America has the largest gambling industry in the world, and the tariffs President Trump has imposed could have negative long-term consequences. Some of the elements underpinning the daily operations of gambling platforms are affected by the tariffs. This includes hardware imports and offshore software development. They could also affect cloud infrastructure and cross-border digital services.
Shifts in consumer spending
When consumers have financial issues, it affects their spending. This could indirectly affect casinos. As prices of most of the daily goods they buy will increase, this is likely to have an impact on their discretionary spending.
When playing using casino apps, the expenses of playing may not be as high, as players can use bonuses and don’t have to travel. However, they are still likely to have to tighten their belts when spending on gambling. With the uncertainty that’s prevailing, potential gamblers won’t want to take financial risks. There are likely to still be many people who gamble both online and at traditional casinos, but the numbers will probably drop.
Rising expenses for land-based casinos
Even as digital entertainment keeps expanding, players still enjoy playing at land-based casinos. Casinos in Las Vegas welcome millions of players from all over the world every year. Most of these casinos rely on imports from other countries like China. They often import surveillance tech, slot machines, and more.
Much of the hardware they use originates from countries impacted by the tariffs. This means that just maintaining what they already have will cost them more. They will either have to increase minimum bet amounts or reduce winnings. This could hurt consumers and even stop them from gambling.
Potential currency issues
The U.S. dollar has decreased in value due to the tariffs, although many people expected the opposite. The dollar is still the most popular currency, but it isn’t the strongest. A weaker dollar affects the purchasing power of consumers. This can be beneficial to players from outside the U.S. but not to those within the country.
The integration of cryptocurrencies may slow down. The process requires plenty of capital and usually also requires specialized hardware, such as chips manufactured in China. Trump’s tariffs mean that some sites will have financial problems sourcing the technology to integrate cryptocurrencies.
Fewer gambling tourists
Many tourists love to travel the world and gamble in different destinations. Trump’s tariffs could change this, as many people from other countries will no longer want to visit the U.S. Even domestic tourism has been curtailed, and crossing from Canada into the U.S. has also dropped considerably. People are increasingly boycotting the U.S. over its policies.
Trump’s recent decisions have been vindicated in what he calls a ‘giant win.’ The Supreme Court ruled in favor of curbing the power of judges to block his orders nationwide. This means that he isn’t likely to reverse any of his policies anytime soon.
Marketing and sponsorship deals
Marketing is essential for both online and land-based casinos. They often spend millions of dollars on advertising and sponsorship deals. They are unlikely to stop this altogether as they need to get new clients, but they are likely to decrease their marketing spend. Some brands may no longer sponsor sports clubs, athletes, or leagues. With the uncertainties of the market, investing in gambling companies is also likely to be affected.
Focus on local markets
As expanding into new regions will be more expensive, many brands are likely to focus on local markets. This will mean even more competition in local markets and could lead to saturation. Brands may have to become more competitive than ever when it comes to marketing campaigns, which means they could spend more money.
An ongoing trade war isn’t good for any industry, including the gambling industry. When people have to spend more on daily goods, they tend to spend less on entertainment. With the uncertainty of the current situation, no one really knows what to expect in the future. The stock market has already taken a huge hit. Of course, Trump could decide to reverse his tariff policies, but getting back to business as usual could be difficult.
