New Study: Online Casinos Boost Revenue For Land-Based Facilities

New Study: Online Casinos Boost Revenue For Land-Based Facilities

A study released Thursday said online casinos provide “a positive impact” on the performance of brick-and-mortar establishments, as iGaming apps draw younger consumers than their counterparts to add to the bottom line. Online casinos, or iGaming, is only available in six states, as opposed to more than 30 that offer legal online sports betting.

The 32-page report by Eilers & Krejcik Gaming for iDEA Growth, a trade group representing online gaming operators, used data over 16 years to make its conclusions. It estimates “the typical state” would see casino revenues jump by 1.7% annually after legalizing iGaming.

Unlike U.S. sports betting, whose legal market has exploded in the aftermath of the Supreme Court’s 2018 decision to overturn PASPA, iGaming has struggled to make inroads in the decade since New Jersey and Delaware introduced the concept to the United States. Since then, only Connecticut, Michigan, Pennsylvania, Rhode Island and West Virginia have passed online casino legislation. All those states are active except for Rhode Island, where Bally Corp. is expected to launch its app this spring.

A leading argument against expansion has been concerns by some groups that the online product would lure people away from land-based casinos, leading to revenue losses and job cuts. Those claims have been made recently in Maryland and New York, where legislators have filed bills this year to bring iGaming into their states.

However, EKG analysts said brick-and-mortar casinos in iGaming states have experienced an average quarterly revenue growth of nearly 2.5%.

“This study offers compelling evidence that online gambling is a catalyst for growth, not a competitor to land-based casinos,” iDEA Growth Founder and General Counsel Jeff Ifrah said in a statement. “The research underscores the conviction that legalizing it drives beneficial economic impact across the industry. As lawmakers consider the merits of legalizing and regulating iGaming, they can be assured that it will complement the land-based casinos to deliver even more tax revenues to their states and establish meaningful consumer protections.”

How Online Casinos Study Was Conducted

The six active states legalized iGaming at different times, just as U.S. sports betting apps have been made available in a piecemeal fashion across the country. So the EKG study used varying timeframes for each state to determine market growth. It used 12 years of data (six before and six after) for New Jersey and Delaware for comparisons, eight years for Pennsylvania, six for West Virginia and four for Connecticut and Michigan.

“We strongly believe that approach provides the most accurate view of the history of casino cannibalization (that online casino doesn’t harm, but rather boosts land-based casino),” the report stated.

All six states saw their land-based markets grow in the respective timeframes after the introduction of online casino gaming, ranging from 0.05% in Delaware and New Jersey to 3.34% in West Virginia. Further, five of the six iGaming states have outperformed non-iGaming states in brick-and-mortar revenue growth over the same timeframes.

Matt Kaufman, managing director for Eilers & Krejcik, said the data shows iGaming creates growth across the board.

“Nearly all states with mature casino markets have experienced land-based casino declines this century,” he said. “States that have introduced iGaming have been materially more likely to see that decline flattening, and at times even returning to growth, compared to states with only land-based casinos.”



Steve is an accomplished, award-winning reporter with more than 20 years of experience covering gaming, sports, politics and business. He has written for the Associated Press, Reuters, The Louisville Courier Journal, The Center Square and numerous other publications. Based in Louisville, Ky., Steve has covered the expansion of sports betting in the U.S. and other gaming matters. He shares his expertise on US Betting Report, among other sites.