Online Casinos Aren’t Expanding As Fast As Sports Betting – Here’s Why

Article by : Richard Janvrin Aug 29, 2023

• 
• 

When COVID-19 hit, and people needed to quarantine and isolate, only three states—New Jersey, Pennsylvania, and Delaware—had legal online casino play.

As the restrictions are lifted, it’s normal to assume that more states would see the success of online play and bring it to their state. Well, only Michigan and West Virginia did so in 2021.

“I think during the pandemic, people were on their computers more than ever, and all sorts of online gaming types had a huge bump in growth and customers,” gaming attorney Jeff Ifrah, founder of iDEA Growth, told PlayUSA in an interview. “And I think most people thought that was here to stay and would serve as a springboard for legalization of online gaming.”

Since Michigan and West Virginia, only one other state, Connecticut, has legalized online gambling, and Rhode Island is on the way.

So, what’s causing the lag in online casino legislation?

Bigger Concerns Post COVID-19

After the pandemic, legislators had more significant issues than gaming, including getting people back to work safely.

“After the pandemic, the priority for most legislatures was jobs,” Ifrah said. “There is an impression that getting people back to retail and brick-and-mortar jobs is better for employment than online gaming.”

States tend to focus on one area in an industry before moving on to another. Coming out of the pandemic, the gaming priority for states was to get casinos back open and rehire employees.

“I don’t think that was the right time for legislators to discuss online casino legislation,” Ifrah said.

Additional Revenue Not Necessary

Interestingly, states don’t need to rely on the potential revenue from gambling as federal funding helped bridge the gap.

“While the pandemic did significantly boost iGaming activity and demonstrated that the model worked, at the same time, you didn’t have a decrease in state revenues that one might have expected during and after the pandemic for state revenues broadly,” said Howard Glaser, global head of government affairs at Light & Wonder. “These states received $293 billion in federal stimulus funds that are still working their way through state budgets.”

New Hampshire Senator Tim Lang, who filed an online casino bill, was an example of how they approached this. He focused on consumer protection as opposed to revenue.

Sports Betting Fatigue

When sports betting became possible, this was a massive push across the country, and lawmakers had fatigued. Does it mean they completed sports betting legislation, and now they have to deal with iGaming?

“You had a rapid gaming expansion in many states,” Glaser said. “Legislators said, ‘We just did sports betting for the industry. Now you come back the next year and want iGaming. We still don’t know how sports betting works.’”

Indiana Senator Jon Ford echoed these sentiments as he’s been trying to play online casinos since 2019.

“I think 2019 was a big bill. Two new casinos, one still being built, and then sports wagering. So there was a big lift that I think left a little fatigue with gaming. And I think people still want to see if we did the right changes.”

Sports Betting Is An Outlier

While online sports betting has expanded across more than half the country, that’s not typically how legislation works, unfortunately.

“I think people were a little surprised that we got to as many states as we did in sports wagering in less than five years,” Ford said. “I think the success of sports betting sped up the movement to iGaming.”

Teams and Leagues Aren’t Involved

While gambling is popular, it’s certainly a lot more enticing and motivating when professional teams and leagues are involved in helping push bills along.

“iGaming is just received differently than sports betting, certainly by lawmakers,” Glaser said. “Sports betting is more about sports than about betting. Sports betting is an amenity to a sporting event. And once the leagues and teams jumped on, it became part of the sports environment and less so about the gambling environment even though at its core perhaps that’s what it is.”

Remaining Reasons

There are many other reasons why online casino play hasn’t been pushed, including the following:

• Sports betting advertising caused issues.
• Increase in problem gambling.
• Casinos worried about cannibalizing their retail presence.

As time goes on, though, we can only hope for these things to improve. Despite how popular online sports betting is, there’s a demand for online casino play. These two industries can co-exist.