Gaming industry experts said to watch Ohio, New York and Texas for sports betting expansion and Indiana and others for adding online gaming in 2021 as state legislatures look for additional sources of revenue to deal with the COVID-19 pandemic.
The analysts warned, however, that just because states are in dire revenue straits doesn’t mean online gaming and sports betting will be passed automatically. Many lawmakers cite problem gambling or fears that igaming will cannibalize casinos and cost jobs.
Those were the salient points from experts at the virtual Global Gaming Expo looking at the future of online gaming and how sports betting influences that expansion.
Fifteen states have authorized online sports betting and six states have authorized some form of online gambling, whether casino games or poker, like Nevada. New Jersey, Pennsylvania and Delaware lead the way with full-fledged online casino gaming and other states like Michigan are in the process of adding it.
Gambling industry analyst Chris Grove, a partner with Eilers & Krejcik Gaming, said that by 2025, both of those online numbers will double.
Sports betting initiatives are on the ballot Nov. 3rd in Louisiana, Maryland and South Dakota.
“We definitely see the spread of online gaming led by sports betting,” Grove said. “You will continue to see online sports betting in far more states than online casinos, but we are increasingly warming to a view that a relatively rapid expansion of online casinos is starting to trail behind that momentum of sports betting.”
Howard Glaser, global head of government affairs and special initiatives for Scientific Games, said he believes the pandemic will be a catalyst for accelerating the adoption of igaming that thrived when casinos were shuttered by the coronavirus.
Much will depend on the perspective of state governments “to realize substantial revenue” that is much-needed, due to losses from the coronavirus, Glaser said. It’s the only source of revenue that has shown growth, he added.
“In the year ahead of us, I think igaming becomes a central discussion in state gaming policy,” Glaser said. “I think we have an opportunity as an industry, particularly if we speak with one voice, to expand the pie and make the point that cannibalization is a myth of the past. Both brick-and-mortar and online can gain.”
Glaser said it’s important to show states that online gambling will produce hundreds of millions of dollars. It won’t solve shortfalls, but more than would be possible without it.
“People want it, and voters want an opportunity to play these games, and that will create some energy behind the shift to igaming,” Glaser said.
Grove said he’s optimistic that Ohio will be one of the first to get a bill passed for online sports betting, while New York will by 2021 at the latest. He said there’s an outside chance Massachusetts can get something done this year and expects a continued move toward sports betting in small to midsize states through 2021.
“Moving into next year, a lot of people are going to be focusing, and correctly so, on the larger states,” Grove said. “If New York doesn’t get it done this year, the attention carries over to next year. We also think there’s a good reason to keep an eye on Texas next year. While the road won’t be straightforward or easy, the prize at the end of the road with the size of those markets is material.”
Online casino gaming will come into focus during the next state legislative sessions, Grove said. Many have wrapped up sessions for the year or are dealing with the pandemic.
Indiana is at the top of that list, Grove said.
“I think more of these states, as they get into year two and three of sports betting, will realize that the sky didn’t fall and that the amount of licensee revenue from online casinos would be substantial. Helping to hit the budget in the current fiscal year is a unique opportunity they may have trouble passing.”
Glaser said governors are waiting for what the federal government will do with pandemic assistance before considering ways to enhance revenue.
“That’s going to push out a lot of the states that might have acted by the end of the year,” Glaser said. “In the longer term, igaming is the big opportunity here. The headlines go to sports betting, but the revenue for the states is in igaming. Anything is possible in this next year because of the uncertainty in revenue, and I don’t discount this. Every single source of revenue in the U.S. is down. Online gambling is the one we can point to that’s up and brings instant revenue into the states in a line the states are already in. They’re already in the casino business. They just have to turn it on. I’m optimistic we can expand that list of states more quickly next year.”
Greg Carlin, CEO of Rush Street Initiative, said, “A lot of eyes will be on Michigan” to see how their launch of igaming goes.
Grove said sometimes states won’t authorize sports betting or igaming, though that has nothing to do with their merits. In Florida and California, for example, there are conflicts between stakeholders.
“More broadly, as online gambling and sports betting can contribute to a state budget, it’s typically not a transformative item,” Grove said. “It’s always going to be subject to broader political whims and wills and highly unlikely to ever be a prime mover and have its hand on the wheel of its own destiny. It’s tempting to say states need money. This can provide money. But rationality and policy making don’t always go hand in hand, and often there’s quite a bit of distance between those hands.”
