Why State Lawmakers Love Sports Betting But Still Fear Online Casino Gaming

Panelists explain the low number of legal iCasino states compared to those approving sports betting
online gambling law
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One of the leading curiosities of the past several years is how many U.S. states have legalized sports betting — about half — versus the few that have done the same with online casino gaming.

After all, if consumer protection and newfound state tax revenue for the state is good for one, why not both?

But at a Monday morning panel in Las Vegas during the American Gaming Association’s Global Gaming Expo — better known as G2E — one of the most experienced gaming executives in the country explained the situation as he learned it through extensive talks with legislators, and even with six governors.

“Here’s how they think: They see sports betting as being more about sports than it is about betting, whereas iGaming (another name for online casino gaming) is a pure form of gaming,” said Howard Glazer, the global head of government affairs and legislative counsel for Scientific Games. “And they have concerns about that, as far as responsible gambling.”

Glazer added that “there is a myth within the industry that sports betting leads to adoption of more iGaming,” ignoring how so many lawmakers have that antipathy toward the latter.

The revenue numbers are there, at least

The lag in iGaming legalization also comes in spite of what typically are ideal circumstances for legislators.

“Most of the time, if the legislature is looking at a new field, they don’t know if it’s going to be successful,” said Glazer, speaking on a panel called “iGaming: Is The Opportunity Real? What’s the Long-Term Outlook?”

“But there’s no doubt about that [with iGaming],” Glaser said. “The model has proven to be a smashing success.”

Glaser said last month’s spending per capita on online casino gaming was $182 in New Jersey, $120 in Pennsylvania, and $82 in Michigan.

In the first eight months of 2021 — with September numbers to be released next week — New Jersey online casino operators took in $866.1 million in gross revenue compared to $466.3 million for sports betting (about 90% of which takes place online).

That has meant $130 million for New Jersey’s treasury so far this year from online casino off a 15% tax rate, versus $55.8 million from online sports betting at a 13% tax rate.

States not hungry enough yet?

Glaser said that legislators typically are eager to find new sources of tax money from all over. But he noted that “some states have a lot of cash right now” from receiving billions in federal funds for COVID-19 pandemic relief. Also, he said lawmakers in some more progressive states are liable to focus more on “tax-the-rich” proposals than on gambling expansion.

So in spite of what some industry colleagues have forecast about iGaming’s rise, Glaser estimates only about five more states — “one large, four smaller” — in the next three years will add the menu of online casino gaming currently available in New Jersey, Pennsylvania, Michigan, Delaware, and West Virginia.

Glaser said the industry does not seem to have come together with a clear, unified message to prompt more legalization: Is it more about tax revenue, or is it about attacking the large illegal market that exists, or about other aspects such as providing residents with more entertainment options?

“The industry needs to be more focused on their message,” Glaser said.

Ultimately, Glaser forecasts in the next five to 10 years iGaming growing to a $25 billion industry, meaning billions in taxes to be claimed by the states that legalize it.

Connecticut is next up with iGaming

On Thursday, Foxwoods and Mohegan Sun launched retail sports betting products at their pair of casino resorts in Connecticut.

And thanks to a comprehensive law passed after negotiation of new compacts with tribes and much debate from lawmakers, the Connecticut Lottery also is about to launch sports betting, with retail options in a dozen or so sports bars in the state expected this month.

In addition, online casino wagering is part of the plan for the Nutmeg State, as the expansion to sports betting and iGaming were approved at the same time in action that mirrored Michigan’s success on that front in 2019.

Anika Howard, Foxwoods’ vice president of brand marketing and a fellow panelist with Glaser, said that Foxwoods plans to add iGaming to the retail and online sports betting options it arranged in a deal with DraftKings. Industry officials expect the state’s launch of iGaming to occur sometime next month.

Photo: Shutterstock

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