDJ’s warnings about the decline of its lottery vertical were realized in the EuroMillions draw of March 24, 2020. The mid-week draw of the multi-jurisdictional game saw only 9.9 million games (grids) played in Europe, recording participation figures that were among the worst in the game’s 16-year history. Compared to a regular Tuesday evening draw, participation was down some 46% overall, reflecting the impact of lottery closures and lockdowns across Europe. Even in the United Kingdom, which locked down relatively late, participation was down by a third, while in France, where kiosks and tobacconists remain open, the decrease was 40%. EuroMillions draws are currently scheduled to take place as usual until April 14, 2020; no decisions have yet been taken about suspending the game or altering the game matrix.
Concerning horse racing, almost all horse racing activity has ceased across Europe; currently only Sweden (harness racing) is continuing to organize closed-door events. WLA Lottery Member Pari-Mutuel Urbain has been particularly affected by the closure of all trotting, flat, and jump race meetings in France, as horse race betting accounts for approximately 85% of its revenues.
U.S. unemployment claims are at an unprecedented all-time high.
In New York, which has seen approximately half of the U.S. cases, Governor Andrew Cuomo put New York state on pause from March 22, 2020, closing in-office personnel functions of non-essential businesses statewide and barring non-essential gatherings of individuals of any size for any reason. New York State Lottery regional customer service and claim centers are thus closed to the public. Nonetheless, drawings are continuing to be held as scheduled, with the lottery promoting its mail-in option.
In Louisiana, where New Orleans has emerged as another hot spot, Governor John Bel Edwards ordered the closure of all state buildings – including the Louisiana Lottery’s Baton Rouge headquarters, its regional prize payment offices, and its distribution center – as part of a stay-at-home mandate. Scratch-off tickets were shipped to retailers until March 23, 2020; there will be no more shipments of instant tickets until the mandate ends. Redemption of prizes of USD 600 or more has also been suspended while prize claim deadlines have been extended for an additional 90 days. At this time, draws for the lottery's games continue as scheduled, and lottery ticket sales continue on a limited basis.
A similar story is now playing out across much of America. Claim centers, customer services centers, and district offices have been closed in California, Florida, Georgia, Michigan, North Carolina, Tennessee, Texas, Virginia, and elsewhere. Many lotteries are continuing to operate on similar lines to New York and Louisiana, with ongoing draws, a downsized retail network, online sales, and restrictions on prize redemptions.
Nationally, Powerball is adjusting its prize payouts. The Multi-State Lottery Association, the group that oversees the block game, announced on March 25, 2020 that, after the current Grand Prize has been won, Powerball minimum jackpots will be cut in half, from USD 40 million to USD 20 million. The jackpot will also grow more slowly, with minimum increases of USD 2 million instead of the normal USD 10 million after each twice-weekly drawing. The modifications to the Powerball game are part of a broader coalition of measures being put into place by U.S. lotteries in response to the coronavirus crisis.
In addition to lotteries, casinos across the country have also been deeply impacted. In Nevada, Governor Steve Sisolak ordered the closure of all non-essential businesses for 30 days from March 17, 2020, bringing the state’s dominant industry to a complete halt by shutting down its 440 licensed casinos. Also shuttered by the order were 1,977 establishments with gaming licenses for 15 slot machines or fewer, including restaurants, convenience stores, supermarkets, and related venues.
As evinced by the Annex below, sports betting operations have also virtually ceased overnight, with either voluntary or government-mandated closures of sports and sports betting venues across all jurisdictions in the United States where sports betting is legally operated. In Kentucky, the Kentucky Derby will not be held this coming May. It is the first time the world-famous race will not be held to schedule since the Second World War.
Moving northwards, Canada has been less affected by the COVID-19 pandemic to date, with 8,500 cases at the time of writing. Nonetheless, Canada’s lotteries have put in place prophylactic measures similar to their U.S. counterparts. The case of British Columbia Lottery Corporation is typical. Currently, lottery tickets continue to be available for purchase, but the lottery is nonetheless encouraging its players to play online or through mobile where possible. Retailer networks are partly impacted through individual retailer closures, reductions in trading hours, and physical distancing protocols. All lottery sales through Lotto Express at grocery checkout lanes were suspended March 24, 2020. The lottery has temporarily closed its lottery prize payout centers in Kamloops and Vancouver, effective March 18, 2020, and has implemented alternative prize-claim processes during the temporary closure period. BCLC also temporarily closed all casinos, community gaming centers, and bingo halls, effective March 17, 2020, following a directive issued by Attorney General. Sports betting continues to be offered where events are scheduled.
