The impact of COVID-19 is likely to prompt state legislatures in late 2020 and early 2021 to eye online casinos and an expansion of mobile sports wagering to fill revenue shortfalls and hedge against any future outbreak that will again shutter land-based casinos.
That was the takeaway Thursday at the Betting on Sports America track during the SBC Digital Summit.
Online gaming, legal only in Pennsylvania, New Jersey and Delaware, has bolstered casino and tax revenue that would otherwise be lost during the shutdown. Online gaming is approved in Michigan, but yet to be implemented.
Stacie Stern, director of governmental affairs for FanDuel, said because the COVID-19 outbreak has shut down the economy and cost states revenue, it could lead to igaming expansion.
“I think in some of Southern states — specifically, I think a lot of the moral pearl-clutching opposition that you typically see for online casinos — there are those who are taking a step back and saying we don’t even know when and how the brick-and-mortar casinos are going to return and what kind of procedures will be in place. I have a pretty optimistic view that some states will want to get something done. Maybe they’ll include mobile sports betting in the budget for a couple of states trying to generate revenue and get things done quickly. I think you’ll see a lot more activity around online casinos, probably later this year and into next year. Those discussions are occurring and legislators are asking to be educated. I think with the concern about bringing brick-and-mortar casinos back, this is a real opportunity for online casinos.”
John Pappas, founder and CEO of Corridor Consulting, said he’s “optimistic this will open the door for online gaming.” Online poker has already shown to be a “great way for Americans to engage in recreation” during the stay-at-home orders and is booming, he said.
Pappas, however, cautioned that the industry states willing to expand gaming may want “serious licensing fees and/or tax rates that they may not be comfortable with.” As examples, he cited Pennsylvania and Illinois. When Pennsylvania passed Internet gaming, it put a 36 percent tax rate to fill a budget hole. Illinois had licensing fees for sports betting between $10 million and $20 million, the highest in the country.
“We need to be cautious when we’re going into states that need the revenue,” Pappas said. “We need to educate them on why having a competitive market with low tax rates and reasonable fees will create more revenue in the long term for the states, instead of trying to get as much as they can out of this industry in a short amount of time and how that is really not the best policy.”
Matt Carey, a reporter with Vixio Regulatory Intelligence, said, “Something six months ago that was unthinkable is suddenly on the table,” especially in states where there’s sports betting already. The sports betting industry has proven it can limit betting within states and verify ages, he said.
“We already established we can do these things responsibly with sports betting, and the mechanism is the same with online gaming and will help bolster struggling casinos,” Carey said. “Even when we come out of this, there won’t be a drop–dead date where everyone says, ‘OK, everyone come out of your houses and you’re free to do whatever you want.’ This is going to be a staggered transition back. There will still be a segment of the population that won’t be rushing to the nearest casino even when they reopen. Online casinos will be a big help to them.”
Not everyone is optimistic about the success of online gaming, but Steve Brubaker, president of Brubaker Public Relations, said he expects the issue to gain traction by the end of 2020, once states deal with COVID-19. Some are discussing online gaming expansion already.
“That’s certainly happening in Illinois and I know it’s happening elsewhere, but I’m not sure it will be successful,” Brubaker said.
