Internet casino expansion is limited despite thriving in six states

In a decade of operation in New Jersey, internet casino gambling yielded nearly $7 billion for casinos and affiliates. The fund has contributed over a billion dollars in tax revenue to the state and supported Atlantic City’s casinos during the COVID-19 shutdown. Even so, the broader adoption of online gambling across America remains limited.

Only six states currently provide internet casino gambling aside from New Jersey. Among them are Connecticut, Delaware, Pennsylvania, Michigan and West Virginia. Nevada focuses on Internet poker, excluding online casino games. Rhode Island passed an online casino bill set to take effect in March 2024.

Casino operators, online gambling firms, analysts and elected officials cite various reasons for the limited expansion. These include concerns, deemed unfounded by analysts, that online gambling may divert players from physical casinos. Additionally, a predominant focus on approving online sports betting, which constitutes nearly 90 percent of the activity in two-thirds of the states, takes precedence.

Anticipating future expansion

Supporters anticipate a swift expansion of online casino gambling in more states. The conclusion of the federal pandemic stimulus funding has reignited states’ quest for fresh tax revenue. Howard Glaser, from internet gambling technology company Light & Wonder, asserts that internet gambling, exemplified by New Jersey’s success, is the most lucrative gaming launch in history. Glaser predicts dozens of states will embrace it soon.

Additionally, Chris Krafcik, managing director at Eilers & Krejcik gambling analytics firm, suggests that some states hesitate to embrace internet casinos. iGaming is perceived as a higher-stakes form of gambling compared to online sports betting. The competition from online giants like DraftKings and FanDuel, which dominate almost half of the U.S. online casino market, further hinders widespread adoption.

Krafcik anticipates that “only a very small number of states” will legalize online casinos by the end of 2027. Indiana, potentially among those states, saw an online casino bill falter in February, primarily due to concerns about its impact on existing physical casinos. A Legislative Services Agency report warned of potential annual tax revenue losses ranging from $134 million to $268 million.

New Jersey takes the lead in legal internet gambling, topping the nation in both taxes paid to governments and earnings for gambling companies. The American Gaming Association reports that states offering internet gambling collectively amassed $16.3 billion in revenue.