The Sports Betting Alliance on Thursday released a study conducted by economists at The Analyst Group that shows land-based casino revenue growth increased by nearly two percentage points in states that currently offer internet casino gaming.
The study also noted that gross gaming revenue increased an average of 46% in the six states before Rhode Island launched internet casino gaming earlier this month. Since adding internet casino gaming to its suite in 2018, Pennsylvania has seen the highest increase of 58.9% to $5.18 billion. New Jersey ranked second with an increase of 56.1% to $4.77 billion in the 11 years to 2012; Michigan ranked third with an increase of 47.8% to $4.77 billion. That’s $4.4 billion since 2019.
Analysis Group’s study also included a survey of nearly 2,400 people, asking about their Internet casino gaming and retail casino gaming preferences. The survey showed that across the six states where iGaming is available, the majority of respondents did not reduce their retail casino betting (either in terms of frequency of visits or spending) after starting internet casino gaming, and 26.5% said it would be more Visitors to land-based casinos often follow their first digital internet casino experience.
The study also focused on five states — Maryland, New York, Illinois, Louisiana and Virginia — that have filed legislation to increase internet casino gaming. In Maryland, for example, Analytics Group predicts that land-based casino revenue will grow 91% to $3.9 billion by 2029, part of which will increase by $224 million.
This is the second study in as many months touting the potential of internet casino gaming as a profitable addition to brick-and-mortar venues. Eilers & Krejick Gaming released a study commissioned by IDEA Growth in February that showed fears of internet casino games cannibalizing casinos were unfounded, with casino revenue growing 2.44% quarterly following the launch of mobile casino apps.
Check out the states with internet casino games
The Analysis Group method uses the Interrupted Time Series (ITS) method to estimate changes in total revenue associated with Internet casino gaming. It forecasts the compound annual growth rate (CAGR) of states before the introduction of online casino products and then compares the CAGR after the introduction.
This approach also has shortcomings, including the inability to distinguish differences across verticals and the inability to distinguish “the impact of the introduction of iGaming over time from other growth in the economy or casino market.”
One thing these six states have in common is the lack of significant land-based growth in casino revenue. Three states saw revenue declines, and no state posted even an annual growth rate of 1%.
New Jersey had the biggest impact on internet gaming, up 12.2 percentage points, with iGaming up 4.1% CAGR from 2012-23 and Atlantic City venues down -8.1% CAGR from 2009-12 .
Based on the 2019 baseline, Michigan grew 10 percentage points to 10.3%, while Pennsylvania improved its CAGR by 9.1 percentage points to 9.7% since launching internet casino gaming in July 2019. Delaware was the only state to continue to see negative revenue growth, but the study showed the rate of decline in online casino ratings slowed from 3.2% to 0.7%. It’s also the only state with a single operator for iGaming, with First State switching from 888 Holdings to BetRivers earlier this year.
Explore survey results
When comparing Internet casino gaming to the five states that have submitted legislation to legalize it, all five states indicate that the vast majority of respondents would not reduce their frequency of visits if Internet casino gaming were legal. The average share of respondents in the five states who were willing to go more frequently or stay the same was 77.4%.
Among them, 28.3% said they would go more frequently, with New York State having the highest proportion (31.7%) and Illinois having the lowest proportion (23.3%). Maryland had the highest number of respondents saying they would go to casinos less often, at 22.7%, and was the only state where more than one-fifth said they would go to casinos less often.
In terms of how much money will be spent at brick-and-mortar casinos, respondents in states where legalization is expected to score the increase slightly higher, at 28.6%, compared to 26.1% in states where it already exists. This time, Virginia leads the five forecast states with 31% of respondents, followed by New York at 30.5%.
Maryland leads the group likely to reduce spending at land-based casinos at 22.7%, significantly higher than the 16.9% of states with internet casino gaming and well above the five-state average of 16.5%.
Revenues expected to increase in states that can legalize
For the five states considering legalizing iGaming, projected five-year revenue totals from 2025-29 range from $3.88 billion in Louisiana to $18.06 billion in New York. Within five years, Internet casino revenue averaged $1 billion per year in four of the five states, including New York at $3.6 billion, which was nearly twice as much as the next closest state, Illinois at $1.86 billion.
In turn, revenue growth forecasts for land-based casinos range from 1.7% in Louisiana to 20.4% in Virginia, with an overall average of 6.6%. It’s worth noting that there are currently only three casinos operating in Virginia, and the Analyse Group study also noted that video gaming terminal (VGT) revenue in Illinois is growing linearly compared to land-based casinos, with VGTs expected to generate an average of $1.07 billion in revenue Per year.
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