Gambling Industry Profits
We all know how the videogames industry has become one of the most lucrative industries during the past couple of years. However, the current year and the COVID-19 pandemic crisis hit us differently. And while different industries suffered the consequences of the economic crisis caused due to the virus, the gaming industry was definitely not one of them. This created an incredible opportunity for indie developers, bigger companies and even tech giants.
According to The Business Research Company, the global gambling market is expected to reach a value of around $565.4 billion, growing at an annual rate of 5.9% through 2022. 5/27/2020 Industry GGY 1 1/ 1 Gambling Industr y Over view G ro s s g a m b l i n g y i e l d During the period October 2018 to September 2019, the r egulated gambling industr y in Great Britain generated a gross gambling yield (GGY) or equivalent. of £14.3bn, a 0.5% decrease compared with the previous repor ting period. The online gambling industry is a growing and dynamic industry and presents significant challenges to operators to remain competitive. Technology is driving increasing demands from customers as.
Gaming and iGaming industries were progressing rapidly even before the coronavirus. Some of the technological advancements made playing videogames and pay n play casino games accessible and more convenient for players around the globe.
The Big 4 in the Gaming Industry
There was no stopping for four of the biggest tech giants in the world, even during the pandemic. As a matter of fact, Amazon, Apple, Alphabet, and Facebook earned $28 billion combined. Starting with Amazon, their sales went up 40% compared to 2019 sales, and when it comes to the profit they managed to double it.
Apple’s sale, for that matter, increased too, even if the retail store sales were never lower. The company announced an $11.25 billion profit only from the sales of its products. Apple’s finance chief, Luca Maestri, stated that weren’t there for the pandemic Apple would have probably made a couple more billions.
When it comes to Alphabet, their revenue did drop, but it was much better than it was anticipated. Lastly, Facebook’s profit skyrocketed, and it increased by 98%. After all, Facebook and Google remained relevant in the advertising industry, even if the Google search ads revenue was down for 10%.
Sports Betting Industry Profits
New Rivalries in the Industry
Even if you think that these global tech giants are not the biggest names of the gaming industry, they sure recognized the potential of this opportunity. As it turns out, Xbox, Sony and Nintendo are no longer the main rivals. According to Microsoft’s head of gaming, Phil Spencer, the company no longer sees the two of their rivals as the biggest ones.
Many believe that the same destiny is waiting for Facebook, Apple, Microsoft, and Alphabet. Some of the reasons behind such opinions are some of the recent events in the industry. Namely, Facebook decided to dabble into VR and AR with their game Horizon. Moreover, this tech giant recently purchased Beat Games - a gaming company.
Playing videogames and casino games for money increased in popularity. Which is why Apple announced Apple Arcade, a videogame subscription service, that will be available for US$4.99 monthly subscription. Plus, with its range of devices, cloud and Apple TV, the company is ready to enter the gaming industry in full force.
Lastly, Alphabet also has a cloud game streaming platform of its own. This streaming platform named Stadia get integration with YouTube, and it will help the users access the game via a link on YouTube.
More 2020 Statistics
Gaming Industry Profits
In case the above-mentioned data wasn’t enough, here’s more on the profit of tech giants in the videogame industry.
- Facebook - their revenue in the second quarter was up for 11% compared to 2019. And their profit jumps reached $5.2 billion. Let us not forget that more than 3 billion people regularly use Facebook or some related applications. The number of active users also increased compared to last year’s analysis, and by an amazing 12%.
- Amazon - First-quarter sales for Amazon’s online shop went 40% up from 2019. Amazon’s profit doubled in 2020 to an incredible $5.2 billion. The huge surge in demand surpassed all their potential threats and costs predicted for 2020. Moreover, the company's cloud computing business had an increase of 29%.
- Alphabet - Google reported might have had a drop in quarterly revenue, but they still made a profit. A $6.96 billion profit.
- Apple - the company representatives stated that their sales went up 11% and their profit 12%. The best sales included iPads and Mac computers, mainly due to the COVID-19 pandemic and the need to have a form of entertainment while inside.
Casino gaming is on the rise across much of the developed world, with governments increasingly unable to resist the allure of windfall taxes and a hefty influx of cash for the local economy. Massachusetts embraced the trend in 2011 when the state legislature voted to legalise casinos. Construction is underway for the state’s first casino at Plainridge Park, with 1,250 slot machines, harness racing and an estimated 500 new jobs.
That decision is now up for review, with a repeal referendum to be considered in the November midterms. In deciding whether to support the repeal, Massachusetts voters will need unbiased information about the social impact of gambling and its downsides. Sadly it’s going to be much harder to come by than you might think.
A compromised research agenda
Anyone looking for good quality evidence about the consequences of gambling first needs to understand how knowledge about gambling is produced. How do we know what we know? Who dictates the research agenda? How is research funded? How do we ensure that we have a sound base of impartial knowledge on which to build policy?
The answers to these questions are profoundly depressing. While in the fields of tobacco and alcohol research, academics regularly debate conflicts of interest and interrogate the strategic use of research and evidence, many gambling researchers remain dependent on industry funding. Gambling is an area largely devoid of disclosure policies, and many researchers are unreflective or outright defiant about industry influence.
