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Supporters of expanded iGaming will enter 2025 facing broader opposition than at any time in recent years, with impressive revenue growth in New Jersey, Michigan and other markets proving to be a double-edged sword.
No new states approved legislation to authorize online casino games in 2024 and advocates are braced for a similar grapple in 2025 as their arguments struggle to break through legislative logjams in various potential markets.
One trend of the past 12 months has been mounting opposition from a cluster of land-based casino operators that are previous or even active participants in the iGaming and mobile sports-betting market.
The CEO of Wynn Resorts recently warned that expansion of iGaming has “very serious implications”, following the company pulling the plug on its online casino operations in Michigan, New Jersey and West Virginia last year.
A decline in land-based revenue of 15 percent due to competition from iGaming would wipe out half the profits of a typical casino, “so you’re not going to employ nearly as many people to the extent that you’re being affected by online gaming”, Wynn CEO Craig Billings told analysts on a third-quarter earnings call.
Billings also voiced concern at potential “longer-term regulatory blowback” affecting the gambling industry at large.
“As we’ve seen in markets around the world, look at Australia … when gaming proliferates to a certain point, there’s societal and regulatory blowback. So, I think that’s an issue,” Billings said.
Other major casino companies that have testified in opposition to iGaming in 2024 include TwinSpires-owner Churchill Downs, Live! Casino operator Cordish Companies, plus Cleveland-based JACK Entertainment.
None of those opposing operators has as broad a land-based footprint as iGaming proponents Caesars, MGM or Penn Entertainment, but they do have a presence and will be an obstacle in various battleground states including Louisiana, Maryland, New Hampshire, Ohio and Virginia.
Double-Edged Sword
At the height of the pandemic, the conventional wisdom was that the pace of iGaming expansion would accelerate due to the explosive growth of online casino markets such as New Jersey’s and the revenue opportunities available at a time when land-based properties were inaccessible.
But it has since become clear that the emergence of New Jersey, Michigan and Pennsylvania as major markets on a global scale has both bolstered and hindered arguments for expansion, as iGaming can no longer be considered a niche but instead an offering to rival the size and scale of traditional casino gaming.
In 2024, union groups representing Maryland land-based casino workers followed counterparts in New York in expressing their firm opposition to iGaming legislation.
It has also not escaped the attention of land-based operators that the overwhelming beneficiaries of online sports betting have been FanDuel and DraftKings, and at least some casinos fear opening up iGaming would benefit those digitally native companies and offer relatively little in return for incumbents.
Still, iGaming advocates have some cause for optimism heading into 2025.
Online casinos are on track to generate well north of $2bn in direct state and local tax revenues in 2024 across the seven states with full iGaming.
The remarkable revenue growth of recent years has come at a time when state governments have generally had less acute budgetary needs due to COVID-19 relief funds received from the federal government, but those programs are now coming to an end.
In recent public comments, the CEOs of major U.S. iGaming operators have been cautiously optimistic that the expansion tide may start to turn in 2025.
Part of the reason for slow-going in 2024 was the fact it was an election year, DraftKings boss Jason Robins told analysts last month.
Robins named New York, Illinois, Maryland and North Carolina as states that DraftKings believes to carry some momentum into the year ahead.
“But always going into [a new year] you think it’s going to be a few, and then inevitably, some of the ones you felt good about don’t pan out, and then there’s some that you didn't see coming and end up having a real chance of success and maybe getting over the line,” he said.
