Will More U.S. States Legalize Online Gambling This Year?

The legalization of online gambling across the U.S. will bring tax revenue which may prove to be vital, considering the economic impact of the pandemic in 2020. Considering the significant number of gambling retails in Nevada, the state may not engage in expanding of iGaming beyond online poker.

The iGaming Expansion in the U.S.

The U.S. iGaming market has been slowly growing since 2013 when Nevada became the first state to legalize online poker. However, since then, the Silver State has not yet expanded iGaming any further. With that in mind, the U.S. iGaming market kept growing at a slow pace and by now, besides Nevada, the activity was legalized in Pennsylvania, New Jersey, West Virginia, and Delaware.

In 2020, many industries including the gambling industry faced unprecedented challenges brought by the global COVID-19 pandemic. The pandemic brought closures, furloughs, and significantly reduced revenues which impacted the economic status of many businesses and states.

Although 2020 was a difficult period for retail casino operations, an increase was observed in online gambling activities, where those are permitted. One example is Churchill Downs Incorporated’s (CDI) Q3, 2020 results, which marked a nearly triple increase in online betting activities on its platform Twinspires. Furthermore, the company’s net revenue increased from $306.3 million in Q3 2019 to $337.8 million in Q3 2020.

Another example comes from New Jersey, where, in November, the sports betting handle hit a record of $900 million. Numbers revealed by the NJ Division of Gaming Enforcement in December outlined that the state’s sports betting industry kept growing rapidly and marked all-time high records for most money spent in four consecutive months.

If we draw the line, it is inevitable for more states to legalize and launch sports betting and online gambling activities. Now, considering the economic impact of the pandemic, undoubtedly each state’s legislature may find such opportunities appealing, given that the taxation of iGaming would bring fresh gambling tax revenue.

The Convenience of iGaming

According to industry insiders, the iGaming market in the U.S. will continue to expand gradually. This year, more states are going to take the steps to legalize online gaming and sports betting. By 2025, as many as 25 or more states may have legalized and launched the activity.

While fresh tax remains one of the reasons why more states would be looking to legalize iGaming, another reason is that retail gambling is not that widely spread in the U.S. Although there are plenty of tribal and commercial casinos, in order to visit, some residents may need to travel hundreds of miles or even go to a neighboring state.

Will Nevada Expand iGaming Anytime Soon?

Focusing on Nevada, it may be some time until the state expands iGaming. Why is that? Mainly because, in Nevada, retail gambling brings most of the profit. In Las Vegas alone, there is a significant number of integrated resorts that combine gambling with entertainment, dining, and conventions. This represents the perfect collaboration between gambling and other hotel and leisure industries resulting in high profits.

However, if Nevada initiates and expands iGaming, many of the operators fear that their revenues would be impacted by the change. Big industry players fear such an impact the same way that small businesses such as gaming bars do.

Speaking for the Las Vegas Review-Journal, the assistant professor at Washington State University’s School of Hospitality Business Management, Kahlil Philander, shares a similar opinion. According to him, local businesses in Nevada are a “convenience-gaming locations throughout neighborhoods”. The ease of access to those locations is beneficial for them. However, if the state initiates the launch of online gaming, “the main advantage these companies” would disappear, added Mr. Philander.