Question of the Day - 08 December 2023

Good questions. And the answers are instructive, though not necessarily definitive.

One reason we don't hear much about igaming is that it's legal in only six states: New Jersey and Delaware (as of Nov. 2013), Pennsylvania (July 2019), West Virginia (July 2020), Michigan (Jan. 2021), and Connecticut (October 2021). As you can see, NJ and DE have been going for more than a decade, while MI and CT are newcomers. And no states have implemented it for more than two years, although Rhode Island legalized igaming this year with a projected start date of April 1.

Combined, the six states have generated $7 billion in revenue and produced $1 billion in taxes since 2013. In the grand gambling scheme of things, that's not much. By comparison, the Strip all by itself generated $7.1 billion in revenue in 2021. And that's peanuts compared to online shopping. Adobe Analytics reported $5.6 billion in online sales on Thanksgiving Day and another $9.8 billion on Black Friday. Wow.

To answer your question about sports betting, all the numbers aren't in yet, but in October, it looks like the nationwide win will be around $1 billion on $12 billion in handle. So we're looking at sports betting accounting for one-seventh in one month of the igaming total in more than 10 years.

Still, igaming is no slouch. In October, the online casinos in six states won nearly $600 million. That's a lot of people in pajamas playing slots on the toilet, suits playing Ultimate Texas Hold'Em on their lunch hours, and moms playing pai gow poker at after-school soccer practices. 

And that's perhaps why igaming hasn't blown up like sports betting. Online slots and carny games are a tough sell in state capitals compared to betting on football and basketball. For one, they're considered more addictive and disrupting; for another, it's also suspected that internet gambling cannibalizes brick-and-mortar casinos, so Big Gaming isn't exactly thrilled by the prospect of the FanDuels and DraftKings showing up and competing in the slot and table-game departments. 

On the other hand, as this commentary points out, the brick-and-mortars' days might be numbered. It's a far-reaching vision, but the ongoing labor shortage, especially in executive and professional positions for which the casinos can't or won't compete with other higher-paying industries, could ultimately spell doom for in-person casinos. If that does come to pass, the explosion of igaming will be something to see.

Until then, however, it's widely accepted by the industry that only when states with successful sports betting get in major cash crunches will igaming be seriously considered as a tax generator. 

But one thing's for sure. Somewhere along the line, if the current trajectory of gambling in general stays on its upward spiral, igaming will no doubt become a big part of it.