Cannibalization concerns persist, but every data point in the 10-plus years of legal online gambling in the US, including the latest AGA commercial gaming revenue tracker, contradicts that claim.
Commercial gaming revenue grew by 6.4% year-over-year in May, per the American Gaming Association’s latest commercial gaming revenue tracker. Online gambling and mobile sports betting did the heavy lifting in May, as land-based casino revenue dipped .6%, while online channels grew by 44%.
Per the AGA, through the first five months of 2023, commercial gaming revenue is 12.4% ahead of 2022’s record-setting numbers. The bulk of that growth comes from sports betting and online gambling, which have increased 65% and 22% year-over-year, respectively.
The sky isn’t falling: Of note, six states (Indiana, Louisiana, Iowa, Mississippi, Florida, and Missouri) have seen declines in casino revenue through the first five months of 2023.
Three of those states offer online sports betting (Indiana, Louisiana, and Iowa), and none offer online casino or poker.
Conversely, the six commercial casino states with online gambling are in the black, with 2023 casino revenue bettering their 2022 numbers through May:
Michigan
West Virginia
Pennsylvania
Delaware
New Jersey
Nevada
As the AGA noted:
“As land-based gaming revenue growth contracted slightly in May, overall growth was primarily fueled by the ongoing expansion and acceleration of online gaming. Revenue from land-based gaming, which encompasses casino slots, table games and retail sports betting, declined slightly (-0.6%) compared to the previous year. Conversely, revenue from online gaming grew 43.4 percent year-over-year.”
I’m not sure this will resonate when online casino is discussed in state legislatures in 2024. Still, the modernization of gambling should be one of the pillars of legalization as it protects the industry’s revenue and the state’s.
The evidence from New Jersey, Pennsylvania, and the other online casino states, along with online lottery states, is airtight. Even if you believe there is currently some cannibalization (more than offset by the online gains) with more on the way, this is the inevitability of the world. We can’t pretend Blockbuster would still be with us if we prohibited Netflix.
Say It With Me: EBITDA
US sportsbooks are starting to be EBITDA positive.
Q2 saw several operators, including BetMGM, DraftKings, Caesars, and RSI, trumpet their EBITDA profitability.
Some readers probably think, “Wow, that’s great news!” Others are likely scoffing at the use of EBITDA. And others are probably wondering, “WTF is EBITDA?”
If you’re curious why they are leading with EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) and not profits on their earnings call, it’s because they’re not turning a profit yet.
Proponents of EBITDA will say it’s a more accurate assessment of a company’s ability to turn a profit. At the same time, critics see it as misleading, hiding financial burdens such as debt expenses.
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The NFL vs. Rep. Dina Titus
In June, Rep. Dina Titus (D-NV) sent a letter to the NFL and other professional sports leagues seeking answers to six specific questions about their sports betting policies. The questions ranged from policies concerning athletes and staff to education and monitoring to prior and ongoing investigations.
The letter should have been bigger news than it was, as Rep. Titus is not some anti-gambling crusader looking to score political points. The Nevada rep is one of, if not the, strongest supporters of legal, regulated gambling in Congress.
We now have some of the responses, and let’s just say, The Rock would be impressed with the eyebrow-raising qualities of the NFL letter, which sidestepped many questions while focusing on the illegal sports betting market.
The NFL response reads in part:
“Congress and the federal government have a unique role to play in bringing enforcement actions against illegal operators. Along with our colleagues in the industry, we’ve been working to highlight the importance of federal engagement in this area. We believe that additional attention and resources are needed from lawmakers and law enforcement to address the illicit sports betting market.”
The response was not to Titus’s liking, who fired back with the following statement, “It’s very disappointing that the NFL has declined to answer our questions and instead pivoted to illegal sports betting generally in their response. It makes one wonder what they are trying to hide.”
“This kind of transparency is crucial for the integrity of the game and success of legal sports betting. Now that we have answers from the NCAA, I need to hear from professional sports leagues about their efforts to protect players and the public from illegal activities.”
Beyond the Headline
As I wrote in June for the Gambling.com Insiders column, this was always heading to Congressional hearings: “Whether the leagues respond is likely a moot point, as the outcome is undoubtedly Congressional hearings. Non-answers or general answers will raise more questions, and complete answers to the final two questions will raise a few eyebrows.”
The rapid expansion of legal sports betting, plus the current news cycle containing numerous athletes under investigation (scroll down to The Watercooler section), is just pouring fuel on the fire. If that fire continues to grow, federal involvement may move beyond hearings and into oversight. And as Richard Schuetz often says, beware the camel’s nose.
One final point: If this was the NFL’s written response (with 30 days to think about what to say), I can only imagine what answers might escape the mouths of league representatives during a Congressional hearing.
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Around the Watercooler
Social media conversations, rumors, and gossip.
A probe into Iowa and Iowa State gambling that uncovered a shocking (to some) amount of gambling by student-athletes has kicked the proverbial hornet’s nest.
@JessWelman on X: I am going to go out on a limb and say I highly doubt Iowa is just some anomalous hotbed of underage student athletes wagering on other people's accounts. And we are clearly turning a blind eye to what is a big deal.
There were multiple instances of athletes placing wagers on their teams. Based on a statement from the IRCG, it appears that the athletes were betting for, not against, their side.
@DavidPurdum on X: Statement from Iowa Racing and Gaming Commission on recent criminal charges against Iowa and Iowa State student-athletes related to betting:
I firmly believe the federal government is looking for reasons to get involved in sports betting (recent articles penned by yours truly on this topic here and here), and this could be its opening.
And then there is also the situation in Florida, which is looking more and more likely that sports betting will be back in the Sunshine State by the NFL season, as Vixio.com’s Chris Sieroty tweeted.
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- In the coming weeks, I’ll be taking a deep dive into the nonsensical opposition to legal online poker in the US and what needs to be done to reignite interest in legalizing online poker.
- Another topic I really need to discuss is the debate over what is and isn’t illegal gambling. The TL;DR version is the legality of any gambling or gambling-adjacent product is up to the current decision-makers unless it receives a legal challenge. Gambling laws are like Bruce Lee’s view on fighting, be like water. If a state wants to bypass a constitutional amendment to legalize online gambling, it calls it a new delivery channel of already legal gambling.
- Age has become the topic du jour in responsible gambling circles. And I have a lot of thoughts on that… which I will relay in this Friday’s subscriber-only column.
- And lastly, bonus points if you recognized the I Eat Cannibals reference.
Author note: Straight to the Point is a one-person show at the moment. Apologies in advance for any spelling or grammatical errors
