EKG study: Online casinos improve revenue at land-based venues

The report was authored by gaming consultancy Eilers and Krejcik Gaming (EKG). It analysed data from casinos, regulators and state governments over a period of 16 years, with the aim of discovering whether online gaming cannibalises revenue from land-based casino.

To determine what, if any, effect the introduction of online casino has on land-based gross gaming revenue (GGR), EKG studied this scenario in regards to six states. These were Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia.

The consultancy compared the compound quarterly growth rates (CQGR) of land-based casino GGR before and after online casino was introduced. It noted that each state experienced a positive change in quarterly growth after online casino came into play.

West Virginia’s land-based sector experienced the highest positive change in CQGR post-online casino, at 6.0%. Before online casino, the CQGR was -3.0%, while after, it was a positive of 3.02%.

West Virginia saved by online casino

Although West Virginia’s land-based market hit a peak in 2012, it had been steadily declining before online casino was introduced in July 2020. Despite the online casino launch occurring in the early months of the Covid-19 pandemic, the land-based market returned to its pre-Covid success.

The report also noted that 2023 could be the best year yet for West Virginia’s land-based casinos.

The report states that Connecticut’s land-based market was experiencing a year-on-year decline before online casino launched. Its GGR improved 0.34% after online casino launched in 2021. The smallest jump came in Pennsylvania, which was experiencing fairly steady growth before online casino was introduced. Nonetheless, post-launch, it it saw a 0.14% rise in land-based GGR.

Delaware, New Jersey and Michigan’s land-based markets experienced a 1.94%, 1.28% and 4.89% GGR jump respectively.

As part of its research, EKG carried out a survey of casino operators from both land-based and online businesses. It noted that “the response from participants has been unanimous: cannibalisation has not been occurring”.

When asked about what impact online casino had had on land-based revenue, 20% of participants said it had “moderately increased”, while 80% said it had “stayed roughly the same”.

To the question “How would you describe the impact the introduction of online casino has on land-based casino revenue?”, 100% of respondents said they did not believe cannibalisation fears are valid.

Differing customer types between land-based and online

EKG also provided information on how land-based and online casinos appeal to different types of customers. This was sourced from Golden Nugget Online Gaming’s June 2020 investor presentation.

For online casino, 55% of users are men, compared to 45% of women. The average age of an online casino player is 40-45 years old. However, for land-based casinos, women make up 51% of players. The age range is also slightly older, in the 50-55 years-old group.

In addition, the report noted that the time investment for online casino is typically lower, compared to higher with land-based casino. Online stake levels are also considered broader compared to land-based.

“Land-based and online casino draw different kinds of customers because each product provides a fundamentally different experience,” reads the report. “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.”