Question of the Day - 25 January 2025

Online casino games are legal in seven states: New Jersey, Pennsylvania, Michigan, Delaware, West Virginia, Connecticut, and Rhode Island. Rhode Island launched its version, monopolized by Rush Street Interactive, last March. 

In the domestic gambling world, sports betting tends to get all the attention. It exploded so fast since PASPA was overturned that it's legal in 38 states. But sports betting is a low-margin, high-taxed, and high-variance proposition for the casinos and online sports books, while internet casinos are the exact opposite. 

For the month of December, in order of GGR from most to least, Michigan's 15 Internet casinos won $244 million (breaking the record set a month earlier), New Jersey $228 million,  Pennsylvania $223.7 million (also beat the previous record set in November), Connecticut $45.3 million, West Virginia $27 million (also a new all-time high for a month over the previous record set in October), Delaware $7.7 million (another record), and Rhode Island $2.9 million (estimated). The total: $778.6 million. More than three-quarters of a billion dollars. For the month. In seven states. And that compares to $582.2 million in December 2023, just under $200 million more year over year.

By comparison, New Jersey brick-and-mortar casinos earned $231.8 million, a mere $3.8 million more than online casinos, which grew by 27% over the prior-year period. Several times in 2024, New Jersey igaming earned more GGR than the state's brick-and-mortar casinos. 

Actually, Atlantic City is a good example of the decline of physical casinos and the growth of icasinos. 

Casino revenue in Atlantic City has been declining since 2006. Until that year, New Jersey was second only to Las Vegas in GGR. In 2006, the Las Vegas Strip generated $6 billion in gaming revenue, while Atlantic City produced $5.2 billion. 

Atlantic City's core market area has more than 50 million people. In the early years of gambling in New Jersey, that advantage was obvious, as casino revenue grew year after year seemingly without limit. But there turned out to be a limit after all and competition defined it: In 2005, Pennsylvania legalized slot machines.

In just five years, Atlantic City casino revenue dropped to $3.6 billion. In another five years, it fell to $2.5 billion. In 2024, it fell again to $2.4 billion. 

Over the past several years, the only gaming-revenue streams still growing in New Jersey at double-digit rates have been sports betting and igaming. Land-based casinos have peaked. Remote gaming, on the other hand, doesn't appear to be even close to a summit, neither in terms of bettors nor the amounts wagered.

Consider that online-casino games were legalized in New Jersey in 2013, the first of any state. In its first 12 months, igaming generated $120 million. Compare that to 2023, during which the six igaming states generated $6.2 billion, up from $4.9 billion in 2022 and $3.6 billion in 2021. In the first quarter of 2024 alone, igaming generated nearly $2 billion and could hit $8 billion for the year when all the numbers are in.

So yes, we look in our crystal ball and see that Internet gambling is the future of the gaming industry. And why not? It doesn't lack for customers. It's not capital intensive, relying on technology rather than big buildings and thousands of employees. It produces ever-increasing revenue streams (and significant tax revenue). And the games themselves are fast changing and evolving to retain consumer interest. 

Gaming analyst Ken Adams writes, "Most industry projections predict that igaming revenue will continue to far outpace that of sports betting as time goes along. But it will be a slow process of expansion. It's definitely a tougher sell to state legislatures, given the potential for abuse by problem gamblers. 

"But all signs point to igaming as the cash cow of the gaming industry sometime in the future. Bet on it!"