States With Legal iGaming See 16% Loss in Retail Casino Revenue
A recently published study by the Innovation Group claims retail casinos see an average 16% drop in revenue after online casinos are launched in those states.
Study claims retail casinos see revenue plunge after legalized iGaming.
Key Facts:
- Study from anti-iGaming group claims jobs are lost, and revenue drops when online casinos are legalized
- Study by supporters of online casinos points to tax revenue and job creation as favorable outcomes of legal iGaming apps
- Social effects may trump revenue concerns in states where online casinos have yet to be legalized
A report released in February by Brian Wyman of The Innovation Group claims that online gambling harms land-based casino revenue, leading to job losses and economic setbacks.
NAAiG’s Study
The study predicts a 16% decline in traditional casino earnings, nearly 5,000 job losses by 2029, and major GDP losses in states like Indiana ($428 million), Maryland ($372 million), and Ohio ($602 million).
The report is titled “Economic Impacts of iGaming Expansion” and was commissioned by the National Association Against iGaming (NAAiG).
In addition to ringing alarm bells about revenue and the economic impact of legal online casinos, it also raises concerns about responsible gaming.
The study claims that problem gamblers mostly bet online instead of in-person at retail casinos. Alarmingly, the NAAiG report claims that over 25% of teenagers who engage in iGaming develop gambling-related issues.
It should be noted that no states with legal online casinos permit customers under the age of 21, however.
Predictably, supporters of legal online casinos disagree with the NAAiG study. But Wyman insists the research is fair.
Buoyed by the findings, the NAAiG is urging lawmakers to consider the risks associated with iGaming before expanding online casinos. Currently, fewer than 15 states have online casino apps.
A Counter Study by the iDEA
A competing group, the iDevelopment and Economic Association (iDEA), offers a different view of legal iGaming. That group, which counts BetyMGM, DraftKings, FanDuel, and other casino operators as supporters, has issued data that champions the benefits of legal online casino apps. The points are essentially:
- Online casinos generate tax revenue and create jobs in the states where it is legal
- Consumers are protected when iGaming is legalized, otherwise they would be lured by illegal offshore operators
- Legal online casino apps can serve as safe entry for new players who later visit brick-and-mortar casinos
According to a previous study by iDEA, legal online casinos in New Jersey “generated approximately $259 million in tax revenue and created 6600 new jobs” since it was launched.
In contrast to the doomsday prognostications of the Innovate Group study, iDEA also says land-based casinos are “seeing overall revenue growth with the introduction of online gaming, which is bringing new customers to the casinos and growing the overall player database.”
The push to expand iGaming has hit roadblocks in several states, with lawmakers hesitant due to social concerns, among other reasons. Churchill Downs’ Shannon McCracken, senior director of government relations, points out that states that have legalized online gambling haven’t seen the financial windfall they expected, which has slowed further growth.
Brianne Doura-Schawohl, an advocate for responsible gaming, echoes these concerns, warning that states must weigh the social impact of gambling expansion. She cites Maryland as an example, where officials are reconsidering previous decisions on gaming regulation.
However, both McCracken and Doura-Schawohl work for companies that oppose iGaming because such activity threatens its financial success. Churchill Downs has supported exclusive rights for online horse racing and pari-mutuel betting, for example, because the company hopes to thrive in that market.
Even with these hurdles, many industry leaders believe online gambling is inevitable. Jessica Fell of OpenBet argues that today’s consumers expect digital gaming options, and the industry must adapt. She also emphasizes that regulated platforms provide player protections that underground markets lack, making them a safer alternative.
