The legalization of iGaming in the United States is expected to follow a different trajectory than sports betting, according to industry experts. This insight comes as states continue to explore new revenue streams in the gambling sector.
Key Takeaways:
- iGaming legalization process will likely differ from sports betting
- Potential for higher tax revenue from iGaming compared to sports betting
- Challenges include concerns over problem gambling and cannibalization of existing casinos
The path to legalizing online casino gaming, or iGaming, in the United States is likely to be distinct from the rapid expansion seen in sports betting, according to Chris Krafcik, managing director of Eilers & Krejcik Gaming. Speaking at the National Council of Legislators from Gaming States (NCLGS) winter meeting, Krafcik highlighted several factors that could influence the iGaming legalization process.
One key difference is the potential for higher tax revenue from iGaming compared to sports betting. Krafcik noted that in mature markets, iGaming can generate up to five times more tax revenue than sports betting. This financial incentive could be a significant driver for states considering legalization.
However, the road to iGaming legalization faces several hurdles. Concerns over problem gambling are more pronounced with online casino games, which offer a higher frequency of play compared to sports betting. This issue may lead to more stringent regulations and slower adoption rates.
Another challenge is the potential cannibalization of existing land-based casinos. Unlike sports betting, which was largely unregulated before the Supreme Court’s 2018 decision, casino gaming already has an established presence in many states. Brick-and-mortar casinos may view online gaming as direct competition, potentially leading to resistance from these influential stakeholders.
Krafcik also pointed out that the technical infrastructure required for iGaming is more complex than that of sports betting. This complexity could result in longer implementation timelines and higher costs for operators and regulators alike.
Despite these challenges, the iGaming sector continues to show promise. States like New Jersey, Pennsylvania, and Michigan have successfully implemented online casino gaming, providing valuable case studies for other jurisdictions considering legalization.
The industry is closely watching states like Indiana, Illinois, and New York, which have shown interest in iGaming legislation. However, Krafcik cautioned against expecting the same rapid expansion seen with sports betting, suggesting a more measured approach is likely.
As the iGaming landscape evolves, operators, regulators, and lawmakers will need to navigate a complex web of economic, social, and technical considerations. The potential for substantial tax revenue will likely be weighed against concerns over problem gambling and the impact on existing gaming establishments.
For players and industry stakeholders alike, the coming years promise to be a period of significant development in the U.S. iGaming market. As more states consider legalization, the industry will need to adapt to varying regulatory frameworks and consumer preferences across different jurisdictions.
“There are a lot of moving parts,” Krafcik said. “It’s not going to be a straight line to widespread iGaming legalization.”
