“We’re not dealing in fear. We’re dealing in facts and real experience,” said Gabe Benedik of Gaming Laboratories International at Global Gaming Expo. Benedik, a former Florida regulator, was introducing “The Evolving Role of Regulators in the Online Casino Landscape.” Although the regulators on hand mightnot be dealing in fear, they described a landscape in which fear runs rampant.
Who’s afraid of online casinos? State legislators across the country, to hear panelists tell it. Even audience members were gloomy. When Benedik asked how many thought the wide adoption of igaming was inevitable, very few raised their hands.
The panelists were Kristofer Gilman, gaming director for Connecticut, former Michigan lawmaker Brandt Iden (now vice president of governmental affairs for Fanatics Sportsbook), and Paul Resch, a 20-year veteran of Pennsylvania’s Bureau of Gaming Operations.
Benedik asked panelists why igaming continues to be a political bogeyman, to which Gilman replied that it would be naive to think that it’s not already ubiquitous, including offshore sites and sweepstakes games. “It’s best to give them a safe and legal outlet,” he added.
Iden said that lawmakers know better, but don’t care when they’re busy trying to fund schools, road work, and public safety. Also, they have a fear of the unknown.
“It was very controversial,” when igaming was legalized in the Keystone State, said Resch. In fact, the chairman of the committee that was hearing the bill got subpoenaed simply for discussing it.
“We had zero expertise,” Resch admitted of Pennsylvania’s igaming adoption. The technology and operators were often new and the launch happened amid COVID, meaning new staff could not be taken onboard: “We knew it was a hard row ahead.”
One thing that caught Resch off guard was the issue of whether to allow players to sign up online or make them do it in brick-and-mortar casinos. “Some operators had different risk-tolerance levels for player identification,” he explained.
“Cannibalization is the biggest myth that exists,” said Iden when the issue was raised. “You have a finite group of individuals” who are worried that their casinos will lose market share. He pointed to high levels of play in Connecticut and Pennsylvania casinos “and online is supporting that as an added benefit.”
Resch agreed 100 percent with Iden on cannibalization. Pennsylvania is having its best year for all verticals, he said, with brick-and-mortar gambling slightly higher. “You can’t draw any conclusions,” he warned, pointing out that the state has thousands of unregulated “skill-based slot machines.” Also, the Pennsylvania Lottery offers online products, making apples-to-apples comparisons much more difficult.
Gilman used to believe that cannibalization was inevitable. “I was wrong,” he confessed. Brick-and-mortar slot play in the Nutmeg State has been steady, even as online play has increased by $9.9 billion in its first year to $16.1 billion in 2024. And the state’s brick-and-mortar casinos—Mohegan Sun and Foxwoods Resort Casino—have no problem since they run I-gaming.
Gilman assured states that don’t have igaming that they have little to fear, as the terrestrial licensees largely carry over to the online sphere.
For his part, Resch conceded that the Keystone State missed an opportunity by taxing promotional play and it needs to reconsider the split tax rate online for slot games and tables. He explained that there is so much online innovation that those games are often hybrids, difficult to classify and tax properly.
“This is uncaptured tax money,” Iden took up, speaking of the offshore market. “States are in a situation where they’re going to need the money and it’s sitting there” online. He urged states to capture that money by legitimizing igaming.
Panelists agreed that, in key respects, online and regulated play was actually safer than at terrestrial casinos. “The legal online option is a no-brainer,” said Gilman. “Everything’s tracked. You’re looking at deposits, recent activity,” making problem gambling easier to trace.
Brick-and-mortar know your customer practices are comparatively random, Iden added, and more rigorous ones exist online. He said Fanatics has 100 people doing KYC activities and only one lobbyist (Iden).
“It’s tough to argue that having a casino in your pocket 24/7 isn’t a problem,” Gilman said of problem-gambling issues. Connecticut, he revealed, already had 7,500 people on its self-exclusion list.
“You’ve got an expanded marketplace, so more people are participating,” Iden responded, adding that problem gambling was far more problematic in an unregulated jurisdiction. “It’s very easy to fall back and say you’re creating a bunch of addicts. It’s a much more nuanced discussion. You can’t just say that, mike-drop, and walk out of the room.”
Resch offered that online player tracking is much more evolved than at terrestrial casinos. “Your online casino employees,” however, “you need to train them extensively on spotting those red flags.”
Iden concluded that igaming is a moving target for regulators, casinos, and lawmakers. “This is about modernization,” he argued. “We don’t go into Blockbuster Video anymore.” Casinos, he added, need to cope with younger customers. “You can’t run from the internet.”
