While 39 US states and jurisdictions have legalised some form of sports betting since the US Supreme Court overturned the Professional and Amateur Sports Protection Act in May 2018, only seven have legalised online gambling, or icasino, as Iden prefers to call it.
Among those states is Michigan. Iden, now the vice president of government affairs for Fanatics Betting & Gaming, was the architect of the Michigan law that legalised digital sports betting and icasino simultaneously in 2019. It might have been a year earlier if not for a veto by outgoing governor Rick Snyder.
Iden had been working on a package of bills for two years. He said at the time that he was “surprised” and “disappointed.” Less than a year later, governor Gretchen Witmer signed off on the idea.
Cannibalisation … or not? Conflicting reports
Six years later, Connecticut, Delaware, New Jersey, Pennsylvania, Rhode Island and West Virginia also offer icasino. Nevada has legal online poker. But no state has legalised any form of gambling this year as fears of cannibalisation and an increase in problem gambling have bloomed. Myriad state agencies, trade organisations and operators have done studies that return mixed results on the issue of cannibalisation.
The iDevelopment and Economic Association (iDEA Growth) last week released a report that refutes a 2023 study about the economic impact of online gambling in New Jersey. The previous report, by the NERA Consulting Group, itself questioned findings from a 2019 report on the same topic. At issue is just how much of an impact online gambling has had on the economy in New Jersey. The studies also explore the level of cannibalisation caused by online markets.
The 2019 report by Meister Economic Consulting and Victor Strategies found that online gambling contributed $2bn (£1.5bn/€1.84bn) to the Garden State’s economy between 2013 and 2018. The 2023 NERA report, commissioned by the Campaign for Fairer Gambling, found that the economic impact was much less.
The 2023 report suggests that online gambling creates cannibalisation. But the iDEA report references multiple studies that show the opposite. The authors of the iDEA study wrote that a regulated online market draws consumers away from the black market. They also referenced studies that show stronger revenue in markets with legal retail and online gambling.
‘False narrative?’
But the bottom line, from Iden’s perspective, is that in the big picture, online casino greatly enhances operator and tax revenue.
According to iDEA Growth, five of six states with online gambling outperformed those with land-based casinos only. In addition, land-based casinos in legal online gambling states saw a 2.4% increase in quarterly revenue and in states that legalise in the future, that increase is projected to be 1.7%.
Iden calls the concerns of cannibalisation “false narratives,” and likens online casino to food-delivery services.
“I’m going to Piero’s for dinner tonight,” he said earlier this week during the ‘iGaming: The Road to Legalization in the US’ panel at the Global Gaming Expo (G2E). “I love Piero’s. But sometimes if I don’t want to go out, I might order it in. It’s the same thing. If I want the casino experience, I’ll go to the casino, but sometimes, I want to play at home.”
Playing at home has translated into a windfall of tax revenue for the states that offer online casino. According to revenue databases on Sports Handle and US Bets, Michigan operators had earned $1.5bn in gross gaming revenue (GGR) and $779m in adjusted gross revenue (AGR) for sports betting between go-live in March 2020 and August 2024. For online casino, operators have earned $6.4bn in GGR and $5.6bn in AGR. In Pennsylvania, all sports betting GGR since launch in 2018 is $2.6bn and AGR is $1.8bn. For online casino, which launched a year later, the numbers are $7.5bn in GGR and $6.2bn in AGR.
Addiction ugly, but regulation creates paths to help
Strictly from a financial perspective, the numbers are hard to argue with. Lawmakers in many states, as well as problem and responsible gambling advocates and religious leaders, will argue that the money isn’t worth the risk. The arguments are compelling and often poignant.
Dave Yeager, a recovering addict who now counsels those addicted to gambling with Kindbridge Behavioral Health, wrote a book about his own experience. In 2005, his gambling addiction was so bad, he tried to kill himself by ramming his head into a brick wall. Over the course of a 20-year battle with addiction, he went broke, ended a marriage, stole from coworkers, wrecked his truck and then fought back to reinvent himself.
“After the relapse in January of 2020 I went from ‘I had a gambling problem’ to ‘I am powerless over this unless I stay in front of it,’” he told US Bets last year. “I think I finally understood staying in recovery. The other part of this answer is the feeling I felt when I really realized what I had done to (my wife), and to my children. I never want to feel that again.”
Yeager’s story is a victory in the problem gambling world. But it was also an odyssey of how to find help. Yeager was in the military when he became addicted to gambling, and avenues for help were limited. In legal digital sports betting and gambling states, operators are required to prominently display helpline numbers on their platforms and at physical casinos. State regulators and operators keep self-exclusion lists, and offer responsible gambling tools. Those include quizzes that can help a bettor determine if their play is getting out of control.
Money will be driving factor of icasino legalisation
Iden isn’t blind to the problems that come with legal gambling. In his presentation, he shared that the road to legalisation includes “promoting stronger RG protections” and added that a regulated market provides “a pathway to consumer protection.”
The arguments for and against legalisation aren’t new, but the idea is to mitigate harm through regulation and help programs. And in the biggest picture, the arguments for and against legalisation will be trumped by one thing: money.
The year after sports betting became a states’ rights issue, nine states legalised. Then Covid hit. Land-based casinos, retail stores and restaurants shut down. States were suddenly stretched financially as consumers — in some states confined to their homes — stopped spending. In 2020 and 2021, a total of 14 US jurisdictions legalised sports betting. Of those, nine legalised digital betting along with retail. And since then, three of the states that did not legalise digital wagering have done so.
Brandt Iden is selling icasino. It’s a tough sell. When will states buy?
States are going to experience a “cash crisis in the next two years,” Iden said. “This budget cycle?Probably not. But Covid money is running out …. Lawmakers don’t like to go to constituents to ask for money, so they go to business first.
“My prediction is, and I am not going to give you any states by name, but I would look at state budgets and say, which states have a history of gaming,? So, what’s next? A state (with legal sports betting) that needs the revenue.”
Original article: https://igamingbusiness.com/casino/icasino-legalisation-money/
