The Path Back: iGaming gaining favor among players, lawmakers

May 17, 2020 4:01 AM
  • Mark Gruetze, CDC Gaming Reports
May 17, 2020 4:01 AM
  • Mark Gruetze, CDC Gaming Reports

COVID-19 quarantines have strengthened the attraction of online casino gaming among players and legislators throughout the United States, three industry executives said Thursday.

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“It’s five years of change in the space of five weeks,” said Dermot Smurfit, CEO of GAN, which supplies online gaming, sports wagering, and social gaming platforms in New Jersey, Pennsylvania, and Delaware.

With traditional casinos shut down across the country, many customers have increased their online play while others have overcome their technophobia and opened accounts. And with every state looking for ways to pay the staggering bills from the coronavirus pandemic, many legislators will be more open to online gaming as a new form of revenue, the executives said.

Smurfit spoke Thursday at “Moving Forward: iGaming in the COVID-19 Era,” the latest webinar produced by The Innovation Center, Global Gaming Business magazine, and Regulatory Management Counselors, based in East Lansing, Michigan.

Other panel members were Sue Schneider, vice president for Growth and Strategy/Americas, Sports Betting Community (SBC), and Kresimir Spajic, CEO of Hard Rock Interactive. Roger Gros, the publisher of Global Gaming Business, moderated.

The webinar was on the day after New Jersey, the most profitable of the three streets with regulated online casino gaming, reported that April iGaming revenue was just shy of $80 million, more than double the $39.6 million of April 2019. Atlantic City land-based casinos, which have been closed since March 16, won $207.6 million in April 2019.

The panelists agreed that the growth in existing iGaming markets will continue at least the rest of this year and that more states are likely to consider expansion in the coming months.

Citing figures from Eilers& Krejcik Gaming, Schneider said U.S. online casino revenue averaged $88.2 million for the three-month period ending in March, up substantially from the $65.2 million average in the previous period.

Spajic tied the increased interest not just to the attraction of online gaming but also to people having to shift other activities, such as grocery shopping and video meetings, to online because of the pandemic.

Schneider said that before the pandemic shut down casinos, many lawmakers had developed a “comfort level” with the concept of legal online gaming. Post-COVID, states looking to replace lost tax revenue might turn to iGaming.

However, she cautioned that they also might push for tax rates that would make it unprofitable for casinos. She encouraged operators and gaming associations to work for reasonable taxation.

Smurfit, whose company officially went public on May 5, said online gaming is the biggest growth opportunity for casinos.

Operators should establish an online presence even in states without mobile sports wagering or iGaming, he advised, because offering play-money games helps casino extend their relationship with customers.

“Move online now to be ready for when online is approved,” he said.

Spajic said Hard Rock Atlantic City’s online customers now can play slot machines that actually are on the casino floor. Cameras at a bank of machines show the slot displays, and players spin the reels remotely. Players describe the setup as trustworthy, fun, and realistic, he said, and it allows Hard Rock to provide Aristocrat and other machine themes otherwise not available online. Hard Rock plans to expand the offering to other markets.

Thursday was the two-year anniversary of the U.S. Supreme Court’s decision allowing states other than Nevada to regulate sports betting; since then, 20 states and the District of Columbia have done so. Most of those jurisdictions allow online sports betting even though they don’t have iGaming.

Mobile sports betting is a bigger opportunity than most lawmakers and even some operators see at first glance, Smurfit said.

“Politicians look at it as a tax revenue opportunity.  It’s a lot more complicated,” he said. While casinos make modest revenues on sportsbooks, “the real profit center in Pennsylvania and, over the past two and a half decades in Europe, has been the online casino. The real economic opportunity has to flow from the online casino.”

He predicted that many states considering Internet sports betting will decide to add iGaming at the same time. “Sports gambling operators have to be permitted to launch online casinos,” he said.

Thursday’s webinar was the fourth in a series titled “Gaming in Crisis: The Path Back.” The fifth, scheduled for May 28, will be on post-pandemic design changes for land-based casinos.

For a replay of the previous webinars or to register for the next one, go to https://casinowebinar.com/