Online casino gaming has been one of the few growth areas for regulated gambling since the COVID-19 outbreak largely shuttered the nation’s multi-billion-dollar casino industry.
Though online gaming has made up just a small fraction of the lost brick-and-mortar revenues, industry stakeholders are optimistic that there are new opportunities for growth in online games as most of the U.S. is taking social distancing measures.
“We’re hopeful that states look at this as a way to drive incremental tax revenue that they might not be receiving from other areas where they’re having budget deficits,” said Jesse Chemtob, FanDuel’s General Manager & VP of Casino, during an industry video conference Monday.
But online gaming hasn’t come easily. Even as the U.S. has added nearly 1,000 commercial and Native American casinos in the past 30 years, only a handful of states have approved online games.
Still, while elected officials at the state level have been far more reticent to approve these digital games, online gaming supporters believe the financial hardships brought on by the coronavirus could be another factor to finally cajole them into action.
“When that money goes away for months on end we’re left with significant budget shortfalls, ones that we had to address,” said Michigan Rep. Brandt Iden, who helped spearhead online gaming legislation which was passed into law in his state last year.
Iden learned the political difficulties to legalize online gaming during nearly five years of battles in the Michigan Legislature.
Along with other backers in the statehouse, Iden worked for years to pass real money online poker, sports betting and iGaming bills. But working with first-term Democratic Gov. Gretchen Whitmer, Iden and other Republicans in the GOP-controlled legislature reached a compromise late last year that finally brought legal gaming to the state.
Whitmer, among many other iGaming skeptics both within and outside Michigan, feared online gaming would cannibalize state lottery revenues. In Michigan, and the majority of other states, government-run lotteries contribute hundreds of millions of dollars in annual tax revenues, which in most jurisdictions are allocated specifically to education.
Iden was among the most vociferous opponents to that belief. He pointed to industry-wide growth in other markets with online and retail gaming, as well as the complimentary nature of the state’s existing iLottery and retail lottery options.
“I think the same thing is going to happen here in Michigan,” Iden said Monday. “I think we’re going to see more foot traffic because of what they’re able to offer players.”
That was echoed at a session of the ICE North America Digital Conference Monday by Chemtob when discussing FanDuel, which has a digital presence in New Jersey and Pennsylvania, the two largest iGaming markets in the country.
“We have always had the belief that it was complimentary to the land-based offering that would help grow the overall gaming market,” Chemtob said. “We still believe that to be the case.”
Opportunities Grow Outside the Statehouses
The COVID-19 outbreak has suspended most state legislatures, making legislative changes, at least for the short term, all-but impossible. But stakeholders believe that nationwide social distancing measures will highlight existing online markets and their potential for growth in new states.
Speakers at Monday’s conference largely agreed that as one of the few revenue sources increasing during the pandemic, lawmakers will be more willing than ever to the prospect of taxed iGaming as they face dramatic budget shortfalls. Most states require balanced budgets, and with revenues quickly and sharply curtailed, they will be all but forced to find new revenue streams if they are to avoid extreme spending cuts.
And even though legislative progress may be slow-moving due to the threats of the virus and the inherent difficulties of the legislative process, industry observers see iGaming advancing on its own terms.
Avi Alroy, Mohegan Gaming & Entertainment VP of Interactive Gaming, said Monday that not only were iGaming revenues increasing, but that much of that growth came from the company’s brick-and-mortar players. Coronavirus is pushing regular retail customers toward new entertainment options, creating digital players among those who otherwise wouldn’t have considered iGaming.
He said he was optimistic this would create a new group of players who would enjoy online games even after brick-and-mortar casinos reopened.
“I think clearly this will give a boost to iGaming, and as we move online for many other products, I think gaming should be included,” Alroy said. “Now it’s really the time that state and other entities are understanding the value of having a diverse portfolio of both online and brick-and-mortar.”