North America Market Forecast

Regulated U.S. online sports-betting and gaming gross revenue jumped by 61 percent to an estimated $12.4bn in 2022, blazing past the symbolically significant $10bn mark as the U.S. overtook the UK to become the largest regulated online gambling market in the world within four years of the repeal of the Professional and Amateur Sports Protection Act of 1992 (PASPA).

Gross revenue across 23 active online sports-betting states soared by 91 percent year-on-year to an estimated $6.9bn and, in doing so, overtook the parallel U.S. iGaming sector where GGR is estimated to have risen by 34 percent to $5.5bn across a smaller footprint of seven states.

This latest balance shift reflects the differing fortunes of the two verticals in the legislative arena, with 14 new states having launched online sports-betting operations since the start of 2020 versus an equivalent three in the iGaming arena.

The online sector’s tearaway growth has been driven by an unprecedented deluge of successful gambling expansion bills in recent years and a step change in consumer habits following the onset of COVID-19 that has been sustained amid a strong rebound in land-based casino revenue.

On the sports-betting side, strong growth in existing states such as Illinois, Tennessee and Virginia during 2022 was supported by sizeable contributions from newer online markets including Arizona, Louisiana and, most notably, New York.

The Empire State immediately dwarfed New Jersey and Illinois to become the largest state-level online sports-betting market in the U.S. after launching at the start of 2022, with full-year gross revenue in the highly taxed market rocketing to $1.36bn to surpass 2020’s overall U.S. yield of $1.14bn.

The launch of online sports betting in Maryland, Kansas and Ohio during the 2022 NFL season will be followed by an expected post-Super Bowl debut in Massachusetts, with these four states expected to collectively drive well over $1bn in incremental gross revenue during 2023.

A slowdown in legislative progress since 2021, with just three states legalizing sports betting in 2022 and an expected two to five to follow this year, means that market growth from 2024 onwards will necessarily become more organic in nature.

A lack of new markets has already constrained growth on the iGaming side, where legislative momentum has been comparatively glacial and just two additional states — Indiana and Iowa — are expected to go live over the next three to four years. 

VIXIO GamblingCompliance’s medium-term legislative and market size forecasts indicate that regulated U.S. online gambling revenue will reach $23bn in 2026, with online sports betting climbing at a compound annual growth rate (CAGR) of 20 percent to $14.6bn and iGaming expanding at an equivalent CAGR of 12 percent to $8.6bn.

Excluded from this base case are potential online sports-betting launches in California, Florida and Texas, as well as the plausible addition of iGaming in New York, with these potential new markets, which feature in VIXIO GamblingCompliance’s U.S. bull case model, collectively representing multi-billion-dollar upside to our forecasts.

Over the border in Canada, Ontario became arguably the global online gambling industry’s most important new market upon its launch in April 2022, completing its transition from an OLG monopoly to a competitive model.

That status is chiefly a result of Ontario’s sizeable population, exceeded by just four U.S. states, and a unique but ultimately “European-style” open licensing framework for a full product suite, with 73 licences issued as of early February 2023.

The steady transition of major operators from Ontario’s grey market to the licensed sector resulted in quarterly online net revenue progressively improving from C$162m (US$121m) in the second quarter of 2022, debut figures that were widely viewed as somewhat underwhelming, to C$267m (US$200m) in Q3 and C$457m (US$342m) in Q4.

According to base case forecasts outlined in VIXIO GamblingCompliance’s Canada Online Forecasting Dashboard, overall regulated online gambling revenue across Canada will reach just under C$6bn (US$4.5bn) by 2026.

A majority C$4.5bn (US$3.3bn) of this total is expected to be generated in “re-regulated” competitive markets, with Ontario’s C$3bn+ fully regulated system predicted to be followed by the introduction of competitive sports-betting markets in Alberta, British Columbia and Manitoba over the next two to three years.

 

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