Four US States That May Legalize iGaming in the Near Future

In the American gaming industry, iGaming stands in the shadow of sports betting.

iGaming panel
iGaming panel
From left, John Pappas, iDEA Growth state advocacy director, Samuel Gerrity, Saratoga Casino Hotel CEO, Howard Glaser, global head of government affairs for Light & Wonder, and New York state Sen. Joe Addabbo discuss the future of iGaming at the Racing and Gaming Conference last week in Saratoga Springs, NY. (Image: iDEA Growth/Twitter)

Sports betting is legal in nearly three-quarters of the states, and within a few months, online sports betting will be allowed in more than half of the states. Online casinos are only in six states.

Sports betting is ubiquitous, even in states that have yet to legalize it. Ads for sportsbooks are prevalent online and over the air. Stadiums and arenas devote signage, and sports broadcasting crews now bring up odds in their event coverage – a taboo topic not long ago.

Online casino gaming doesn’t generate the same buzz, but what it does generate is money. A lot of it.

According to data from Spectrum Gaming Group, iGaming operators in New Jersey reported gross gaming revenues of $1.49 billion in the 12-month period ending in April. In Pennsylvania, operators there made $1.2 billion, while Michigan’s online casinos earned $1.18 billion.

Besides those three states, iGaming is also allowed in Connecticut, Delaware, and West Virginia.

Why Hasn’t iGaming Caught on in the US?

Online casino gaming has been legal for nearly a decade in the US, but as a panel at last week’s Racing and Gaming Conference at Saratoga in New York noted, there are a variety of reasons why iGaming has not caught on as sports betting has in recent years.

Here are just a few that were brought up at the conference: First, there’s no unanimity among gaming companies on online casinos. That includes tribal operators. Second, legislatures in several states are weary of dealing with expanded gaming topics, and third, most states aren’t in dire fiscal straits right now.

“A great driver of gaming adoption in the US, not shockingly, has been needed for revenue among states,” Howard Glaser, Light & Wonder’s global head of government affairs and legislative council, said at the conference. “States in the US received $393 billion in direct funding from the federal government through the federal stimulus over the last two years. Even states that spend quickly – and we’re in one of those – take a while to get through $400 billion of money.”

Still, Glaser said he believes as many as a dozen states may consider legalizing iGaming within the next three to four years, and of those, as many as six or seven may actually approve legislation during that timeframe.

John Pappas, state advocacy director for the pro-iGaming iDevelopment and Economic Association, said that people can’t look at how sports betting has grown in recent years and apply that to legalizing online casino applications. It can take years to educate lawmakers about iGaming.

“To see how sports betting just went from zero to 36 in so quick that is that is an anomaly,” Pappas said. “That’s not how gaming expansion happens traditionally. So, when we think about iGaming expansion, we really can’t say, ‘What do we think is going to happen next year?’ You got to really look at it from a two-to-five year window.”

So, what states might have iGaming on their radar screens? Here’s a look at four that may pursue online casinos in the near future.

‘Appetite’ in Indiana

If there’s a favorite for the next state to approve iGaming, it’s likely Indiana. The state doesn’t have a fiscal crisis brewing since lawmakers wrapped up a special session earlier this month that included refund checks to taxpayers as a result of the budget surplus the state reported. However, it does have an influential lawmaker who is willing to bring up the bill.

The state legislature approved sports betting as part of an expanded gaming package three years ago, and a leading sponsor of that bill – state Sen. Jon Ford (R-Terre Haute) – has said he plans to file an iGaming bill in the General Assembly next year. A similar bill in this year’s session did not get a vote.

Much like the 2019 bill, which also authorized two new land-based casinos, a bill that legalizes online casino gaming may include other gaming items.

I think there’s an appetite, and I think with iLottery, there’ll be a discussion again to continue to modernize gaming,” Ford told Casino.org earlier this summer at the Queen of Terre Haute groundbreaking. “That’s what we’ve got to focus on, and that even includes pari-mutuel offerings.”

One potential roadblock to iGaming in Indiana may be a push by some to legalize video gaming terminals (VGT). Ford does not think there’s much support, but there is a group lobbying for support of a bill to allow the machines in some establishments.

Lawmaker Sees ‘Potential’ in New York

Two years ago, New York lawmakers approved online sports betting. Earlier this year, the legislature approved a budget that kickstarts the downstate casino bidding process. Could New York make it three years in a row with major gaming legislation? State Sen. Joe Addabbo (D-Queens) certainly thinks so.

Like Ford in Indiana, Addabbo proposed legalizing iGaming this year, but the chairman of the Senate Racing, Gaming, and Wagering Committee said there was not enough time to get that passed along with the downstate casinos. Still, filing the bill led to the opportunity to get input from stakeholders, which should help influence the next version of the bill Addabbo will bring forward.

What may help push iGaming over the top in New York? The state will likely need to find new revenue streams. Earlier this month, state officials revised the five-year budget outlook. They cited the recent economic downward trends to reduce the amount of personal income tax that flows into state coffers. That forecast includes multi-billion dollar shortfalls within a couple of years.

An iGaming bill wouldn’t cover all of that, but it would certainly help raise revenue. Already, mobile sports betting is exceeding expectations as the state is currently projected to generate more than $550 million in sports betting tax revenue this fiscal year. And that figure may rise as football season gets ready to kick off.

We have the potential to blow the numbers from mobile sports betting out of the water,” the senator said at the conference.

One key issue that will need to be resolved is what entities will be able to participate in iGaming. Racinos that offer video gaming terminals will want to participate in iGaming, and there will likely be interest from the state’s tribal gaming nations as well.

Illinois a Likely Candidate

Much like Indiana and New York, Illinois has passed its fair share of expanded gaming legislation in recent years. But whatever gaming fatigue there may be in the Land of Lincoln could get overshadowed by the need for more money.

According to the Pew Charitable Trusts, the state’s rainy-day fund has $4.1 million in it, which is not even enough for one day of covering state services. In addition, Pew also noted that Illinois has the second-worst unfunded state worker retirement liability in the country, to the tune of $145 billion.

The Illinois Gaming Board is still working its way through a number of casino licenses that were established through the 2019 expanded gaming bill, so an iGaming bill in Illinois may be a little further down the line than in Indiana or New York.

Maryland May Join Neighboring States

Since it shares borders with four iGaming states – Delaware, New Jersey, Pennsylvania, and West Virginia – Maryland seems to be a logical candidate to consider allowing online casinos. In addition, according to the Pew report, the state’s rainy day fund only has $631 million in its coffers.

That covers less than two weeks of state government obligations. Nationally, the median average for the states’ rainy day funds would cover 34 days, or more than a month.

However, state gaming regulators are still working through the licensing process to get online sportsbooks up and running in the state. That backlog could curtail efforts to pass iGaming.

The post Four US States That May Legalize iGaming in the Near Future appeared first on Casino.org.

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