The gaming industry started 2022 on the tailwind of record-breaking revenue in 2021. As this year winds down, it appears revenue is on track to surpass that record.
But an overview of gaming in 2022 reveals more than just numbers. There were groundbreaking deals, mergers and acquisitions, and grand openings. The industry’s conventions flourished, notably the Global Gaming Expo, the Indian Gaming Association Tradeshow and Convention, and SBC Summit North America. People changed jobs and innovations emerged as the industry continued to grow.
CDC Gaming Reports asked four unaffiliated gaming analysts and experts to write about their most significant stories of the year. Here are their thoughts and ideas about the stories that most affected the industry in 2022.
Susan Hensel, founder and partner, Hensel Grad PC
This story is important because it captures the growing complications created by the intersection between sports betting and college sports in the U.S. With widespread sports wagering still in its infancy in the U.S, there are a lot of unknowns about how colleges, lawmakers, regulators, and other stakeholders should best balance betting websites and promotions, integrity protections, problem gambling risks, college athletes, underage college students and other emerging issues. In addition to the article, other recent news reports have added to this debate. One report revealed agreements between certain colleges and sports books to promote gambling on college campuses where many students are underage. Another report indicated a sportsbook company is facing a substantial fine for its marketing partner distributing player registration forms to underage college students. We are very much at the beginning of the policy debates about how to address these issues and this article highlights some of the reasons there is brewing controversy about this lucrative slice of the U.S. sports betting pie.
This article is significant because it demonstrates increasing momentum to rethink the role of smoking in the gambling experience. There is a long-held belief that for casinos to succeed, they must allow smoking because gamblers have the propensity to smoke. In recent years, and partly due to smoking restrictions linked to Covid safety measures, the perspective on smoking has begun to change as customers and casino employees become more vocal about the health risks they are being exposed to as a result of smoking. As illustrated in this article, some operators are stepping away from the mindset that smoking is a necessity and are eliminating indoor smoking in their casinos. This story helps advance the conversation about gambling and smoking and how the legacy position on smoking is finally evolving.
This short story is worth paying attention to because the amount of revenue that can potentially be generated in the United States through igaming will shape the future of the nation’s gaming industry. While there are currently six states in the U.S. that allow full icasinos, the spread of icasino has lagged substantially behind the expansion of sports wagering. With the majority of states now live with sports wagering, it is expected that the next big push in the U.S. will be for icasino. Not only is icasino more convenient to players (a concern for problem gambling) who can access games 24×7 without leaving the comfort of their homes, it is more profitable for operators than sports wagering which has traditionally had smaller holds and greater volatility. It is widely suggested that the authorization of sports wagering in states is simply a precursor to lobbying for icasino expansion. This story adds fuel to what is an already smoldering fire.
Steve Ruddock, igaming analyst, editor-in-chief, Gaming Law Review, casino and igaming consultant
I’m not sure there is a fix for Atlantic City. A New York City casino or casinos will devastate Atlantic City. Not only will AC casinos lose many of their New York customers, but a resort casino in the City That Never Sleeps will be the first destination casino on the East Coast and attract customers from across the region, even those in close proximity to Atlantic City.
The city has tried to reinvent itself as a gaming destination many times since it legalized casino gambling in 1976. Still, it has never seemed to control its own destiny, always seeming to be at the mercy of outside forces. The city’s shortcomings will be further laid bare when NYC casinos become a reality, and the fallout could be worse than the period between 2013-2016 when the city went from 12 to seven casinos.
I can see the city surviving (something it is excellent at) with a reduced inventory of land-based casino properties, with maybe as few as three or four remaining when the dust settles.
DraftKings’ acquisition of Golden Nugget Online Gambling demonstrates that sports betting is the present, but online casinos are the future. More precisely, the future will be won by companies that offer a full suite of top-tier online gambling products.
Digging a little deeper into 2022 stories, you come across Rush Street Interactive rounding out its online gambling products (a very-well received proprietary online casino platform and a Kambi-powered sportsbook) with the acquisition of one of only a handful of quality online poker sites: Phil Galfond’s Run It Once site. That was definitely an under-the-radar story, but it demonstrates what long-term success in the US will require from a product standpoint.
Taking Massachusetts off the board was a huge win for sports betting. The structure of the Massachusetts sports betting bill made it a huge win, which could have very easily gone sideways from the industry’s perspective.
On the heels of New York’s 51% tax rate, the proposed 35% tax rate and Massachusetts’ flirtations with the most restrictive advertising and marketing policies in the country could have been held up as the model in legal sports betting holdout states. But with Massachusetts taking a moderate approach (a 20% mobile tax rate and standard advertising restrictions), the likelihood of a similarly populated Missouri or Georgia considering such policies is significantly reduced.
