It’s been four years now since three US states chose to authorize and regulate gambling online. The initial results were incredibly underwhelming, but revenue has risen steadily in recent months, and regulators are pleased with the results. But while online gambling may be growing upwards, it is not growing outwards.
Expansion of the market was expected to come almost immediately as nearly a dozen states began investigating the matter of legalization. However, over the last two years, not a single US jurisdiction has made the move to follow in the footsteps of Delaware, Nevada and New Jersey.
Nevada was the first the launch a regulated form of iGaming in April of 2013, choosing to go ahead with online poker, but no other form of gambling online. Delaware came next, launching both internet poker and casino games in October, followed by a similar online poker/casino launch in New Jersey in November 2013.
At that time, industry experts were positive that the market was set to boom across multiple states; particularly those that already regulate land-based gambling of some type. But that boom stalled immediately, and has remained stagnant ever since.
Why the Excessive Delay in Expansion?
The majority of those who seemed intrigued by the idea chose to take a ‘watch and wait’ stance, and that fact is the main contributor to the industry’s delay in expansion. New Jersey Gov. Christie had grossly overestimated that iGaming would bring in $1 billion in the first year, and the state came nowhere close that that margin, instead harvesting just 12% of the projected revenue.
Now, many analysts are confident that at least one of two states – California and/or Pennsylvania – will legalize some form of gambling online by 2020. California legislators have been trying to push an online poker bill for years, and seem closer than ever to success (but that statement is made every year), while Pennsylvania is seriously moving in the direction of online poker and casino regulation to better compete with its neighbors in Delaware and New Jersey.
Evidence of Change in the iGaming Forecast
Gambling Compliance has predicted that at least 9 other states will begin considering legislation to authorize gambling online next year, and that New York and Mississippi will manage to pass legislation by 2020.
Supporting that theory is the steady rise in iGaming revenue experienced in Delaware and New Jersey over the current fiscal year. Nevada’s market may be doing just as well, but the state is not required to report revenue unless there are 3+ iGaming sites operating in the state, and there are currently just two (RealGaming and WSOP.com).
In Delaware, operators generated $1.4 million in the fiscal 2013-14 year (July-June), increasing to $1.8 million in 2014-15, and has already secured $500k so far beginning July 2015.
In New Jersey, the first fiscal year brought in $122 million. After 10 months of reporting in the current fiscal year, they’ve already matched that, conveying a 17.6% increase over the same period last year.
“The market was smaller than a lot of people predicted, but the market is growing pretty nicely now,” said Tom Ballance, President of Atlantic City’s top grossing live and online casino, The Borgata.
After three quarters of reporting, Borgata’s online casino has already generated $6 million. “In Atlantic City, $6 million in profit is not easy to come by,” said Ballance. “We’ll take that anytime.”
Being the most populated state to authorize gambling online, New Jersey is considered the bar-setter in the US – the one to watch, so to speak – and with PokerStars poised to launch there in the first half of 2016, the current and future growth could be a strong catalyst for the eventual expansion of gambling online throughout the nation.