Plenty of parallels exist between online casinos and sports betting in US states. It took a while for the first few dominos to drop in sports betting, but eventually, the momentum became undeniable.
That same wave of momentum could hit the shore for online casinos throughout the rest of this decade, starting as soon as 2025. And as hope remains high that New York online casinos could be on the front end of that wave, many stones still need overturning to make it happen.
The National Council of Legislators from Gaming States (NCLGS) sought to address many of these issues, especially the potential of iGaming to cannibalize land-based casino revenue, at its summer meeting in Pittsburgh in July. The overwhelming message on cannibalization was clear: It does not affect retail casinos.
As the top online sports betting market and one with commercial and tribal casinos, New York lawmakers may have concerns about cannibalization when visiting future legislation. Hopefully, they paid attention to what the council had to say.
Cannibalization among primary iGaming policies
The NCLGS consists of state lawmakers focused on the best ways to regulate the industry. Rather than promote or oppose gaming, it takes a proactive approach to educating lawmakers on gaming issues by offering information, informative panels, and balanced presentations.
The NCLGS iGaming Committee discussed several primary focus areas for its legislative framework. These areas included:
- Advertising restrictions
- Age limits
- Brick-and-mortar cannibalization and involvement
- Data sharing and collaboration with universities
- Licensing
- Responsible gambling
- Revenue generation and expectations
- Tax rates
Many of these topics – like age limits, data sharing, and responsible gaming – offer standardized solutions already in effect elsewhere, such as sports betting and retail casinos.
Others, like taxes and cannibalization, are less clear-cut. Three expert panels at the NCLGS conference discussed having iGaming tax rates between 15% and 25% but did not agree on a uniform suggestion.
Cannibalization brings legitimate concerns for many states with strong retail casino industries, but three states offered experiences that spoke as to why it’s a nonissue.
Three regulators rebut narrative, speak from experience
A panel of three state legislators voiced rebuttals based on facts and experience:
- David Rebuck, former director of the New Jersey Division of Gaming Enforcement
- Helene Keeley, director at the Delaware Lottery
- Lee Copello, iGaming compliance manager at the Pennsylvania Gaming Control Board
Delaware legalized iGaming in 2012 and New Jersey the following year. Both launched online casinos in November 2013. Pennsylvania legalized it in 2017 and opened its first online casinos in 2019.
All three said cannibalization had not occurred in their collective 25 years with online casinos. That topic has been the biggest hurdle for New York, where the New York Hotel and Gaming Trades Council has called legalizing online casinos “a job killer.”
“IGaming has been around for five years now in Pennsylvania. I think you have some crossover players, but you have two unique players,” Copello said of the younger, internet-oriented clientele and those who prefer to visit land-based casinos for various reasons, including entertainment. Differentiating the two profiles creates different experiences for each, rather than competing for one profile at the expense of the other.
In March, Rebuck told PlayUSA about cannibalization concerns raised in Maryland.
“When you hear the fearmongering of cannibalization and loss of jobs from internet gaming, I have 12 years of data in New Jersey showing it isn’t true. Online gaming doesn’t cannibalize brick-and-mortar casinos and it doesn’t hurt casino jobs.”
Just seven states offer online casinos. Those states have generated around $23 billion in revenue and have paid more than $5.7 billion in state taxes.
Model legislation coming in December
The NCLGS planned to release its official iGaming model legislation at its summer conference in Pittsburgh, but discussions resulted in the council needing more time to finalize its recommendations. Now, it’s looking to finalize and ratify model legislation at its winter conference in New Orleans in December.
“We got so much input, we just couldn’t get everything done,” NCLGS founder Steve Geller told PlayUSA. “Then the decision was made that we were going to spend hours at this meeting on iGaming, so we could take that input and get the first draft out in the next two to three weeks.”
A 30-day comment period will follow the submission of the first draft. After that, a panel of experts will adopt a bill to recommend to the NCLGS iGaming Committee of state legislators. The NCLGS iGaming Committee will then hold a public meeting in New Orleans to discuss and pass the legislation.
Once passed, NCLGS will recommend it to all legislators who want to introduce iGaming legislation in 2025. However, it won’t officially finalize the model legislation until its summer meeting in 2025.
Geller said he hopes prospective states use the model as a framework to fit into their individual needs rather than as a hard-and-fast blueprint.
