Slow to expand, internet casino gambling is the future of US betting, industry execs say

SECAUCUS, N.J. (AP) — Internet casino gambling is legal in only a handful of states, but the industry is convinced it is the future of betting, even as some worry about cannibalizing physical casinos.

Speaking Wednesday at the SBC Summit North America, a major gambling industry conference, industry executives acknowledged the difficulty they’ve had in expanding the legalization of online casino games.

Yet they remain certain that, like many other industries, the future of gambling is online.

“Once you get to millennials, people are comfortable basically running their entire life off their cell phone,” said Elizabeth Suever, a vice president with Bally’s Corporation. “This is where gaming is going.”

It’s just not getting there all that quickly.

Only seven U.S. states currently offer legal online casino games: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia. Nevada offers internet poker but not online casino games.

In contrast, 38 states plus Washington D.C. offer legal sports betting, the overwhelming majority of which is done online, mostly through cell phones.

When the U.S. Supreme Court cleared the way in 2018 for any U.S. state to offer legal sports betting, such bets “took off like a rocket,” said Shawn Fluharty, a West Virginia legislator and president of the National Council of Legislators from Gaming States.

“Many people thought i-gaming would follow suit,” he said. “That has not taken place.”

“It’s been a rough road,” agreed Brandt Iden, a vice president with Fanatics Betting & Gaming. “I-gaming is paramount; this is the direction the industry needs to go to be successful, and this is where consumers want it to go.”

Last month, Deutsche Bank issued a research note saying it is likely a matter of “when, not if” internet gambling in Atlantic City overtakes revenue from physical casinos.

Panelists agreed the industry needs to do a better job of educating state lawmakers about internet casino games, drawing explicit comparisons with the illegal, unregulated offshore web sites that attract customers from across the country. Legal sites are strictly regulated and offer customer protections, including responsible gambling options like self-imposed time-outs and deposit and activity limits, they said.

Cesar Fernandez, a senior director with FanDuel, said online casino games should prove increasingly attractive as federal post-pandemic aid dries up and states look for new revenue without raising taxes on their residents.

“Since 2018, FanDuel has paid $3.2 billion in taxes,” he said. “That’s a lot of teacher salaries, a lot of police officers and firefighters.”

The industry cites several challenges to wider approval of internet casino gambling, including fears of increasing gambling addiction by “putting a slot machine in people’s pocket,” Iden said, adding casino companies need to do a better job of publicizing player protections the online companies offer.

Then there is the ongoing debate in the industry over whether internet gambling cannibalizes physical casinos. Many in the industry have long said the two types of gambling complement each other.

But recently, some casino executives have said they believe online gambling is hurting the revenues of brick-and-mortar casinos. Rob Norton, president of Cordish Gaming, which owns physical casinos and internet gambling operations, has become one of the loudest voices raising the alarm that online gambling is hurting established physical casinos.

“We’re setting ourselves up for our own failure,” he said Wednesday.

Norton said that once online sports betting began in Maryland, in-person sports betting revenue in the company’s Maryland Live! casino declined by 65% “and has stayed there.”

There has been a decrease of about 7,000 people a day entering the physical casino since mobile sports betting began, Norton said.

He said that may be one reason why online casino games have not spread more widely.

“Last year, eight states considered i-gaming,” he said. “Not one passed.”

Adam Glass, an executive with Rush Street Interactive, an online gambling company, said his firm has relationships with physical casinos as well, and works hard to be “additive” to them.

He said online gambling can also be a job creator, not only designing and operating the games themselves, but also in ancillary industries like marketing and media.

Ouincy Raven, U.S. managing director of NeoGames Group, a technology platform company recently acquired by Aristocrat Leisure Limited, said what may appear as cannibalization to one person may in fact be successful business to another company that takes market share from a rival by giving the customer what he or she wants.

“That’s not cannibalization; it’s just competition,” he said.