In lieu of the closure of its casinos and bingo halls, BCLC is encouraging players to play its online slot and casino games through its web portal, just as it is encouraging payers to purchase lottery tickets through its web portal and apps. This is reflective of a sharp refocus on online and mobile across all of North America. However, to date iGaming gains have been modest for lotteries, with the sales increase for lotteries with iLottery products reported to be in the order of 5%. In recognition of the increasingly important role this category of products is likely to play in the immediate to near-term future, there are now growing calls in the U.S. for iGaming to be permitted as part of state governors' emergency powers.
While China, Europe, and the U.S. have witnessed the worst of the coronavirus pandemic to date, Latin America has not been spared, with more than 5,800 cases reported to March 31, 2020 in Brazil alone. Currently, forecasts of the impact of the pandemic on the regulated gaming industry and especially the lottery industry in Latin America are not available, and the outlook is mixed. On the one hand, 95% of the lottery market in Latin America is for numbers games, which in principle are less pervious to the pandemic than other forms of gaming, while on the other hand, street vendors compose the majority of the retail network in a number of countries in the region, and online and mobile gaming is less well-developed.
In Brazil, where the coronavirus crisis has seen a mixed response from authorities, all lottery draws at Caixa Econômica Federal have been suspended for three months, in order to reduce the impact of the spread of the disease. The new draw calendar will be released in July. Similarly, the Mexican Ministry of Finance and Public Credit (SHCP) suspended draws at Lotería Nacional para la Asistencia Pública from March 29 to April 19, 2020, as a measure to avoid contagion from the coronavirus pandemic.
The SHCP indicated that raffles and tombolas will resume once the competent authorities issue that conditions are fit to do so.
In Argentina, preventative measures are likewise in force. Numerous of the provincial lotteries have suspended their activities and have stopped serving the public, and employees are working from home where possible. In contrast, a state of emergency was declared in Ecuador on March 16, 2020 and all draws scheduled from March 17, 2020 onwards have been deferred indefinitely. Prize redemptions have been similarly deferred indefinitely. Online games can still be played and purchased over the lottery’s website with the exception of the Lottery, Lotto and Jackpot Millonario games. Regular sales will be resumed when the public health emergency ends.
A slightly different approach has been taken by Lotería Nacional de Beneficencia de Panamá. The lottery is still offering games to the public through its retail network. Ticket sellers and employees who interact with the public have been provisioned with alcohol, alcohol gel, gloves, masks, and antibacterial soap. Hygiene products have been dispensed in all public bathrooms and common areas of its offices, and screening tests have been implemented at the lottery’s headquarters. Provisions preventing crowds from gathering have also been enforced, and an institutional oversight committee has been created to oversee the implementation and compliance of these and other measures. In this way the lottery hopes to continue to be able to offer its regular raffles on Wednesdays and Sundays, as well as the monthly drawing of the Sorteo Gordito del Zodiaco Millonario.
While Chile continues to organize some horse racing events, Argentina, Brazil, and Uruguay have stopped all horse racing activity entirely.
COVID-19 has been slower to spread to Africa than any other region of the world, but is now starting to take hold across the continent. Firm numbers are not yet available from the continent; nonetheless the trends are clear.
In South Africa, President Cyril Ramaphosa ordered a three-week nationwide lockdown commencing March 26, 2020. Ithuba Holdings (RF) (Proprietary) Limited (Ithuba), operator of the South African National Lottery, is continuing to offer Lotto, Powerball, and Daily Lotto through digital and online platforms during this time. Several of its sports betting offerings have nonetheless been affected owing to the cancellation of international football fixtures.
In contrast, Loterie Nationale Togolaise (LONATO) suspended its activities until at least mid-April, in accord with measure taken by the Togolese government at its meeting of the Council of Ministers on March 16, 2020. Two products are principally affected: the PMU and Loto Sport. Likewise, WLA Lottery Member Lottotech Ltd. suspended all sales of lottery tickets for the Mauritian National Lottery from March 21, 2020 until further notice. As the lottery’s most popular product, Loto, can currently only be played at a physical point of sale, the decision was taken to protect players from the coronavirus epidemic, which has seen at least 145 cases and 5 deaths across the island.
In Morocco, a state of medical emergency was declared from March 20, 2020, requiring citizens to stay in their homes, except for employees of essential services. In addition to the logistical problems occasioned for the Moroccan lotteries by the closure of main retail points of sales – 90% in the case of La Marocaine des Jeux (MDJS) – MDJS has been dealt a further blow by the worldwide shutdown of international sports competitions; like several other WLA Lottery Members around the world, MDJS derives the majority of its revenues from (fixed odds) sports betting.
The macroeconomic outlook at present is almost unrelievedly gloomy, with the OECD warning the entire world economy is at risk. The example of China shows that efforts there to contain the virus caused economic activity in China to slow dramatically, with some economists averring the coronavirus likely halved China’s economic growth in Q1 2020 as compared with the previous three months. For the U.S., Morgan Stanley currently forecasts a drop in U.S. GDP of 30.1% in Q2 2020 as well as an increase in the U.S. unemployment rate to 12.8%. For gaming, these negative expectations are encapsulated in H2 Global Gaming's 2020 total gambling forecast, which now downgrades gaming 12.1% on pre-outbreak estimates.