Jennifer Gaynor, attorney, J. Gaynor Law Ltd.
This AGA study underscores the change in position the AGA has apparently taken regarding igaming. In the past, the AGA had shied away from taking a position in support of a regulated igaming industry. In 2022, however, we have seen the AGA sharing studies and warnings about the size of the illegal and unregulated igaming market in the United States and how this is a threat to the legal gaming industry. I believe this change in position is in part driven by the growth of regulated sports wagering across the nation, and the fact that many states and operators had over-inflated expectations regarding the revenue that sports wagering would garner. Now that there are many operators that have made investments in the sports betting market, and particularly in online sports wagering, there is a new understanding that they need to offer igaming in addition to sports wagering to see the revenues they had been hoping to see from sports wagering. Thus, I expect to see the AGA continue to make moves in the direction of support for increases in the regulated igaming market in the US.
Nevada tops $1 billion in revenue for 20th straight month, Downtown Vegas sets record, visitors return
- Las Vegas nears pre-pandemic visitation in October – CDC Gaming Reports
- Downtown Las Vegas sets gaming-win record at $90 million – CDC Gaming Reports
- Gaming revenue sets quarterly record, on pace to exceed 2021: AGA report – CDC Gaming Reports
We have jumped from Covid-lockdown lows to new, pre-Covid record-breaking gaming revenues over the past couple of years. I’m sure the reasons for this are multiple and complex (including zero-covid policies in Macau), but my take is that this is the new “roaring 20s”. After months of social isolation, many people have embraced social activities, like gaming, with renewed enthusiasm. And this is, in turn, driving innovation and growth in the gaming industry, including the expansion of igaming and revitalized emphasis on renovation and construction of new resorts across the country in gaming destinations such as Las Vegas.
Tilman Fertitta is making a not-so-risky gamble on the gaming industry and Las Vegas. His investment in Wynn at a time when its stocks were arguably quite undervalued has already paid off following the rise in share price spurred by his investment. And his new luxury casino-resort on the south end of the Strip is likely to pay off as well, given the record pace of the gaming industry in Las Vegas over the past couple of years. Even if gaming revenues slow in 2023 and beyond, they are not likely to crash, especially in light of the renewed investment in Las Vegas and the Strip, which is helping to cement the status of Las Vegas as the ultimate adult playground. As a resident of Las Vegas, which was hit hard by the housing crisis and resultant recession in the aughts and then again with Covid shutdowns in 2020, it has been exciting to see all the new investment and construction taking place.
Lawrence Shen, CFA, Principal, C3 Gaming
C3 Gaming conducted the market study, revenue forecast, competitive and repatriation study, and economic impact study for Bally’s winning bid. The City of Chicago selected Bally’s for two reasons: 1. Bally’s forecasted gaming revenue stands out from other bidders as it proposes more gaming and amenity offerings, plus advantage with their omni-channel marketing with Bally Sports Regional Network. 2. Bally’s is the only bidder that does not already have a competing casino with much lower gaming tax rate near Chicago, so Bally’s proposed casino will generate the most tax revenue and create the highest economic impact to the City of Chicago. The memo addressing #2 was created by C3 Gaming and directly called out by multiple City officials.
The two Illinois properties have been riverboats and position-number limited for decades. As Illinois goes through its massive gaming expansion which includes new casinos in several cities, position increase and renovation at Rivers Des Plaines, culminating with the opening of Bally’s Chicago, it is important and necessary for the two Penn properties in Aurora and Joliet to move onshore and increase in position counts and other amenity offerings. In addition, there are also significant new openings in Indiana and Minnesota.
The new hotel tower at the M Resort is inevitable too as M has been enjoying growing high-quality locals play and benefiting from large constant influx of population moving to Las Vegas. Plus, its successful partnership with Las Vegas Raiders, close proximity to the Allegiant Stadium and T-Mobile Arena where the Golden Knights play, great sports-theme marketing makes it a destination for sports fans.
Caesars has been rumored to be trying to sell a Strip property for some time, and I believe it will still happen down the road. Caesars needs cash to cover its heavy operating loss on Caesars Sportsbook in the arms race for market share, plus it is very highly levered due to the Eldorado-Caesars acquisition. It might need a financial cushion should a recession hit. However, the rising interest rates and shrinking access to capital make buyers scarce and cautious. Plus, the entire gaming industry is still benefiting from the strong rebound in leisure travel, so Strip properties are raking in money. Yet, nothing is fully off the table should there is an attractive price, and Caesars is likely not going to spend a dime more in capital expenditure on the one or two properties they prefer to sell.