In all the hoopla that surrounds the spread of sports gambling in the United States, lost is the potential of another form of gambling with far greater potential impact. That would be iGaming, also known as iCasino.
To the surprise of some, the potential of revenue for gambling companies and tax money in iGaming dwarfs the amount of corporate revenues and, consequently, tax money from sports gambling, including internet sports betting.
In the case of Illinois, two bills have been introduced in the current legislative session of the state General Assembly to legalize Illinois online casino games.
The bills, if they became law, would likely legalize casino-style games, such as slots and table games. Customers would be able to access these games on personal computers and mobile devices, such as tablets and smart phones.
Undoubted Financial Windfall From Online Casino
The contrast in the financial potential between sports gambling (again, including the online type) and Illinois online casino games was highlighted in the latest final numbers from the American Gaming Association review of the industry in 2022. The AGA is the trade group representing much of the U.S. gambling industry.
Sports gambling, which is legal in more than 30 states, including Illinois, saw revenues of $7.5 billion in 2022. Meanwhile iGaming – which is legal in just six states – brought in more than $5 billon revenue in 2022.
The comparison becomes even more striking if you take the revenue from New York, which launched online sports wagering in 2022, out of the national sports figures. That leaves sports gambling with total national revenue of just a little over $6 billion in gross revenue. Online and retail Illinois sportsbooks accounted for nearly $800 million of that total.
Now, back to iGaming. That $5 billion of revenue in 2022 was a 35% leap from 2021. And that was without adding any states to the group of states with iGaming. Connecticut was the last state to legalize iGaming, in late 2021.
Why More States Have Not Adopted iGaming
So why don’t more states legalize iGaming? And if Illinois were to follow the lead of states such as New Jersey, Pennsylvania and Michigan (West Virginia and Delaware are the only other iGaming states), what would that mean?
The very nature of iGaming – that people would be able to play slot machines at home on a computer or on a cell phone – has a different feel than online Illinois sports betting apps for both politicians and just regular folks.
As one industry insider put it, “When legislators hear the phrase ‘sports gambling’, all they really hear is ‘sports’. It’s something they’ve probably been doing themselves. But when they hear ‘iGaming,’ all they hear is ‘gambling.’”
Strong Gambling Tradition in Illinois
Illinois is a state with a robust gambling culture.
The state already has many traditional casinos, with a $1.7 billion destination-style gambling palace planned for Chicago. Retail and online sports betting launched in the state in 2020. And there’s widespread distribution of video lottery terminals (VLTs) — devices similar to slot machines — in convenience stores and truck stops.
However, iGaming is a different sort of gambling. It virtually puts a casino in people’s pockets.
Its advantages to the casino industry have been proven is some cases. In New Jersey, Atlantic City’s casino industry was largely saved – along with the jobs it provides – when the state introduced iGaming about 10 years ago. Last year, only a little more than half the revenue brought in by New Jersey’s gambling industry was earned through in-person gambling. There is a compelling argument that some of the casinos at the Jersey shore might have closed without iGaming.
New Jersey a Model Supporting Online Casino
In that light, New Jersey is a model for how an iGaming component can work to enhance a state’s overall gaming industry.
However, in Nevada – where there are hundreds of casinos ranging from mega-resorts to tiny mom-and-pop gambling shops – there is significant local gaming industry resistance to iGaming. The worry is that if slot machines and blackjack tables were so convenient that gambling customers wouldn’t have to leave home, many casinos that locals frequent would simply close.
Proponents of iGaming contend that virtual gaming does not seriously cannibalize the bricks-and-mortar variety and they point to New Jersey to buttress the argument.
But the reality is this: Gambling is a state-by-state creature and New Jersey’s casino industry, with casinos packed in one locale, doesn’t make it analogous to other jurisdictions where casinos are more spread out and cater to highly localized markets.
Illinois Sports Betting Revenue No. 3 in Nation
Should Illinois legislators pass iGaming, to go along with mobile sports wagering operators that offer Illinois sportsbook promos, they can surely expect a healthy windfall of tax revenues. Illinois has quickly jumped to the No. 3 state in sports betting revenue, trailing only New York and New Jersey.
One industry report projects that Illinois’ annual gross gaming revenue from iGaming at almost $1.37 billion and annual tax collections at almost $274 million. To be clear, those are substantial numbers.
However, the implicit dangers of problem gambling associated with iGaming are obvious. State legislators and state regulators must be mindful of that societal jeopardy. More research is needed on the impacts of virtual gaming on gambling addiction; then measures must be devised to mitigate the dangers. The gambling industry as a whole is aware of such measures and has responded – for instance, on Friday, BetMGM, which offers BetMGM Sportsbook Illinois, pledged to make responsible gaming messages more prominent in its advertising in both the United States and Canada.
The gaming industry is cognizant that mobile gaming could be appealing to younger adults who are already wedded to their smart phones but just as technology addiction has become a “thing”, marrying compulsive mobile device use with gaming is a combination that is not yet fully understood.