Online casinos are booming in 6 states. So why didn’t it spread more widely in the United States?

ATLANTIC CITY, N.J. (AP) — In the 10 years it has been operating in New Jersey, online gambling has generated nearly $7 billion in revenue for casinos and their affiliates, sent more than $1 billion in tax revenue to state coffers and helped keep… Atlantic City’s nine casinos are staying afloat while closed during the COVID-19 pandemic.

So why didn’t it spread more widely across America?

Currently, only six states offer online casino gambling: New Jersey, Connecticut, Delaware, Pennsylvania, Michigan, and West Virginia. (Nevada offers online poker but not online casino games; Rhode Island has passed an online casino bill, but it is not expected to take effect until March 2024.)

Casino operators, online gambling companies, analysts and elected officials offer a number of reasons why they believe it has not yet expanded more widely: among them concerns (unfounded, analysts say) that online gambling will lure gamblers away from Physical casinos, and a higher priority effort to approve sports betting – nearly 90% of which is online in two-thirds of states.

Supporters say they expect additional states to embrace online gambling soon, in part because a wave of pandemic stimulus funding from the federal government has ended and states are once again looking for new sources of tax revenue.

Online gambling “emerges as the most lucrative revenue stream of any gaming launch in history, and New Jersey is ‘prime evidence’ of its success,” said Howard Glaser of online gambling technology company Light & Wonder. He expected dozens of countries to adopt it in the near future.

However, some states may be reluctant to move forward with online casinos, which some politicians may view as a more serious, high-risk form of gambling than online sports betting, said Chris Kravcik, managing director of gambling analytics firm Eilers & Krejcik. . Another factor is competition from online giants like DraftKings and FanDuel who control nearly half of the online casino market in the United States.

Krafcik predicted that “a very small number of states” will legalize online casinos by the end of 2027.

“Selling online casino has always been difficult,” Krafcik said.

One of those states may be Indiana, where an online casino bill stalled in February, largely due to concerns that it would hurt existing brick-and-mortar casinos in the state. A report from the state Legislative Services Agency warned against this, citing “loss of tax revenue from displacement of gaming activities at traditional casinos and racinos” of $134 million to $268 million annually. Lawmakers plan to try again next year.

Eileen Valaster from New Jersey has been playing online gambling for about three years at BetRivers.com, where she also loves the free bingo games and the chat function that has enabled her to make many friends that she connects with in real life.

“There’s a lot of things to do there,” said Valaster, who once won $14,000 online. “I’ve met people I go to lunch with. You laugh and have a lot of fun.”

Legal online gambling in New Jersey leads the nation in the amount of taxes paid to governments and the money made by gambling companies. Collectively, online gambling has generated $16.3 billion in revenue for states that offer it, according to the American Gaming Association, the gambling industry’s national trade group.

As of September of this year, New Jersey had generated $6.91 billion since November 2013; Pennsylvania has generated $4.34 billion since July 2019; Michigan has generated $4.1 billion since January 2021; Connecticut has generated $615.3 million since October 2021; West Virginia has made $294.7 million since July 2020, and Delaware has made $59.1 million since November 2013.

In terms of estimated tax revenue on online casino bets during those same time periods, Pennsylvania generated $1.83 billion; New Jersey and Michigan each earned $1.03 billion; Connecticut generated $88.4 million. West Virginia generated $44.2 million. Delaware generated $19 million.

Online gambling does not represent a complete windfall for casinos, which must share a portion of what they win from online casino games and sports betting with third parties including technology platforms. But that extra money came in handy in 2020, when Atlantic City’s nine casinos were closed for three and a half months at the start of the COVID-19 pandemic, and online gambling was the only money they had. Most sports were closed as well, and there wasn’t much to bet on.

Online gambling, which began in New Jersey on November 25, 2013, has exceeded most expectations.

“The volume of betting, people’s interest, and the excitement surrounding it as an entertainment option shows the power and reach of the Internet,” said David Reebuck, director of the New Jersey Division of Gaming Enforcement. “We were able to do this in a responsible and professional manner that avoided embarrassment and scandal.”

There was initially concern that online gambling would eat into the money that brick-and-mortar casinos were making from people physically present at their workplace. But this proved not to be the case.

In most online gambling states, brick-and-mortar gambling revenues have grown alongside online betting revenues, although at a slower pace, noted Jane Bokonowicz, director of the Lloyd Levinson Institute at Stockton University, which studies Atlantic City’s gambling industry.

Richard Schwartz, CEO of Rush Street Interactive, agreed that the two complement each other.

“New Jersey has proven that,” said Schwartz, whose company operates BetRivers and PlaySugarHouse. “Casino revenues stabilized after the pandemic, and online revenues set new records.”

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