iGaming Revenues Dwarf All Other Forms of Online Gambling; What Does 2022 Hold?

Note: This is part of a series of articles on what the sports betting landscape will look like in 2022.

The American Gaming Association’s commercial gaming revenue tracker tells the dramatic story of iGaming relative to the rest of the gambling universe.

For the first nine months of 2021, iGaming – which is online slots and table games – enjoyed the greatest jump in gross gaming revenue compared to the same three quarters in pre-COVID 19 pandemic 2019 compared to all other forms of gaming, including sports betting.

And it wasn’t close.

iGaming’s Big Numbers in 2021

Gross gaming revenue for iGaming from January through the end of September 2021 showed an increase of more than 644% over January-September 2019. The same time-period comparisons for other gaming verticals were: Sports betting (retail and online), nearly 350%; retail slots, 9.8%; retail table games, minus-1.2%, and the gaming industry overall, 19.8%.

Adding to the “wow factor” is that for most of the time period measured, the first nine months of 2021, only five states, New Jersey, Pennsylvania, Michigan, West Virginia and Delaware had launched iGaming – a sixth, Connecticut, launched in September.

For all the hoopla surrounding sports gambling, especially online sports betting, and the fact that 31 jurisdictions (30 states and Washington D.C.) now have some iteration of sports wagering (with more to come), whether retail or online or both, compared to the mere handful of states that have iGaming, the two verticals were running neck-and-neck for the first three quarters of 2021 in gross gaming revenue.

Sports gambling (retail and online) had $3.16 billion in GGR while iGaming had $2.98 billion in GGR. As a percentage of the gambling industry total GGR of $43.43 billion – and that’s casino and online combined as well as sports betting – iGaming, standing alone in just a few states, contributed nearly 7% of that total.

iGaming Brings States Big Tax Revenue

The numbers are similarly impressive when analyzing iGaming as a tax generator. For September in New Jersey -- a state with a mature bricks-and-mortar casino industry, as well as robust online and retail sports wagering, plus an iGaming component – iGaming (with a 15% tax rate) delivered more tax dollars to the state, $18.5 million, than Atlantic City’s nine actual casinos (8% tax rate) with $17.3 million in taxes. Sports betting, which enjoyed a headline-making $1 billion handle that month in Jersey, yielded a little more than $10 million in taxes.

Michigan has also done well with iGaming. Online gambling launched there in January. Through November, the state had collected $179.1 million in taxes, Detroit had collected $49.4 million, and the state’s tribal operators had earned $19.7 million.

iGaming A Hard Sell to Legislators

Those are pretty stunning and even surprising metrics, even to some people fairly familiar with the gaming industry -- and they beg an obvious question.

So, if iGaming is so lucrative, both in terms of revenue for operators and, consequently, in taxes paid to governments, why haven’t more states legalized best online casinos?

Well, in short, iGaming is a much harder sell to state legislatures than other forms of gambling in terms of the optics.

“When people hear sports gambling,” one industry stakeholder said, “they hear sports. “When they hear online casino gambling, they just hear gambling.”

Outlook for iGaming in 2022

Indeed, there are several states ready to launch some type of sports gambling in 2022, online or retail, but iGaming is hardly on the radar in state capitals.

Early in 2021, an iGaming bill was introduced in the Indiana state House of Representatives but it hasn’t gained significant traction. In Iowa, the Iowa Gaming Association, which represents licensed casinos in that state, has said it doesn’t expect a serious conversation on the topic in the state legislature in 2022.

There are serious headwinds for iGaming from several directions. For one thing, 2022 is shaping up as fairly contentious election year and politicians have enough tricky terrain to navigate without taking a position on a topic like Internet casino gambling. For another, there has been and will continue to be opposition from bricks-and-mortar casinos themselves who fear cannibalization of their own in-person businesses should gamblers decide to play slots and blackjack at home rather than go to a real casino where they’d also eat and drink, shop and maybe take in a show.

Without a cohesive game plan that the gaming industry can deliver to lawmakers, there’s little chance that iGaming will get a serious hearing regardless of the spectacular potential revenue numbers that financial analysts tout regarding its future.

How Industry Can Push iGaming

That game plan the industry would have to present would necessarily include a comprehensive and effective approach to problem gambling since iGaming will be perceived in some quarters as a more potentially insidious form of gambling than, say, sports betting.

At the Global Gaming Expo in Las Vegas in October, Anika Howard, vice president of brand marketing and digital for the Foxwoods Casino in Connecticut, discussed her company’s successful approach to persuade policymakers in that state regarding iGaming.

As mentioned, Connecticut is the most recent state to go online with casino gambling.

“It’s a continuing process,” Howard said at G2E. “It’s a commitment to responsible gaming and it’s an education around the technology to make regulators feel comfortable that they’ll be able to regulate, and that it’ll be a safe environment for the players.”