The Slow and Steady Rise of iGaming in the United States

As iGaming grows globally, many US states have expressed apprehensions about the potential impact of internet casinos on other regulated gaming markets. 

Internet gaming has emerged as a contentious issue in several regions nationwide in recent months. Following the Supreme Court’s annulment of PASPA over six years ago, legal sports wagering has proliferated across the nation. In addition to the District of Columbia, sports betting is permitted in 38 states and continues to expand. Nonetheless, the legal online gaming business has not undergone the same rapid growth as sports betting.

Why have Online Casinos been limited to seven US States?

As of now, internet gambling is legally permitted in just seven US states, all of which can be found at Gambling.com, with certain restrictions, such as access being limited to online poker in some instances. The states permitting legal iGaming include Pennsylvania, Connecticut, Delaware, Nevada, New Jersey, Rhode Island, and West Virginia. 

The question is: Why has the market not experienced the same growth as sports betting?

Numerous variables exist; however, a primary one seems to be states expressing apprehensions that legal online gambling marketplaces may adversely affect the terrestrial business. Those jurisdictions have suspended iGaming, asserting that the business may undermine income from physical casinos. 

This year, Maryland lawmakers deliberated the potential economic advantages of legalizing iGaming inside the state. The Maryland Lottery and gambling Control Agency examined the potential impact of internet gambling in light of the proposed iGaming legislation. 

Posing a threat to land-based casinos 

Maryland legalized retail sports betting in 2021. The state launched its online sports betting business the subsequent year. Nonetheless, iGaming has not achieved momentum in the state since some believe that introducing online gambling may jeopardize employment for workers at physical casinos. This reserve is not just an issue in Maryland.

The discourse around iGaming and its potential effects on terrestrial enterprises has prompted some states in the US to evaluate the merits of embracing legalized online gambling inside their jurisdictions. Critics argue that the introduction of iGaming may jeopardize employment for workers at terrestrial casinos.

More Data Equals More Wins for iGaming

Both Pennsylvania’s and New Jersey‘s reports show rich tax collections and handles that are far more than what both states did when their marketplaces initially opened. A research in Pennsylvania indicated survey data demonstrating an increase in online gaming involvement.

In 2021, PSU was involved in a survey that the Pennsylvania Department of Drug and Alcohol Programs released. The survey indicates that around 10% of residents engaged in internet gaming. The poll revealed that 28% of Pennsylvania residents reported participating in some type of gambling in the prior 12 months.

When shifting the focus to net profit, the figures are difficult to argue against. 

Billions of dollars sitting on the table

The financial prospects of internet gambling in the United States are more substantial than many comprehend. A recent research by Vixio, commissioned by Light & Wonder, indicates that legalizing igaming in all remaining gaming states may yield billions in supplementary tax income annually for state and tribal governments.

The United States commercial gaming sector is substantial, with a gross revenue of $66.66 billion in 2023, as reported by the American Gaming Association. The igaming sector possesses considerable potential within this market.

Despite its restricted scope, internet gaming generated $1.61 billion in tax revenue last year.

The statistic is notably remarkable when juxtaposed with commercial sports betting, which was legalized in 29 states last year and yielded $2.06 billion in tax income.

If all 44 jurisdictions that permit gambling legalize igaming, Vixio forecasts that state and municipal governments may generate around $15 billion in total tax income annually.

Fighting Back

Despite the undeniable increase in revenue in jurisdictions having legalized iGaming, the national argument persists. At the last G2E exhibition in Las Vegas, many panels discussed iGaming issues and the prospective advantages of growing the US industry. One presenter directly confronted the topic during an educational breakout session. The panel was chaired by Fanatics lobbyist and lawmaker, Brandt Iden, alongside Soft2Bet CBDO Martin Collins.

Iden played a pivotal role in legalizing iGaming in the state of Michigan. In the panel discussion, he identified three prevalent “false narratives” regarding the expansion of the US iGaming market: the notions of extinction and job losses, an anticipated increase in problem gambling, and the belief that iGaming lacks widespread support.

Iden utilized the Great Lakes State as a case study to demonstrate that the prevalent concerns to restricting iGaming access lack validity. He presented current tax revenue data from Michigan to substantiate his assertion. In the 2023 fiscal year, the Great Lakes State garnered $23 million in state taxes from its sports betting sector, while iGaming generated $486.5 million in taxes over the same year.

He referenced a recent analysis by Vixio and Light & Wonder indicating that iGaming tax income across 44 states could provide an estimated $15 billion. In response to the worry that legal iGaming would consume land-based markets, Iden asserted that the idea is “absolutely false.”  

USA iGaming: Slow and Steady Expansion

In conjunction with Iden and Collins, additional leaders are optimistic that the US will soon embrace an expanding iGaming business. The chief commercial officer of Play’n Go, Magnus Olsson, said that the firm plans to keep expanding within the current market, even though iGaming is growing slowly in the United States. 

“We aspire to achieve significant success in the US by implementing enhanced protections as states liberalize and assisting them in generating revenue without increasing taxes,” stated Olsson.