U.S. Online Casino Expansion Outlook Grim For 2022

February 1, 2022
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While only one month has passed in 2022, the lack of momentum behind legislation in several key states suggests the year will be a bleak one for supporters of online casino expansion in the United States.

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While only one month has passed in 2022, the lack of momentum behind legislation in several key states suggests the year will be a bleak one for supporters of online casino expansion in the United States.

Despite stunning revenues in the now billion-dollar markets of New Jersey, Pennsylvania and Michigan, placing each in the top five regulated markets globally, online casino legislation has moved far slower than the sports-betting boom of the past four years.

Only six states currently offer online casino gaming, compared with 32 that offer regulated sports betting, while only one, Connecticut, has legalized internet gaming since the onset of the coronavirus pandemic in March 2020.

Most observers had pegged Indiana as the best hope for online casino expansion in the U.S. in 2022.

But legislation introduced in the state’s House of Representatives failed to even receive a hearing before the state’s January 31 deadline for bills to pass at least one chamber of the legislature expired on Monday night.

This marks the second consecutive year where interactive gaming failed to receive a hearing despite optimism from stakeholders, with the writing on the wall for this year’s effort when the champion of iGaming in the state Senate, Republican Jon Ford, decided against reintroducing a bill in his chamber for 2022.

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Internet gaming in Indiana faced several challenges, including the realpolitik and condensed lawmaking schedule of an election year.

There were also lawmakers who were opposed to further expansion of online gaming following the state’s launch of mobile sports betting in 2019, as well as those left uneasy about gaming issues by a campaign finance scandal involving the CEO of Spectacle Entertainment, which was awarded a casino license as part of the 2019 legislation.

One benefit that Indiana did have in its pursuit of online gaming expansion was unified support from the state’s casinos.

The Casino Association of Indiana lobbied in support of legislation and released a study earlier this month in partnership with online gaming advocacy group iDEA Growth and Global Market Advisors touting the potential benefits of legal iGaming, projecting almost $600m in revenue in 2026 with little impact to land-based casino revenues.

An official fiscal analysis of Indiana House Bill 1337 reached a different conclusion, however, suggesting a net increase in state gaming tax revenues of just $9.7m to $19.9m by 2025, with more than 30 percent of interactive gaming revenue being supplanted from land-based casinos.

Incumbent casinos are not as aligned in Iowa, where online casino legislation was introduced in the state’s House of Representatives last week.

Although larger Iowa casino operators Penn National Gaming, Caesars Entertainment and Boyd Gaming have registered their support for House Bill 604, local operators such as Prairie Meadows and Elite Casino Resorts are opposed to the proposal.

“I don’t envision anything’s going to pass this year on this,” said Wes Ehrecke, president of the Iowa Gaming Association (IGA), the trade group representing the state’s casinos.

The IGA holds a neutral position on the pending legislation.

“I’ve got members that are supporting the concept and those that are opposed,” Ehrecke told VIXIO GamblingCompliance. “It’s going to take more dialogue and awareness and education to determine what changes, if anything, going into next year.”

Just like Indiana, Iowa legalized sports betting in 2019, but casinos in the Hawkeye State were also uneasy about online sports wagering, requiring in-person registration at a casino until January 2021, over concerns about cannibalization of land-based revenues.

“There is an option to go to a casino and certainly the investment that has been put into those places, I’m sensing that’s the difference for some that are hesitant about [iGaming], that’s it’s going to take away from their brick and mortar,” Ehrecke said. “Compared to sports wagering, there wasn’t anything to take away from there, you’re adding something to it, another amenity for people that want to do it.”

If not Indiana or Iowa, it is hard to see where internet gaming legislation might be passed this year.

Bills were introduced in the Illinois House and Senate last year, but operators of lucrative video gaming terminals (VGTs) in bars and taverns that generated more than $840m in tax revenue last year have been clear about their opposition.

Other states mentioned industry figures as potential online casino candidates include Colorado and Missouri.

But the former would require approval of a state-wide referendum, while the latter has yet to legalize sports betting and Missouri casinos are determined to do so via narrow legislation that does not address other gaming issues, including VGTs.

Additional reporting by James Kilsby.

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