The implementation of iGaming has been slow going in the U.S. since 2013, but one expert said it’s reasonable to expect two to three more states to come online in the next two to three years.
Pennsylvania, Illinois and New York could join New Jersey, Nevada and Delaware that launched iGaming in 2013, according to Chris Krafcik, research director at North America for Gambling Compliance.
“Pennsylvania is by far leading the way at the moment and New York and Illinois are somewhat behind in terms of iGaming consideration,” said Krafcik who appeared on the G2E panel, ‘Another Year Later: iGaming Policy in the U.S.’
New Jersey is the only state that allows full-blown casino gambling online, while Nevada is restricted to poker. The state also has mobile sports betting.
Krafcik said after four years of iGaming operating in New Jersey, it’s clear that it’s a “complement and not a cannibalization” to land-based casinos.
“We’re at a point where we will see a number of states join because the iGaming debate is pretty mature now,” Krafcik said. “Look at the New Jersey example, and it’s a pretty safe bet to go forward.”
New Jersey has been the most successful state when it comes to iGaming because it allows casinos to provide full gaming, said Gene Johnson, executive vice president of Victor Strategies. The percentage continues to grow and this year will surpass 10 percent of its proportion compared to land-based gaming, Johnson said. iGaming reached $196 million in 2016 and will surpass $240 million. Since 2013, iGaming has had more than a $1 billion economic impact in the state.
“People think they must be taking away from the land-based revenue, but that’s not true,” Johnson said. “There’s no cannibalization. Ask any operator in New Jersey. You are creating employment and economic development. This is the future of the industry. Any business has to embrace interactive commerce.”
Krafcik said no one is expecting, however, a rush to iGaming that many predicted last decade and earlier this decade. That enthusiasm was overly optimistic based on economic projections at the time, he said.
“I think the day of spreading to 10 states in two years has passed,” Krafcik said. “The progressing of iGaming is going to be slow and incremental, rather than fast and expanding on a mass basis.”
Even though it’s slow in implementation, Steve Ruddock, senior analyst with Catena U.S., said it’s positive and is moving in the right direction.
The important lesson from New Jersey is “that if you have a solid online operation,” you can compete in the market,” Ruddock said. Some of the smallest casinos in the market are doing well online.
“The Golden Nugget should not be competing with the Borgota in that market,” Ruddock said.
Ruddock said iGaming makes up about 9 percent of the revenue of larger casinos, compared to 20 percent for smaller ones. It enables casinos further away from population areas to get a bigger share, he said.
Ruddock said iGaming has created a new customer base, and existing customers are spending even more overall, in some cases 15 percent. Lapsed customers are returning because they’re getting rewards online, he said.
“It does three things,” Ruddock said. “It engages new customers, it activates lost customers and it retains existing customers.”
