The ongoing debate over the potential growth of iGaming in the US has intensified as major casino corporations lose ground.
A new anti-online gaming group, the National Association Against iGaming (NAAiG), recently released a study arguing that iGaming has a severe impact on the economy and society as a whole.
It also challenges the widely accepted notion that online gambling generates significant state revenue.
The study, conducted by research and advisory firm The Innovation Group on behalf of the NAAiG, asserts that the introduction of iGaming results in a decline of approximately 16% in retail casino revenue.
This decrease, according to the report, has a cascading effect on job losses, economic downturns, and diminished tax contributions that support public services.
One of the most alarming projections is that total gambling losses due to iGaming will exceed $1tn by 2028, placing additional strain on local economies and public health resources.
This concern is central to NAAiG’s advocacy against the expansion of iGaming, as it seeks to rally businesses, policymakers, and community leaders to oppose online gambling initiatives.
Among the key figures leading NAAiG are high-ranking executives at several large casino operators, including Churchill Downs, Cordish Companies, Red Rock Resorts, and others.
These organisations emphasise the importance of brick-and-mortar casinos, which they argue foster local economic growth and prevent the social harms associated with online gambling.
The NAAiG is headquartered in New Jersey, whose casinos in Atlantic City have seen declines in revenue amid a rise in iGaming interest.
Claim: iGaming causes more economic issues
The study’s specific projections, which the Innovation Group admits may be “forward-thinking,” regarding job losses and economic downturns are significant.
If iGaming is legalised in states such as New York and Illinois, according to the report, nearly 5,000 jobs could be eliminated by 2029.
The report further estimates that Ohio would lose 2,818 jobs, Louisiana 2,642 jobs, and Mississippi 1,906 jobs.
The economic output of these states would be substantially affected, with Ohio experiencing a loss of $602m, Indiana $428m, Maryland $372m, and Colorado $313m.
Additionally, the study suggests that states would not see the net tax revenue benefits often associated with iGaming.
Louisiana, Maryland, and Mississippi, for instance, might experience a drop in tax revenue due to the displacement of in-person gambling dollars, leading to broader economic repercussions.
One of the more controversial aspects of the report is the assertion that iGaming cannibalises traditional casino revenue.
The projected financial losses for retail casinos include nearly $984m in New York, $545m in Illinois, $523m in Ohio, and $343m in Maryland by 2029.
These losses translate into substantial reductions in annual wages and employment taxes, with New York’s labour income projected to decline by $450m, Illinois by nearly $300m, Ohio by $204m, and Maryland and Colorado by roughly $110m each.
The study also highlights the impact on distributed gaming revenue, noting an 8.3% decline in areas with legalised iGaming. This decline affects taverns and small gaming businesses, which rely on traditional in-person gambling.
Claim: iGaming causes more social issues
Beyond economic concerns, the report raises alarms about the social costs of online gambling. It estimates that direct government expenses related to problem gambling and associated social issues could exceed $100m annually.
The broader economic impact, including reduced productivity and financial distress among gamblers, could be four to five times that amount, it suggests.
The study also presents troubling data on gambling addiction, stating that 81% of gambling addicts participate in online gambling. Moreover, it suggests online gamblers are much more likely to develop compulsive gambling habits than those who gamble in person.
The report links online gambling to an alleged 14% decline in household investments and highlights that youth gambling increases significantly when iGaming is legalised, with 26.4% of adolescent participants reportedly developing gambling disorders.
Executives within NAAiG emphasise that widespread access to online gambling presents a significant policy concern.
Mark Stewart, executive vice president of The Cordish Companies and a board member of NAAiG, argues that unrestricted access to iGaming on mobile devices poses a substantial risk to local economies, jobs, and state revenues.
Jason Gumer, executive VP at Monarch Casino & Resort, reinforces this perspective, stating that beyond economic losses, iGaming places vulnerable individuals at heightened risk of addiction and financial instability.
Similarly, Churchill Downs senior director of government relations Shannon McCracken warns that states must act to mitigate the economic harm caused by iGaming expansion.
Industry pushes back
Despite NAAiG’s claims, the report faces scrutiny from pro-iGaming advocates, who argue that its findings lack full analytical support.
Gene Johnson, executive VP at Victor Strategies and a prominent casino industry analyst, points out that while there is some cannibalisation, the study does not account for various factors influencing the gaming market.
Johnson argues that iGaming serves as an essential part of an omni-channel strategy, particularly in an era where industries are increasingly moving online.
He notes that in states like New Jersey, Pennsylvania, and Michigan, iGaming has generated billions of dollars in revenue without significantly harming traditional casino operations.
Furthermore, he argues that during adverse weather conditions, online gaming can sustain industry revenues when land-based visitation declines.
Johnson also challenges the study’s methodology, arguing that comparing revenue trends in states with iGaming to those without, while accounting for other variables, such as casino expansion in non-iGaming states, creates an incomplete picture.
He highlights that states such as New York, Louisiana, Colorado, and Indiana have seen casino growth over the past five years, skewing the revenue comparisons.
As for the job loss concerns, Johnson contends that land-based casinos have become more efficient since the COVID-19 pandemic, regardless of whether they operate in iGaming states.
He also disputes the claim that iGaming increases problem gambling, stating that research does not show significant differences in gambling addiction rates between online and in-person platforms.