National responses to the coronavirus pandemic around the world.
In the near term, much will depend on how successful immediate efforts are to control the spread of the virus and to minimise the number of cases. In the longer term, any return to normality will likely depend on a coordinated and unified global response to the coronavirus threat, especially in relation to the possible development of a vaccine
In jurisdictions where they continue to operate, constructive initial responses have largely ensured that for lotteries, sales of traditional numbers games and some instant products have remained comparatively robust, and retail networks have remained comparatively intact. This is in keeping with the received wisdom that lotteries are to some extent ‘recession-proof’. However, the story is clearly different for operators largely dependent on revenues from casinos, VLTs, and sports betting products.
Looking forward, in the near term to medium term it is natural to expect a renewed emphasis on iGaming and eSports, as well as possibly a renewed focus on traditional draw-based games. Operationally speaking, the significant changes in business operations that have been put in place already for the protection of employees, retailers, and players alike are likely to remain in place and to be refined and enhanced. Lotteries and suppliers are also likely to begin contingency planning for the as-yet undetermined developments of the longer term. Concerning these longer-term developments, the WLA Quarterly Lottery Sales Indicator will report on these on a regular basis, for the benefit of the global lottery and sports betting sectors and the wider regulated gaming community.
WLA Executive Director
|Basketball||NBA regular season||Postponed indefinitely|
|NCAA March Madness||Canceled|
|Baseball||MLB regular season||Postponed until April 9, 2020|
|Ice Hockey||NHL regular season||Postponed indefinitely|
|Golf||PGA Tour||Cancelled after Round 1|
|Soccer||MLS||Postponed until May 10, 2020|
|Fifa World Cup qualifiers||Postponed indefinitely|
|American Football||College football||Many spring games cancelled|
|NFL||Draft to be held with no fans. No season impact announced at the time of writing.|
|Horseracing||Kentucky Derby||Postponed until September 2020|
|Motor Racing||NASCAR||Postponed until May 9, 2020|
|Soccer||Euro 2020||Postponed until 2021|
|Fifa World Cup qualifiers||Postponed indefinitely|
|UEFA Champions League||Postponed until June 2020|
|Europa League||Postponed until June 2020|
|All UK professional leagues||Postponed indefinitely|
|La Liga (Spain)||Postponed indefinitely|
|All Italian Professional Leagues||Postponed indefinitely|
|Bundesliga I and II (Germany)||Postponed indefinitely|
|Ligue I and II (France)||Postponed indefinitely|
|Liga NOS and LEDMAN Pro (Portugal)||Postponed indefinitely|
|Rugby||UK Rugby League||Postponed until April 2020|
|UK Rugby Union||Postponed until April 14, 2020|
|European Professional Club Rugby||Postponed until April 15, 2020|
|Tennis||French Open||Postponed until September 2020|
|ATP Tour||Postponed until April 27, 2020|
|WTA Tour||Postponed until May 2, 2020|
|Basketball||FIBA EuroLeague and EuroCup||Postponed indefinitely|
|Cricket||England vs Sri Lanka Test Series||Cancelled|
|PGA Tour||Cancelled after Round 1|
|Horseracing||All UK Racing||Postponed until April 30, 2020|
|Motor Racing||Formula 1||Postponed until May 3, 2020|
|Formula E||Postponed indefinitely|
|Moto GP||Postponed until May 3, 2020|
|Cycling||All UCI Races||Postponed until June 1, 2020|
|Olympics||Qualifying events||Largely postponed until Summer 2020|
|Tokyo 2020 Olympic Games||Postponed until summer 2021|
|Soccer||Asian Champions League||Postponed until April 28, 2020|
|Chinese Super League||Postponed until April 17, 2020|
|J League (Japan)||Postponed until May 9, 2020|
|K League (Korea)||Postponed indefinitely|
|Fifa World Cup Qualifiers||Postponed indefinitely|
|Baseball||Nippon League||Postponed indefinitely|
|Basketball||FIBA AsiaCup||Postponed indefinitely|
|Cricket||Indian Premier League||Postponed until April 15, 2020|
|Golf||Asia Tour||Postponed indefinitely|
|Horseracing||All JRA Races||On-track attendance suspended|
|All HKJC Races||On-track attendance suspended with a partial lifting of the ban from March 11, 2020|
|Motor Racing||Japanese Kyotei (Motor Boat)||On-track attendance suspended with a partial lifting from March 15, 2020|
|Japanese Auto Race (Motorcycle)||Ontrack attendance Suspended|
|Cycling||Japanese Keirin||Ontrack attendance suspended|
Credit: Table courtesy of H2 Gambling Capital’s Global Gambling Market COVID19 Impact Matrix.