Take A Bite Out Of The Revenue Pie
The debate over online gambling eating away at land-based casino revenues continues to be a significant hurdle for legalization efforts.
The Bulletin Board
THE LEDE: Will we ever get past the cannibalization debate?
BEYOND the HEADLINE: TIG report bumps cannibalization rate to 16%.
ICYMI: SPGA response to Mississippi sweeps bill; Latest Google update impact on affiliates; New CFTC Chair announced.
NEWS: FanDuel touts “My Spend” usage and new “Deposit Alerts” RG tool.
AROUND the WATERCOOLER: TransUnion report: $500+/month bettors.
STRAY THOUGHTS: Pat on the back.
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The Lede: The Cannibalization Debate Is Heating Up
Online casino hearings in Maryland, Indiana, Wyoming, and Virginia have highlighted the all-encompassing nature of cannibalization as states consider adding online casinos to their gaming menu.
Both sides have dug in their heels and continue to talk past one another, which is fine if you’re against legalization and are happy with gridlock. And a terrible strategy if you want an online casino bill to pass.
As I’ve argued in the past, cannibalization is a losing debate for legalization advocates. The word itself is taboo, and the minute you start denying cannibalization, you’ve lost the plot and the debate.
Attempts to shift to a softer term, like demand-shift, haven’t gained traction. That said, even if the word itself disappeared, the underlying debate would still be a dead end for legalization efforts — As I’ve previously written, “Intuition overrides evidence when evidence isn’t overwhelming.”
The idea that online gambling doesn’t eat away at land-based revenues is counterintuitive. More importantly, it doesn’t mesh with the industry’s other claims: That sweepstakes sites, offshore gambling platforms, VGTs regulated or unregulated), and every other form of gambling cannibalize other forms of gambling.
At some point someone will ask the question: So, why is regulated online casino gambling the only form of gambling that doesn’t cannibalize existing gambling? And there really isn’t an answer.
In the same vein, the evidence lacks context, and most people can see through it. I’m not saying the other side doesn’t play around with the facts, but supporters aren’t doing themselves any favors, as their arguments ring hollow.
As I wrote following Maryland’s January 29 hearing:
“[Maryland State Sen. Ron] Watson noted he sent each member of the committee data from Pennsylvania that shows across-the-board increases in gambling revenues and more jobs following the legalization of online gambling, calling cannibalization a fallacy.
“The statement does not mention the new brick-and-mortar casinos that were part of the expansion bill or the legalization of online lottery products. The aforementioned Cordish-owned Live! Casino Pittsburgh opened in 2020, and smaller mini-casinos (Hollywood Casino Morgantown and Wind Creek Steubenville) are juicing the overall numbers.”
Essentially, supporters keep pointing to the market’s growth alongside online gambling but don’t consider external factors unless those external factors favor their argument.
Yes, Pennsylvania land-based revenue has grown since the introduction of online gambling on July 15, 2019. However, there are five new casino locations in the state [bolded and italicized below]:
Parx Casino
Wind Creek Bethlehem
Rivers Casino Pittsburgh
Mohegan Pennsylvania
Hollywood Casino at The Meadows
Mount Airy Casino Resort
Live! Casino Philadelphia (January 2021)
Rivers Casino Philadelphia
Hollywood Casino at Penn National
Harrah's Philadelphia Casino
Valley Forge Casino Resort
Live! Casino Pittsburgh (November 2020)
Presque Isle Downs and Casino
Hollywood Casino York (August 2021)
Hollywood Casino Morgantown (December 2021)
Parx Shippensburg (February 2023)
The Casino at Nemacolin
As the table below shows, slot revenue has been stagnant since 2014, and table game revenue has been stagnant since 2016. Furthermore, both are declining when adjusted for inflation — the $2.36 billion slot revenue in 2019 would be $2.91 billion in 2025 dollars.
You can claim that land-based revenue is up (very slightly) compared to 2019 if (and that’s a huge if) you don’t account for inflation or the opening of five new gaming locations, which conveniently dismisses the concerns of individual operators.
There are obviously many other factors that can contribute to declining revenue, but I’m going to keep screaming that the industry needs to walk back the “no cannibalization” stance, and shift to:
“Yes, there is some cannibalization, and you are already experiencing it at the hands of gray and black market operators.
“Presently, and this will only get worse in the future in the future, the state is importing the harms and exporting the benefits of online casino gambling. Here is how we are going to structure the market to import the financial benefits of online gambling and mitigate the harms.”
As Steve Jobs said, "If you don't cannibalize yourself, someone else will."
You can read my previous analysis of the cannibalization debate in New Jersey here.
Beyond the Headline: TIG Report Bumps iCasino Cannibalization to 16%
The Innovation Group caused a stir when an online gambling study conducted for Maryland (prepared in 2023) indicated online casinos could cannibalize land-based gaming by as much as 10%. TIG’s study led to a separate study by Eilers & Krejcik Gaming (a newsletter sponsor) that pushed back on the original claims.
TIG has updated its study with 2023 and 2024 data (this time contracted by the National Association Against iGaming). However, rather than moving closer to EKG’s “no-cannibalization” finding, the firm has increased its estimate to 16%.
Per the press release from NAAiG, “A new study for NAAiG by The Innovation Group… debunks the myth that iGaming offers easy revenue for states. Instead, the study uncovers the damaging effects of iGaming expansion, exposing widespread job losses and significant declines in economic output across multiple states.”
The new study examines the potential economic impacts and social harms should states legalize online casino gambling, finding:
Land-based casino revenue drops by 16% on average after iGaming is introduced, leading to substantial job losses, hundreds of millions of dollars in lost economic output, and reduced tax contributions that fund public services.
