How Covid-19 will hasten igaming’s US proliferation

Measuring the depths of the economic toll caused by Covid-19 will take months, if not years, but one thing is already clear – the US casino industry was in no way prepared for a pandemic.

Under increasing concerns for patron safety and mandates from health officials, most casinos across the nation shut their doors mid-March. Since then, only a handful have been authorized to begin allowing patrons back indoors under measures which limit capacity. Others toil with state and local officials to begin the process of safely reopening.

Time will tell what the recovery period looks like but, for the foreseeable future, the brick-and-mortar casino industry can expect to operate at low capacity and under the greatest health department scrutiny imaginable. In most states, operating at low capacity and hoping for the best is the only way forward. But can a casino maintain profitability while catering to a fraction of its designed capacity?

Brick-and-mortar casinos cannot possibly keep up given these new Covid-19 era limitations. Nor can states that rely on gambling revenues to fund essential services. Gambling tax dollars are used for education, infrastructure and senior care in various states.

These are not optional ‘nice to have’ services, these are basic needs. Without gaming revenue, some states will have to slash budgets or find another source of income. Even so, don’t expect many legislators to have the courage to increase taxes in an election year.

Filling the gap in state coffers

Nearly every state in the country is looking at billion-dollar budget shortfalls, and igaming presents an opportunity to bolster revenues, provide an alternative to large public gatherings at casinos and protect jobs in the gaming industry.

Gaming-friendly states like New Jersey and Pennsylvania are already reaping the rewards of igaming. March, April and May revenue numbers show they are being handsomely rewarded for their foresight.

West Virginia just launched and Michigan will be up and running with igaming soon. The rest of the country may have been relatively slow to embrace igaming, but I expect that the growing popularity of regulated online sports betting combined with the need to respond to the Covid-19 crisis in a productive way will lead to as many as a dozen additional states to authorize and regulate igaming in the next two to three years.

This is dramatically more than I expected at the beginning of the year. Opinions among casino operators are sure to differ and concerns that igaming will cannibalize existing brick-and-mortar revenues may dampen the enthusiasm for a swift adoption of online gaming options.

However, evidence from early-adopter states shows that igaming and online sports betting provide a bump to all sectors of the gaming industry. They very well could be the tool to keep casino gaming popular in the face of demographic shifts.

The other unknown will be whether tribes embrace online gaming. Tribes have a lot to gain from expanding their offerings beyond tribal lands, but they also face a very uncertain landscape in terms of federal and state laws that simply don’t adequately address the issue of online gaming.

Michigan, which authorized tribes to offer igaming recently, will serve as something of a test case. If successful, tribes across the country, including in coveted markets like Illinois, New York, Florida and California, should take notice.

States facing the aftermath of the Covid- 19 shutdown have tremendous challenges ahead of them. Without minimizing the importance of all the work ahead, igaming will likely be one of the more practical and useful policy choices for states looking for revenue enhancements in the coming years.

Charles Gillespie, CEO for Gambling.com Group

[Bio] Charles Gillespie founded affiliate firm Gambling.com Group in 2005. The group publishes information portals that offer comparisons and reviews of regulated online gambling websites around the world. Featured brands include Gambling.com, Bookies.com, Bookmakers.co.uk, SlotSource and the American Gambling Awards.