A Breakdown of Online Gambling Revenue Across the US
Gambling in the United States has not been easy for the industry and gamers. While it has been relatively simple to acquire a license to run a casino, provided you have a solid financial background and meet separate state’s criteria, it definitely hasn’t been easy to be a gamer. And yet, the industry has been doing well. A recent overturn of a blanket federal ban known as PASPA has guaranteed that operators may find new ways to monetize U.S. citizens’ love for gambling.
Looking at the facts, the industry contributes as much as $137.5 billion to the U.S. economy, according to Statista. Not only that, but it gives employment to 730,000 people across all states. Las Vegas alone generates an impressive $12.88 billion in revenue. Beyond the land-based operators, the online gambling segment is also growing.
However, online gambling is regulated in the U.S. to the point where not many facilities can offer such products, and those that do require you to be physically present on the premises of a casino, bar the four states we will mention later on.
A Future for the Online Gambling Market in the US
Technavio analysts have said that the online gambling market in the U.S. will grow 51% in terms of CAGR between 2016 and 2020. This puts the value of the segment at around $4 billion by 2020 in the U.S. alone. Technavio used the data available about legal online casinos and sports betting as well as lottery across the country.
In their breakdown of the current trends, the analysis said that while Atlantic City and Las Vegas may be touted as international hotbeds for gambling and a world-known traveler’s destination, the U.S. as a whole is subject to some of the most stringent regulatory laws. The country’s laws are no less demanding than similar laws found in China, the United Kingdom, Australia, France, Italy, Germany, and Spain.
Technavio have made a list of factors that can facilitate the adoption of the segment and mentioned those that prevent the industry from growing. According to the intelligence firm, easing of government regulations and highlighting the benefits from taxing the segment and the profit thereof to the economy are instrumental to the timely adoption of online gambling.
Worldwide, revenue is expected to grow to $81.71 billion by 2022, up almost 50% from its 2016 levels at around $44.16 billion.
Revenue Grows Amid Casino Expansion
According to a Morgan Stanley report, online gambling will grow by $5.2 billion by 2020, but the original estimate was slashed down to $2.7 billion. Still, the financial company estimates that at least 20 states will have legalized online gambling by 2020. Presently, you’ll only find legal online poker sites in the U.S. in the following four states, including Pennsylvania, New Jersey, Delaware, and Nevada.
However, Morgan Stanley’s report may turn out to be true, if not as to the the exact sum, then at least about the states to adopt an online gambling bill by 2020. In 2018, several states saw their own online gambling bills discussed, even if some of those were put on hold until the end of the year or 2019. These states are Louisiana, Illinois, Michigan, West Virginia, New York, Massachusetts, and New Hampshire.
This brings the total number of states that have adopted or are in the process of adopting online gambling in some form to 9.
Breaking Down Revenue for Pennsylvania
As one of the most developed states for online gambling, Pennsylvania has an interesting breakdown of the total revenue that stems from the activity. Did you know that for every $1 in online gambling revenue, Pennsylvania needs to spend 42% on gaming taxes? But that’s hardly all. Here’s a detailed breakdown:
- 18.5% go on processing payments, Know Your Customer (KYC) practices and royalties.
- 10% is allocated to cover administrative costs, including salaries!
- 2.5% go to regulator who charge specific fees.
- 12% of the dollar go for advertisement!
- 10% is put towards player promotions and retention costs
And at the end, only 5% of every $1 of online gambling revenue in Pennsylvania is left for profit, as shown on the chart above published by OnlinePokerAmerica.com.
This is just one of the possible distributions of the proceedings. Different states have specific needs and they tailor their spending accordingly, although the profit margin remains fairly similar at 5% across all states where online gambling is legal, including New Jersey.
Best Years for Online Gambling
Looking at recent events, the repeal of PASPA can definitely be cited as one of the water-shed events. However, much of the good things that have happened to online gambling began back in 2017. New Jersey managed to notch up well over $200 million in total revenues by Oct 31, already eclipsing the $196.7 million that was generated throughout the whole of 2016, with 2 months left before the end of year. This alone was a clear sign that demand for online gambling was on the rise.
However, an even more significant achievement was the addition of Pennsylvania, which passed its comprehensive gambling expansion bill, involving online table games, online slots, and online poker. Poker has also been a conduit of online gambling, although the game is generally skill and not chance based. Pennsylvania is also driving forays in sports betting, benefitting in full by the relief in regulatory norm.
In 2018, we are expecting even more to change. While only four states have had online operators, now 5 more are considering it. The defeat of PASPA will certainly spell new opportunities. Sports betting, online gambling and poker lobbies are all trying to get their respective segment legalized in the shortest terms possible.
Online Gambling in the U.S. Continues to Grow
While revenue may have not reached colossal figures just yet, the rapid adoption of the industry will guarantee that enough opportunities will be created for the country’s gamers to experience a segment that is arguably more comfortable. As they are gradually introduced to it, online gambling will grow in terms of net value and the offshore industry will eventually peter out completely.