Brick-and-mortar casinos in every state would face significant revenue losses due to iGaming cannibalization. Projections reach up to $983.7 million in NY, $545.3 million in IL, $522.6 million in OH, and $342.6 million in MD by 2029.
The introduction of iGaming reduces in-person casino employment, with an estimated 2,818 jobs lost in Ohio, 2,642 in Louisiana, and 1,906 in Mississippi.
States with iGaming experience an 8.3% decline in distributed gaming revenue, impacting taverns and small gaming establishments.
Direct social costs to governments from problem gambling and social ills tied to online gambling could well exceed $100 million annually, plus additional downstream economic losses from a 4-5x loss in productivity.
Online gamblers are 8 times more likely to report compulsive gambling.
In areas with legalized iGaming, household investments have declined by 14%.
Underage gambling increases with online gambling, with 26.4% of adolescents who engage in iGaming developing gambling disorders.
So, who is NAAiG?
NAAiG consists of land-based gaming operators opposed to online gambling expansion. The group’s known board members include:
Jason Gumer, EVP and General Counsel at Monarch Casino & Resort
Mark Stewart, EVP & General Counsel of The Cordish Companies
Shannon McCracken, Senior Director of Government Relations at Churchill Downs
STTP believes there are other companies involved in NAAiG, but that information is not public at this time.
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ICYMI: SPGA Responds to MS Sweeps Bill; Google Gambling Ad Update; New CFTC Chair
SPGA statement on Mississippi sweepstakes ban: As reported yesterday, the Mississippi Senate passed a bill prohibiting sweepstakes gaming sites in the state. The sector’s trade organization, the SPGA, issued a statement that reads in part: “The SPGA is deeply disappointed by the Mississippi Senate’s decision to advance SB 2510, which unjustly targets sweepstakes and conflates a safe and legal form of entertainment with illegal operations. This bill not only misrepresents the nature of sweepstakes gaming—an established and consumer-friendly model—but also sets a troubling precedent by equating these operations with illicit gambling… Voters deserve better than lawmakers who prioritize the protection of a slot machine maker over individual freedom.”
Google makes another update that impacts gambling affiliates: Speaking of Google updates, a new update designates “which countries are approved for gambling-related advertising and require advertisers to have a designated landing page with responsible gambling information,” per SBC Americas. “The new policy will continue to allow aggregators and affiliates to promote legal online gambling sites so long as they “provide information about, or a comparison of, gambling services… Affiliates also must ensure any operators they promote have active licenses and registrations for the markets they are advertising in.”
New CFTC Chair bodes well for Crypto and prediction markets: Donald Trump has tapped Brian Quintenz as the next Chair of the Commodity Futures Trading Commission (CFTC). The appointment is great news for prediction markets and crypto. Quintenz was appointed to the Kashi Board of Directors in November 2021 and previously served as an Advisory Council Member for Crypto.com after his stint as a CFTC Commissioner came to an end in September 2021. Dustin Gouker’s Event Horizon newsletter took a deeper dive into Quintenz’s purview on prediction markets.
News: FanDuel Touts My Spend Usage + New RG Tool
In December, FanDuel introduced My Spend, a “personalized responsible gaming dashboard designed to help customers track spending patterns and manage their budgets.”
My Spend allows FanDuel customers to monitor their deposits and winnings/losses over specific periods and encourages bettors to set limits.
A FanDuel press release on Friday states, “Nearly half of its customers, approximately 3.5 million, reviewed their play activity using My Spend, a new personalized responsible gaming dashboard,” during the 2024-2025 NFL Season.
“The growing adoption demonstrates that customers are engaging with RG tools that provide personalized insights that help them to manage their time and spending on the platform,” the press release notes.
FanDuel also announced the release of a second RG tool: Deposit Alerts and “efforts to leverage technology to enable early intervention when at-risk behavior is identified with new initiatives to be announced in 2025.”
Deposit Alerts allow customers to create “daily, weekly, and monthly target budgets and receive a notification when they reach the amount they’ve set.”
The tools resemble the PlayMyWay program trialed at some Massachusetts casinos.
“We want our customers to know what they are spending and to ensure they are within their comfort zone. Since the launch of My Spend, we’ve seen a meaningful rise in engagement with tools that give our customers the ability to create a personalized plan to manage their play,” said Jill Watkins, Senior Commercial Director of Responsible Gaming at FanDuel. “We’re encouraged by the progress and remain steadfast in our commitment to making responsible play a natural part of the FanDuel experience for all customers.”
Around the Watercooler
Social media conversations, rumors, and gossip.
I was going to write a newsletter entry about the latest TransUnion survey results, but Ryan Butler did such a good job addressing the point I planned to cover that I’ll let his tweets do most of the talking.
Interestingly, the number of $500+ per month bettors has fallen since 2023:
Butler went on to say, “And for further clarification, this is money bet ("handle" ), not money lost. Assuming the nationwide sportsbook hold of around 10%, we can extrapolate a $500-a-month bettor is losing "only" $50 a month, something most frequent bettors can afford to lose.”
That may be true, but gambling wins and losses are never clean. The average might be $50 over time, but the monthly wins and losses will be quite volatile.
I’d also add that the report says $500 or more, and I’d be very interested in the “and more” numbers.
The report found that $500+ per month bettors were in better financial shape than non-bettors:
However, it goes on to say, “This cohort also faces challenges with bill management and exhibits more erratic behaviors related to savings and debt, which can impact their ability to engage in responsible gaming.”
Stray Thoughts
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