“Passing igaming legislation is hard!” A sentiment resonating across the United States as lawmakers and gambling stakeholders embark on new legislative sessions filled with optimism, only to encounter the complexities of actualizing online gambling laws. Even after the pivotal 2018 Supreme Court decision overturning the Professional and Amateur Sports Protection Act, legal online casinos exist in merely seven jurisdictions, starkly contrasted by the 31 that permit online sports betting and 40 that allow some form of legal betting.
The 2024 legislative season has begun with a sense of disappointment for proponents of igaming legalization. States like Georgia, Minnesota, and Mississippi have bills on the brink of silence, stagnant in committees, and with every passing day, the likelihood of legalizing online wagering grows dim.
Commonly cited challenges to legalizing online casinos include the fear of promoting addiction, concerns over potential harm to physical casino revenues, and the notion that states aren’t in dire need of the financial influx. Yet, the stall in progress might be rooted beyond the walls of state capitols, in the nuances of market dynamics.
Howard Glaser, Light & Wonder’s global head of government affairs, suggests that it’s not solely a legislative impediment but a matter of the casino market itself. Land-based casinos, particularly those that aren’t industry behemoths like MGM or Caesars, may doubt their ability to thrive online, considering the stronghold companies like DraftKings and FanDuel have, commanding 80% of the digital betting and casino markets.
Wynn Resorts CEO Craig Billings, representative of a “mid-sized or regional player,” expressed concerns on LinkedIn. He spoke to the concentration on total addressable market and tax revenue, which overshadows the value of market share for individual operators. Many of the nearly 1,000 U.S. casinos may not benefit from the much-vaunted “omni-channel” strategy, limited as they are in their capacity to compete with digital-native gaming providers.
Glaser says that for the smaller players, the priority should be to band together and build a formidable presence that can take on tech behemoths. Although companies like Caesars Entertainment, MGM, and PENN Entertainment have a significant share, it’s not enough to challenge the dominance of DraftKings and FanDuel. Entities like Bally’s, bet365, and unbranded casinos need not aim for a huge share but must have a stake in the online realm. He suggests their fragmentation is to blame for their reticence in pursuing legal online casinos.
If unity were to be achieved among casinos, both tribal and commercial, within a state, Glaser believes it could be the key to passing igaming bills. A cooperative strategy would centralize power, allowing these entities to share platforms and profits.
Yet other potential complications could emerge on the road to legalization. Wynn’s CEO Billings warns of labor unions’ influence. The streamlined workforce of online casinos, compared to their land-based counterparts, may lead to workforce reductions, prompting union resistance.
Despite these challenges, the conversation around online gambling legislation is active in statehouses—even if bills aren’t advancing. Leaders in the industry, like Fanatics Betting and Gaming’s government affairs head Brandt Iden, emphasize the need for educational efforts to clarify what igaming entails for lawmakers unfamiliar with the terminology.
Iden and Shawn Fluharty, who made strides in legalizing igaming in Michigan and West Virginia, often lead these discussions. However, they are uncertain about online casino bills gaining ground in 2024. Maryland is making a notable effort with plans for a public education session slated for mid-March, a pioneering initiative of its kind.
Maine is another state with active discussions, with its tribes granted online gambling rights excluding physical casinos from digital offerings. And while there were hopes for multiple states to legalize igaming this year, the realities of the legislative landscape have largely dashed these expectations.
Despite the stagnation, the financial argument for online casinos is strong. Tax revenues from digital casinos far outstrip those from online sports betting, a disparity evident in states like Connecticut, Pennsylvania, and West Virginia.
Political considerations in an election year further complicate the picture. Lawmakers gauge voter interests, deliberating whether igaming legislation would be pivotal enough to warrant their support.
Ultimately, until these central issues are effectively tackled, the path to legalizing online gambling remains fraught with uncertainty. As the industry beckons for a way forward, the need for collaboration, education, and strategic market engagement becomes ever more clear.
