NATIONAL NEWS

As US sports bets boom, internet gambling is slow to expand

Apr 19, 2023, 2:20 PM

ATLANTIC CITY, N.J. (AP) — While two-thirds of the country now offers legal sports betting, only six states offer online casino gambling, confounding industry hopes that the rapid growth of sports betting would also bring internet casino wagering along with it.

Speaking Wednesday at the East Coast Gaming Congress in Atlantic City, industry executives and legislators from gambling states offered various explanations for why internet gambling has yet to expand beyond a handful of eastern states.

Internet gambling is legal in New Jersey, Connecticut, Delaware, Michigan, Pennsylvania and West Virginia; Nevada offers online poker but not casino games.

By contrast, 33 states plus Washington, D.C. offer legal sports betting.

“It’s a mystery to me why we have 30 or so states that have sports wagering, and only six that allow I-gaming,” said Lloyd Levenson, an attorney who represents many Atlantic City casino companies. “You have to scratch your head as to why.”

Shawn Fluharty, the minority whip of the Werst Virginia House of Delegates, said the disparity is surprising because internet gambling brings in much more money than sports betting does. He said in his state, it takes three months of sports betting revenue to match a single month of online casino revenue.

Some in the gambling industry, as well as in state houses around the country, continue to fear that authorizing internet gambling will cannibalize revenue that would otherwise go to brick-and-mortar casinos — even though the experience of states like New Jersey has shown that not to be the case.

Internet gambling brought in $1.6 billion in New Jersey in 2022, up more than 21% from a year earlier. Atlantic City’s nine casinos won nearly $2.8 billion from in-person gamblers, an increase of 9% from the previous year.

Indiana state Sen. Jon Ford said his state tried unsuccessfully to pass internet gambling this year, an effort that was at least partly undone by an analytical report from legislative researchers that worried that online gambling would eat into revenue from brick and mortar casinos to an unacceptable extent.

“I question the validity of that report,” he said, adding he plans to try again next year to get the bill passed.

Howard Glaser, global head of government affairs with Light & Wonder, the gambling equipment manufacturer, said efforts to expand internet gambling are “dead in every state this year.”

“Where we run into a problem is there is a realization that this is about revenue — who gets a piece of the pie?” he said.

Glaser said many casino companies are reluctant to give a perceived foothold to companies “that they view as an existential threat. There’s a fight for dominance within the casino industry about who gets growth.”

Fluharty said about 65% of the country is governed by Republican-controlled state legislatures, a group he said is less likely to favor gambling at all, let along expanding it.

But he and others said that with federal pandemic-related aid coming to a close, states will once again be looking for money to avoid raising taxes. That should give internet gambling another look in many places, they said.

Panelists agreed that New York and Indiana are among the states most likely to add internet gambling in the next two years. Fluharty also said states that recently adopted sports betting might also be likely to add internet gambling, including Ohio.

“There’s been a push in New York; this just wasn’t the year to get it done,” said Jordan Bender, a senior equity research analyst with JMP Securities. “That’s a market we estimate can get to $3 billion, That’s a massive, massive number.”

Duane Bouligny, a managing director with Wells Fargo Bank, said Texas remains a longshot possibility.

“There has been a shift in tone in the last two or three years, where there is a future for gaming in Texas,” he said, adding he does not expect it to happen anytime soon.

Other possibilities include Iowa or Illinois, they said.

Siobhan Lane, CEO of Light & Wonder, said she is optimistic about the likely expansion of internet gambling.

“I-gaming is still in its infancy in the U.S.,” she said. “We know that will change. The revenues being generated in New Jersey, Pennsylvania and Michigan are just far too great for other states to ignore for long.”

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Follow Wayne Parry on Twitter at www.twitter.com/WayneParryAC

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As US sports bets boom, internet gambling is slow to expand