Engaging in Old Conversations: The NCLGS Conference in Louisville
Last week’s National Council of Legislators from Gaming States (NCLGS) summer meeting in Louisville turned the spotlight on both emerging and longstanding debates in the gaming industry.
Attendees, including legislators, regulators, corporate representatives, and lobbyists, gathered to discuss critical issues like the ongoing turmoil surrounding prediction markets and taxation challenges. Yet, a familiar topic dominated discussions—the impact of online gaming on traditional casino revenues.
For years, the relationship between land-based casinos and online gaming platforms has grown tense, with many brick-and-mortar establishments rallying against the expansion of digital gambling. Their efforts have borne fruit, leading to a two-year drought in new iGaming legislation after a wave of activity between 2013 and 2021.
In states with established online markets like New Jersey and Pennsylvania, recent reports show a stark contrast in revenue growth. For instance, New Jersey casinos reported a gross gaming revenue (GGR) of $265.3 million in May, a healthy 10% year-over-year increase. However, online gaming in the state ballooned to a record $244 million, representing a remarkable 28% year-over-year growth. Similarly, Pennsylvania achieved an unprecedented monthly gaming revenue of $601.8 million, fueled by a staggering 33% rise in online revenue.
Chad Benyon, a senior gaming analyst with Macquarie, noted that while iGaming may contribute to an initial 15% decline in retail revenue after legalization, overall market GGR tends to soar by approximately 40% after three to four years. This notion was echoed in a study by the Innovation Group, although divergent conclusions from other research sparked debate about the independence of these findings.
The divide was made evident when gaming attorney Jeff Ifrah, a staunch advocate for online expansion, dismissed claims that iGaming stifles growth. “Evidence shows that rather than causing layoffs, iGaming creates opportunities,” he argued, suggesting that an overall increase in revenue should be the focus rather than direct competition between the two sectors.
Yet, this debate is far from settled. Several traditional casinos have united to form the National Association Against iGaming, with representatives like Shannon McCracken from Churchill Downs criticizing online gambling as a profoundly addictive form of gaming. McCracken emphasized concerns about problem gambling, particularly among younger demographics.
In response, John Pappas from iDEA highlighted the hypocrisy he sees in such arguments, especially when companies like Churchill operate their online platforms. He contended that a regulated market could mitigate risks and encourage safe gambling practices, contrasting it with the dangers posed by the unregulated, illegal market.
The conversation shifted to modern consumer habits, with advocates suggesting that the embrace of online platforms reflects broader trends in digital integration. Basic questions emerged: should society resist technological evolution for the protection of traditional industries? Opponents of online gaming argue that retail casinos serve as significant economic drivers, providing jobs and stimulating local economies.
As this discourse continues, the reality remains that the balance between traditional and digital gambling is in flux. The increase in online revenues raises essential questions about market fairness and the future of land-based facilities. As this sector faces mounting pressures from digital advancements and changing consumer preferences, its significance in state revenues emphasizes the ongoing struggle between tradition and innovation.
With fluctuating revenues and shifting attitudes, the future landscape of the gambling industry will likely hinge not just on legislative decisions, but on how stakeholders navigate the inevitable digital transformation that promises to reshape their fortunes.