While the world seems transfixed by the daily commotions in Washington, D.C., the real action for the gaming industry might be on the banks of the Susquehanna and Hudson rivers.
That is because, at long last, the states of Pennsylvania and New York might join New Jersey, Delaware and Nevada in legalizing online gaming.
If legislators in Harrisburg and Albany do take the plunge, it would no doubt get the attention of peers throughout the country. And, continuing the river analogy, their legalizing iGaming might not quite be the dam that bursts, but it should lead to some states going online over the next several years.
If legislators need encouragement, they need look no further than their New Jersey neighbors. After a slow start, online gaming in the Garden State has gained momentum and now promises to be a material, if not major, source of tax revenues. iGaming generated $196.7 million in New Jersey last year, 32.1 percent higher than the year before.
That momentum should continue this year, especially for online casino games, which have more potential than online poker, which is already flattening in New Jersey.
A sense of the potential size of the markets can be surmised simply by comparing populations.
Assuming New Jersey is mature and Pennsylvania and New York generate revenues commensurate with their populations, iGaming would generate $240 million and $430 million. However, it’s a safe bet that New Jersey isn’t mature so the numbers for all three states should be higher.
On the other hand, New York could be limiting its potential if it legalizes only poker. The most recent trends in New Jersey show poker’s limitations. Poker accounted for just 11.43 percent of online revenue in December and grew just 5.01 percent at $2.101 million. Casino comprised the balance and generated $16.281 million, 35 percent year-over-year growth.
But the real potential for iGaming is the precedent that Pennsylvania and New York would set. Already, Massachusetts Gaming Commission Chair Steve Crosby says a study of future gambling in the Bay State should include iGaming.
States with online lotteries no doubt would look more closely at legalizing casino gaming and poker.
The beneficiaries of gambling expansion would include casino operators in Pennsylvania and current online operators, game providers and suppliers in New Jersey.
As Laura Briggs, editor of Fantini’s Public Policy Review reports, the current Pennsylvania legislation would award online licenses to the casino operators, as is the case in New Jersey.
With Pennsylvania and New Jersey providing the model, it’s likely at least some other states would follow suit.
Meanwhile, iGaming companies now operating in New Jersey and Delaware are gaining valuable experience and positioning themselves to enter new jurisdictions. Publicly traded companies among them include Paddy Power Betfair, 888, GAN, NYX Gaming, Amaya and bwin parent GVC.
Then there is daily fantasy sports, which is included in the Pennsylvania iGaming bill.
Here is other DFS legislation reported by Briggs in Fantini’s Public Policy Review:
• ALABAMA. SB 28 to legalize and regulate DFS.
• FLORIDA. Three bills to legalize DFS.
• IOWA. HSB 52 would tax DFS.
• MISSISSIPPI has two bills to legalize DFS and tax revenues at 8 percent.
• NEW HAMPSHIRE. HB 580 would tax DFS revenues at 5 percent.
• NEW JERSEY.A 3532 would tax DFS revenues at 10.25 percent of revenue.
• OREGON. HB 2761 was introduced to define daily fantasy sports as a contest of chance under state gaming laws.
Previously filed HB 2549 doesn’t specifically define DFS as chance or skill, but states the winning outcome of the contests reflects the knowledge and skill of players.
• TEXAS has three bills that, combined, would reverse an attorney general’s opinion that DFS is illegal gambling.
Obviously, there is a lot of action on DFS following last year where several states legalized fantasy sports.
The point of these bills isn’t online gaming, per se, but more a further pressure to end the federal ban on sports betting.
And that, to end the analogy, could be a dam burst leading to online gaming becoming a truly big industry in the U.S.
