In an industry where the balance between online and physical presence is constantly scrutinized, a recent report by Eilers and Krejcik Gaming has shed new light on the subject. Covering a span of 16 years, the detailed analysis focused on the impact of online gaming introductions on the financial health of conventional land-based casinos. The gaming consultancy examined comprehensive datasets from casinos, regulatory bodies, and state government officials across six U.S. states: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia.
The core of the investigation centered around changes in the compound quarterly growth rates (CQGR) of gross gaming revenue (GGR) for land-based casinos before and after online gaming platforms were launched. Surprisingly to some, each of the states in question observed a rejuvenation in quarterly growth subsequent to the onset of online gaming services.
West Virginia’s casino establishments, in particular, tell a tale of remarkable turnaround. With a negative CQGR of -3.0% before online gaming, the sector went through a complete reversal, posting a positive change of 3.02% thereafter. This shift was all the more notable given the onset of the Covid-19 pandemic close to the online gaming launch in July 2020, yet the land-based casino market still returned to pre-pandemic performance levels. There are now predictions that 2023 might mark the most lucrative year for West Virginia’s traditional casinos.
Meanwhile, Connecticut, which had seen a consistent decline in GGR year upon year, noticed a modest improvement of 0.34% post the 2021 introduction of online casinos. Though Pennsylvania had a stable growth curve prior to the digital dive, it still benefited from a 0.14% increase. Other states like Delaware, New Jersey, and Michigan saw GGR jumps of 1.94%, 1.28%, and 4.89% respectively.
As part of this comprehensive research, Eilers and Krejcik Gaming sought insights directly from operators within the casino ecosystem, polling opinions from both segments—land-based and online. The feedback conveyed a significant consensus: fears of cannibalization between the two modalities were unfounded. Survey responses showed 20% perceived a “moderate increase” in land-based revenue due to online gaming, while a large majority of 80% indicated revenues had “stayed roughly the same.”
In terms of characterizing the interaction between online and land-based casino revenue streams, the operators unanimously discarded the notion of cannibalization. This consensus aligns with the tangible data presented and challenges the widespread apprehension that online casinos would devour the profits of their physical counterparts.
Diving deeper into customer demographics, the study utilized data from Golden Nugget Online Gaming’s investor presentation, highlighting distinct user profiles for online and land-based casinos. For instance, online casinos predominantly attract males, who constitute 55% of the user base and tend to fall within the 40-45 age bracket. On the flip side, women slightly edge out men in land-based casinos, making up 51% of the clientele, which generally skews towards the 50-55 age group. These distinctions extend to the nature of engagement as well, with online casinos typically requiring a lower time commitment and offering broader stake levels when compared to land-based establishments.
The time patrons dedicate to their casino experiences further differentiates the two, with online interactions often spanning minutes against the substantially longer hours likely to be spent at land-based casinos. The report concludes with a decisive statement, reinforcing the notion that each casino type draws differentiated customer bases due to the inherently distinct experiences they provide.
In summary, empirical evidence from the Eilers and Krejcik Gaming report suggests that rather than cannibalizing revenue, online casinos may actually be complementing and even slightly enhancing the GGR of traditional land-based casinos. The interplay between digital expansion and physical venues appears to foster a symbiotic relationship, enabling growth and stability across the gaming industry spectrum.
