With airlines tiptoeing on the edge of collapse, empty hotels filing for bankruptcy, and restaurants forced to shut their doors for the last time, the financial impact of the coronavirus is not holding back. As more countries around the world are thrown into chaos, it seems that very few industries can escape the jaws of Covid-19.
The latest of which is a $100 billion industry which relies entirely on one group of people engaging in some kind of rule-based activity, whilst a much larger group of people cheer them on, and millions of others pay money to try and guess what the outcome will be! Yes, you guessed it… we’re talking about sports betting.
Bookmakers around the world are looking at potentially losing upwards of $2 billion in the coming weeks as major sports events get cancelled in an attempt to keep people at home and stop the further spread of the deadly coronavirus.
So far, the list is already pretty long, with the next three formula one Grand Prix all cancelled or postponed, both the NBA and English Premier League (two of the biggest sporting competitions in the world) suspended until further notice, and both the London and Boston Marathons, which were due to take place in April, postponed until much later in the year.
On top of this there has been cancellations and suspensions in Boxing, Rugby, Cricket, Golf, Cycling, Baseball, NHL… the list goes on.
With very little live sport taking place, the bookmakers are at a loss with what to offer their customers. In the last week, share prices of major betting companies plummeted to record lows as traders looked to sell and place their capital in safer stock which might still return a profit as the world goes into quarantine.
THINK LIKE AN ECONOMIST!
Q1. What is meant by the term share price?
Q2. Explain why the demand for sports betting has decreased so significantly.
Q3. Explain what a “safer stock” might be during this crisis. Are there any companies whose share price might be increasing?
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