US iGaming Market Missing Millions in Revenue
For more than a decade, gaming companies and analysts have been estimating the potential size and scope of a United States internet gaming market. The latest figures, however, are far more than speculation and estimates. These are projections based on data from states that already offer internet gaming in various forms.
VIXIO GamblingCompliance generated its report at the beginning of August for Light & Wonder, a gaming content creator for land-based casinos, online casinos, and mobile casino gaming platforms. VIXIO provides data and regulatory information to the global gaming industry.
The numbers contained in its “U.S. iGaming State Tax Revenue Potential” report were notable.
-The US commercial gaming industry was worth $53.03B in 2021, based on gross revenue.
-The US online gaming market alone could be worth $30.37B if 42 states with gambling expanded online.
-A US igaming market in 42 states could generate $6.35B in annual tax revenue.
-US igaming in six states in 2021 generated $970M in direct gaming tax revenue.
The way that VIXIO estimated the tax potential of a maximized United States market is to look at the states that currently offer internet gaming…at least as of 2021. They used the revenue generated by New Jersey, Delaware, Michigan, Pennsylvania, Connecticut, and West Virginia, all of which offer online casino games, which generate substantial revenue.
Nevada does offer online poker but not casino games. In addition, there is only one operator in Nevada, and that operator does not publicize its revenue. Therefore, VIXIO did not try to include its information.
In 2021, the six states mentioned above generated tax revenue of $970M in 2021.
In comparison, the 30 states that offered sports betting in various forms only generated $560M in 2021.
By using the revenue and generated taxes in the six igaming states, VIXIO was able to project the potential tax revenue in 42 states, if they cumulatively legalized online casinos and table games. They chose those 42 states because they already have some form of gambling, whether commercial or tribal land-based casinos or some form of live or mobile sports betting. If they all launched online casino sites, they would cumulatively generate $6.35B (that’s billion) in tax revenue in one year.
Few States Debating iGaming
The potential revenue should sound appealing, especially in a time of economic uncertainty. States are consistently trying to shuffle budgetary priorities to ensure that they can fund the most urgent programs, while trying to find funding for others.
Therefore, it is somewhat curious that only a handful of states actually examined bills to legalize internet gambling in 2022. Most of them failed to make any headway toward a full legislative debate or passage into law.
All of the above states are favorites to see another round of legislative possibilities in 2023. There are others who are likely to legalize sports betting next year, but most of them will ignore the opportunity to attached online poker and/or online casinos to the bill.
Where is Online Poker?
At one time, online poker was the fastest growing online game in the world. Millions of people gathered on various poker sites to play…until some governments began to crack down on the global online poker operators. And when the United States did it – partially in 2006 and fully in 2011 – it caused the industry to shrink significantly.
Online poker has never been the same.
Since the United States has chosen not to recognize poker as a game of skill and legalize online poker at a nationwide level, states must do it for themselves. Nevada, New Jersey, and Delaware were fairly quick to launch state-regulated online poker after Black Friday, and Pennsylvania followed years later. Michigan was next to launch poker sites. And while Connecticut and West Virginia also legalized state-licensed poker online, no operators have launched there yet.
The only way to make online poker a hugely profitable venture is to ensure that all operators can link their sites across state lines. This will create large player pools and prize pools once again. Until enough states legalize and then link, online poker will not be a significant part of the decision-making of most state lawmakers.
State revenue derived from igaming is mostly from online casino games, like slots and table games. Poker is considered a separate vertical. And the revenue generated from online poker is miniscule as compared to that from other forms of igaming.
The only hope for online poker players in America at this point is the inclusion of poker in the growing igaming market.