It’s no secret that in the United States, the legalization of online casino gambling has lagged behind that of sports betting. All you need to do is look at the scoreboard: While 38 states have authorized some form of event wagering, just seven have done the same with internet slots and table games.
The industry and pro-iGaming lawmakers have put forward some of the same tried-and-true arguments that worked with sports betting, such as increased tax revenue and the fact that a lot of activity is already happening.
To that end, a recent Vixio report done on behalf of gaming supplier Light & Wonder Inc. estimated around $15 billion in annual tax revenue could be realized by legal iGaming if all 44 states with casinos or mobile sports betting took a Pennsylvania-like plunge into online gambling.
But those arguments haven’t yet gained the same sort of traction as the effort to legalize sports betting did.
Cannibal corps
Some of that may be the hangover and ongoing regulation following the authorization of sports wagering. Another reason may be because, outside of Nevada, mostly, the sports betting business started from scratch, whereas plenty of states already have brick-and-mortar casinos.
The concern over “cannibalization” of the casino business if iGaming is introduced has indeed proven helpful enough to hold back the legalizing forces. So the search for a silver bullet to iGaming legalization continues.
But if unregulated activity and tax revenue aren’t doing the trick, what could? Some recent developments suggest it could be the old political refrain of jobs and the economy, albeit perhaps spun in a different way. Whether it pays off in future legislative sessions is still to be determined, but lawmakers are at least well aware of the economic concerns they need to smooth over if they want iGaming to have a chance.
Job Guarantees, Not Economic Projections, May Be Key To Unlocking iGaming Legalization Stalemate In New York
— Daniel Wallach (@WALLACHLEGAL) August 13, 2024
My latest for @ForbesSports:https://t.co/tJJmS9SmZ9
Earlier this week, for example, one well-known gambling lawyer floated an idea that has already earned the endorsement of one pro-iGaming lawmaker: guarantee brick-and-mortar casino jobs.
Daniel Wallach's article in Forbes centered around the iGaming impasse in New York, where the Hotel and Gaming Trades Council (HTC) has labeled online casino gambling as bad for jobs, as it will steal business from physical gaming properties.
“Instead of trying to win the ‘battle of the experts’ or funding more economic studies, the focus should be on crafting a solution that will meaningfully address the concerns of the HTC and its membership,” Wallach wrote. “How do you do that? Easy. Guarantee the jobs.”
Make employment levels a condition of someone's iGaming license and they would have a very good reason not to cut any jobs. They may even add some, such as those needed for online table games with flesh-and-blood dealers.
In a statement later in the week, New York Sen. Joseph Addabbo Jr. threw his support behind Wallach’s approach.
“It is crucial to protect current brick and mortar casino jobs when entertaining the idea of introducing iGaming in New York,” Addabbo said. “I know that New York can be the model for other states, as we work towards groundbreaking, legal language to not only protect union casino jobs from any cannibalization, but also witness employment growth at those brick-and-mortar sites.”
It’s not just lawmakers in New York that are aware of the need to ensure existing jobs are protected by any iGaming legalization. In July, the report of the Study Commission on the Future of Gaming in Ohio was released, which included a letter from the three Republican House members on the committee outlining their thoughts.
Their thinking was that online lottery and casino gambling could be a "net benefit" to Ohio but that care would have to be taken to protect existing brick-and-mortar operators that employ thousands.
“While the state should proceed with caution and care with any expansion of this magnitude, with the right regulatory framework, these types of gaming can thrive with nominal impact to our current system,” the lawmakers wrote.
Canadian content
Further north, in the Canadian province of Ontario, the battle over iGaming was decided without much of a fight. A competitive iGaming market launched in Ontario in April 2022 and the provincial government has not looked back — it’s even taken to touting the employment and economic activity generated and maintained by online sports betting and casino gambling. (In Ontario, "iGaming" is defined as both, plus poker.)
A study done on the iGaming market by Deloitte found it sustained nearly 15,000 jobs in its second year, most of them "indirect" positions attributed to suppliers. Those jobs are not guaranteed by casino or iGaming operators, but are instead a byproduct of Ontario’s decision to embrace online gambling.
The Deloitte study also found the regulated iGaming market added $2.7 billion to Ontario's gross domestic product in its second year, up from $1.58 billion for the first 12 months.
“Our igaming sector is not only a job creator here in Ontario but it shows the world our ongoing commitment to building a sustainable and responsible igaming industry,” Attorney General Doug Downey said in June.
Still, Ontario’s findings could qualify as one of the “conflicting” economic studies Wallach warned about, even if it is studying something that’s already happened and is not forecasting the future.
Yet there are others who have pushed back against the cannibalization argument altogether. One prominent voice hails from New Jersey, which legalized iGaming back in 2013.
David Rebuck, the former director of New Jersey's Division of Gaming Enforcement, said in March that "hundreds" of jobs in the retail casino industry in New Jersey remain unfilled, despite the challenges faced by brick-and-mortar operators and the existence of a sizable iGaming market.
Rebuck is well-known and well-respected in the gambling industry and his comments could come as a comfort to states wrestling with the iGaming question.
“If you go with the New Jersey model, I don't see cannibalization,” Rebuck said during the NEXT Summit New York conference in Manhattan. “The data doesn't show it. And the job numbers are steady.”
