Beyond the Cannibalization Narrative: An Empirical Analysis of iGaming's Effect on Land-Based Casinos
- 4 days ago
- 2 min read
Executive Summary:
This report examines the impact of the authorization and legalization of iGaming on
casino gaming. We measure this by analyzing state-level regulatory structures, overall
market trends, and revenue. Furthermore, when examining revenue, we will specifically
focus on gross gaming revenue (GGR), an industry metric used to measure overall
gaming revenue (total amount of money players wager minus the amounts paid out to
them as winnings).
In the seven states that have authorized iGaming and casino gaming (Connecticut,
Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia), referred to as dyad-markets, we examine the GGR growth rates for casinos before and after the introduction of iGaming.
Average calculations exclude outlier revenue and growth rate figures, identified through
a standardized formula. Additionally, Rhode Island has been omitted from this report, as
the state only has one full year of authorized iGaming operations.
Key Takeaways
Overall, iGaming is a net positive for casino GGR: Five out of six states examined in this report reversed their negative casino GGR growth rate after the legalization of
iGaming, with an average rate of 1.4%. The New Jersey casino market experienced
the largest post-iGaming turnaround, with an average increase of 5.82% in casino GGR growth after steady year-over-year (YoY) declines. The state continues to hold
the top spot for iGaming revenue and the second-largest casino market in the U.S.
Pennsylvania was the only state that experienced a decline in its casino GGR growth
rate after iGaming’s introduction, with an average change of -3.96%.
Regulatory structures provide incentives: Every state in this report requires an
iGaming license to be tethered to an active casino license. As a result, casino
operators have the opportunity to benefit from the expansion of iGaming either
through partnerships with online operators or by launching their own platform.
Low customer cannibalization risk: Casinos and iGaming attract different customer
demographics, limiting cannibalization risk. On average, casino gamblers are 53 years
old, spend $10 per month on gambling, and predominantly identify as women.
iGaming gamblers have an average age of 35, mainly identify as men, and spend an
average of $20 a month on gambling. Gamblers who engage in both are, on average,
38 years old, identify as men, and have an average monthly spend of $50.
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