After igaming’s disappointing defeat at the ballot boxes in California at the tail end of last year, the hope of 2023 marking the start of a defining era for online gambling in the U.S. seems far-fetched.
While the reasons for California not working out as many hoped it would have been hashed over in detail, the truth is it’s only one of many states that are yet to take the leap – revealing a more general reticence among U.S. legislators, and the public, that may mean we don’t see great strides for some time.
At present, six states allow igaming: Connecticut, Delaware, West Virginia, Michigan, Pennsylvania and New Jersey. There is some expectation that New York, Indiana, Illinois and Iowa will follow suit this year.
However, given it’s now getting on for five years since the Professional and Amateur Sports Protection Act was repealed, significantly liberalising the U.S. gambling market, the growth of igaming has been lamentably slow for those hoping to see the U.S. gambling market reach its fullest potential.
iGaming Business published an article last week, citing several U.S. commentators who feel the market is under-utilising igaming. The Buck Wargo-penned feature quotes head of government affairs for Light & Wonder, Howard Glaser, as predicting that Maryland, Ohio, Colorado, Louisiana and Kansas may introduce igaming legislation this year, but he still seems stunned that the vertical is not being more readily adopted.
“We have extremely successful igaming in New Jersey, Pennsylvania and Michigan, and these each went from zero to billion-dollar markets in a very short time”, he tells Wargo, characterising igaming as “the single-most successful launch of a casino product in the history of the United States, if not on the globe”.
The same article quoted managing director of the Spectrum Gaming Group, Michael Pollock, who said he felt legislators were missing a trick by only basing the value of igaming on the tax dollars it could generate.
“What we urged legislators to do is look at the bigger picture, because if igaming is coordinated with the land-based casino industry, it becomes a demographic opportunity to reach new customers and get them to visit your property”, Pollock added.
This may be true, although brick and mortar gambling has been less than resilient in the face of vast igaming expansion across Europe. While the U.S. is concerned with casinos over high street bookies, I’m not convinced that igaming would significantly boost the demographic using casinos.
What it would do is bring a new generation of gamblers online and introduce them to what has been, until relatively recently in the states, a highly stigmatised form of entertainment. That would grow the overall market, whether or not it acted as a feeder for existing casinos.
Meanwhile, one of Europe’s biggest online gambling businesses, Bet365, has continued its cautious expansion into the U.S. this week, striking a deal with Churchill Downs Incorporated (CDI) to enter Pennsylvania’s sports betting and igaming market.
CDI announced it was withdrawing from the consumer-facing remote sports wagering industry in February 2022, to focus on its retail sports betting business. The Bet365 deal neatly enables it to focus on its TwinSpires online horseracing wagering business, while capitalising on its existing sports betting and gaming licenses.
The Bet365 deal comes as the UK-based company revealed a gargantuan drop in profits from $545m to $60m in the year ending March 2022. The operator blamed the massive profit slump on spending $385m to launch Argentina, Colorado, Ontario, and the Netherlands.
This underlines the massive cost of entering new markets, with the States up there among some of the most expensive in terms of both licensing and customer acquisition. It’s the very reason CDI decided to pull back from the market and focus its resources on its horseracing business – the competition for customers had become feverish with giants such as DraftKings and FanDual happily doling out eye-watering sums to attract new business.
While the march forward in U.S. igaming is inevitable, it is shaping up to be a market that will build gradually and cautiously. If and when a major state such as California were to get legislation over the line, it would mark a game changing shift, but it seems unlikely that such a paradigm change is on the cards for this year.
Rather, we will likely see more legislation in a few states, reaction and learning from the states that have already taken the leap, and some cautious planning from stakeholders that are yet to commit to the igaming space. It’s a model that requires caution in many ways; once unleashed it will undoubtedly see rapid take up among punters, and as more mature jurisdictions have learnt, it is not an industry that’s easy to put back in its box.