Researchers, regulators and policy makers champion a “partnership model” for producing research, not so much “business as usual” as “we are all in this together.” This remarkable state of affairs contrasts markedly with other fields and produces a weak knowledge base that is unevenly influenced by industry interests.
The impact on the discipline is striking. A large proportion of spending goes on prevalence studies – counting problem gamblers in the general population. These surveys are popular with industry because they make it possible to downplay the absolute numbers of pathological gamblers, along with the percentage of the general population at risk from gambling problems, the percentage of gamblers who experience problems and the proportion of profits that come from problem gamblers (estimated at between 30 and 50%).
Prevalence studies also tend to sidestep the question of social class, thus disguising the inconvenient fact that most of the harm from gambling occurs in disadvantaged populations – those with the least capacity to absorb it.
The problem with problem gamblers
Complementing prevalence studies is a vast body of research on problem gamblers. Much of it rests on the assumption that gambling is a harmless leisure activity which makes a net contribution to public funds through either taxation or out of town tourism.
The idea that normal consumers gamble without ill-effect creates a separate category of defective consumers labelled as “problem gamblers”. According to this framework, solutions to problems with gambling are to be sought on an individual level. The alternative approach – to see gambling as an aspect of public health that may be managed by limiting the supply of particular products - is poorly supported by industry or government funding, particularly where taxes on the profits of gambling have become an important source of state income, as in Australia, Canada and, increasingly, the United States.
A minority of critical researchers continue to agitate for change – arguing that research should not be funded by the industry, that priorities should not be set by industry-influenced panels, and that research should have a public health remit.
The role of researchers
So far, these arguments have fallen on deaf ears. Senior researchers are not only content to take industry money, they are also prepared to defend these arrangements.
In December 2000 Nottingham University decided to accept a donation from British American Tobacco of £3.8 million to establish an International Centre for Corporate Responsibility. The executive editors of leading respiratory medicine journal Thorax, John Briton and Alan Knox, wrote an open letter arguing that “accepting money from the tobacco industry degrades the reputation of our University and undermines the work of all with a commitment to the teaching of medicine and the promotion of public health.”
Professor Richard Smith, editor of the British Medical Journal, resigned from his post at Nottingham, followed by a team of 20 cancer researchers, led by Professor David Thurston.
Almost 14 years later, Professor Alex Blaszczynski, editor-in-chief of the journal International Gambling Studies, and one of the most prominent gambling scholars in the world, received $1.2 million from the New South Wales clubs industry to study problem gambling in Australia. Australians have the highest gambling losses per resident adult of any country in the world and spend more on gambling than they do on alcohol or petrol.
Asked to defend this arrangement, Blaszczynski said:
Because of the nature of gambling, you do have to start looking at gaining access to data held by the industry, by patrons who are in industry venues and start looking at real life research that provides sensible, evidence-based information.
Blaszczynski’s defence is disappointing. It does not engage with the most pressing criticism: scholars in the fields of alcohol and tobacco have shown that industry funding systematically influences findings.
Further, by accepting that industry can control such access, Blaszczynski is, in effect, arguing for a monopoly on knowledge production for those who get along with the industry.
How industry funding frames the agenda
Blaszczynski’s acceptance of industry funding is not, however, exceptional and many in the field of gambling studies in the US, where funding for research is one-twentieth that of Australia and Canada, would vigorously defend his actions.
US universities enter into partnerships with individual casino companies. US academics compete for funding from the National Centre for Responsible Gaming (NCRG) which is paid for by the American Gaming Association and claims to have mandated, “stringent firewalls to separate the gaming industry’s contributions from the research it funds”. The effectiveness of these firewalls, and similar mechanisms in the UK and Australia, is debatable.
Not surprisingly, the National Centre for Responsible Gaming focuses exclusively on the disease model of gambling addiction and does not fund research with a wider social purview. Senior research director Christine Reilly recently justified this approach by saying:
To me it seems kind of silly to spend time and money on an issue that is extremely difficult to research, because you can’t count on people’s memory.“
John Warren Kindt, Professor of Business and Administration at the University of Illinois recently described NCRG output as 'research designed not to hurt the gambling industry and to misdirect the debate”.
The trust deficit
Some research with a broader public health remit can be found in Australia and the US, but, as I discovered when I interviewed researchers for my study of gambling research, it is likely to be criticised and ignored. The price of independence is the loss of funding and access to data.
We depend on researchers and public health organisations to inform us about the potential harms associated with gambling, consuming alcohol or smoking. The purpose of this research is to better understand how risky activities affect communities and help us to judge what restrictions, if any, should be placed on their supply and promotion.
We cannot trust gambling research. We must therefore be sceptics. Every expert invited to give evidence to a committee on gambling should be asked, “Have you ever accepted money from the industry to conduct a piece of research, write a paper or attend a conference?”
In the absence of a culture of disclosing interests, every paper submitted as evidence should be contextualised – again we must ask “Who paid for this research?” and “How did this person gain access to data?”
It’s not much - it doesn’t produce the independent research that we so urgently need - but until the field of gambling research undergoes meaningful reform it’s the least we need to do.
In the meantime, voters such as those in Massachusetts looking for independent research, will have little choice but to roll the dice.
This article is part of a series on gambling in America. You can read the rest of the series here.