Road to ICE 2024: Waiting for igaming regulation to take off in the US
We have seen plenty of news this year about US online sports betting. In total, online sportsbook is now live in nearly half of all US states.
Igaming, however, is yet to hit the same levels of regulation.
Rhode Island was the only state to legalise igaming in 2023. This made it just the seventh across the US to have done so.
After the governor signed the bill with just hours remaining, back in June, Rhode Island is now expected to make online slots and table games live in April 2024.
Rhode Island will join New Jersey, Delaware, West Virginia, Pennsylvania, Michigan and Connecticut as the only states to have legalised igaming.
The lack of igaming legislation is certainly affecting the American online scene. This has already prompted a major WynnBet roll-back in August, closing its operations in a number of states.
Only Nevada and Massachusetts operations, where WynnBet operates land-based properties, are guaranteed to continue. This has shaped much of the company’s outlook for this year and beyond.
The financial power of igaming
Despite the slow expansion, Light & Wonder’s global head of government affairs Howard Glaser called igaming the most successful product in US gambling history.
Evidently plenty of big names are still backing it and it’s easy to see why. The segment is generally considered to bring in more revenue than sports betting. No doubt, as the numbers become clear to see, states will start to look to catch up.
Even with only seven states regulated by the end of 2023, igaming grossed $1.52bn in the US in Q3. This is up 26% year-on-year and an all-time quarterly record.
In Pennsylvania, the igaming segment reported the most significant growth in September. Revenue jumped 41.5% to $159.5m, an all-time high for the state, eclipsing the previous record of $148.2m set in March.
Online slots revenue also jumped 47.3% to $114.7m and internet table games revenue hiked 31.7% to $42.4m.
Lack of igaming regulation an ongoing hurdle
While the signs are positive, the limited regulation continues to be a barrier to progress. Lawmakers are concerned over potential cannibalisation of land-based casinos, and the subsequent cost of jobs. The potential for greater addiction with enhanced accessibility to gambling is also a worry.
Tribal considerations complicate the issue of igaming, while online casino is less accepted by the general public than sports betting. The opposition of entrenched land-based casino operators is also a real problem.
Illinois was one of the states seen as a potential igaming domino to fall in 2023, and while that hasn’t yet come to fruition, the online casino bill could be revisited next year.
New York is also expected to discuss the topic in early 2024 after Senator Joseph Addabbo Jr recently revealed plans to introduce a bill for a January legislative session.
Financial benefits of igaming must be stressed
In 2024, the onus will again fall on the industry to broadcast the benefits of igaming to lawmakers and responding to their fears. Igaming’s ability to generate tax revenue in comparison to sports betting could lead to it becoming a vital player in addressing fiscal stress in a number of states.
In approaching legislators on igaming, tax contributions play a much greater role than they have for sports betting. Igaming offers a reasonable solution best targeted to specific areas of fiscal health.
Rhode Island was the first state to legalise commercial igaming since the pandemic. Connecticut introduced a tribal-sponsored online casino, while Michigan was approved for igaming prior to the pandemic.
Significant unfunded pension liabilities in Kentucky and Mississippi suggests igaming tax revenue, if specifically targeted, could offer a way forward in 2024.
