Online Gambling Found to Boost Local Land-Based Casinos

idea reports online gambling boost land based

Whenever a new country or jurisdiction, such as a US State, floats the idea of legalizing online gambling, there is always a backlash from the land-casino industry over fears that it will take away from their business. However, a new report commissioned by iDEA (iDevelopment and Economic Association) has challenged that idea and found that introducing online gambling boosts revenue and land-based casinos.

The report was produced by the gaming consultancy firm Eilers and Krejcik Gaming (EKG). It examined data from casinos, regulators, and state governments spanning a period of 16 years in order to determine whether online gambling takes revenue from land-based venues.

Study Examined Six States

In order to examine the impact of the legalization of online gambling on land-based gross gaming revenue (GGR), the study looked at six states: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia.

The firm looked at the compound quarterly growth rates (CQGR) of land-based casino GGR prior to and after the introduction of online gambling. The report found that in each of the six states, there was an increase in quarterly growth after playing at online casinos had been legalized. In other words, giving players access to slots, online blackjack and online baccarat sites encourages more people to experience the games also in a land-based casino.

The biggest increase in land-based casino CQGR came in West Virginia, where it was at -3% before online gambling was legalized and +3.02% afterward.

Online Gambling Rescued West Virginia Industry

The land-based casino industry hit a peak in West Virginia in 2012 and it had since been steadily declining until the introduction of online casino gambling in July 2020. Even though the state’s online industry launched towards the beginning of the COVID-19 pandemic, the land-based industry returned to its pre-pandemic levels, and according to EKG’s report, 2023 may be the best-ever year for the state’s land-based casinos.

EKG also found that the land-based industry in Connecticut was suffering a year-on-year decline prior to the launch of online casinos. Following the introduction of online casino gambling in the state, its GGR rose 0.34%.

GGR in Delaware, New Jersey, and Michigan’s land-based industry rose by 1.94%, 1.28%, and 4.89%, respectively. The smallest increase was in Pennsylvania where the land-based industry was enjoying steady growth prior to the launch of online casino gaming. However, it still saw a 0.14% increase.

The research for the report included a survey of both land-based and online casino operators. It found that “the response from participants has been unanimous: cannibalization has not been occurring”. This means that online gaming had not been cannibalizing revenue from land-based casinos.

When asked about the effect that online casinos have had on land-based revenue, a fifth of respondents said that it had “moderately increased” while the others said that it “stayed roughly the same”.

In response to the question, “How would you describe the impact the introduction of online casino has on land-based casino revenue?” all of the respondents agreed that worries about cannibalization are unfounded.

Different Players Online and in Land Casinos

While there is certainly a crossover between land-based and online casino players, the report contained information about how the two realms appeal to different types of players. The data, taken from Golden Nugget Online Gaming’s June 2020 investor presentation, found that 55% of online casino players are men (and 45% women) and that the average age of online casino players is 40-45. By contrast, 51% of land-based casino players are women and the average age is 50-55.

Furthermore, the report found that online casino players spent less time playing than those in land-based casinos:

“Land-based and online casino draw different kinds of customers because each product provides a fundamentally different experience. An online casino visit, for example, is typically measured in minutes, while a land-based casino visit is more likely to be measured in hours.”

Summarizing the findings from reports by the iDevelopment and Economic Association (iDEA) and Eilers and Krejcik Gaming (EKG), we can deduce that this is positive news for residents in jurisdictions considering the legalization of online gambling. It has the potential to alleviate opposition from the land-based industry.

Caroline Richardson
Caroline Richardson Read Bio
Hi all, I’m Caroline. I’m based in Boston, Massachusetts, with my husband and our three noisy and inquisitive kids. I began my career in journalism, working for several Boston-based....
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