A fight is brewing that pits national casino companies against regional operators in the expansion of igaming across the U.S.
The battle lines have been redrawn as a newly formed group, the National Association Against iGaming, released a study this week that it claims uncovers “the significant economic and social dangers of igaming expansion.”
The NAAiG says that the study by the Innovation Group, a research and advisory firm specializing in gaming, hospitality, and tourism that has conducted multiple studies of online gambling for state governments and industry stakeholders, “debunks the common belief” that igaming boosts state revenue. It is urging businesses, policymakers, and community leaders to push back against its expansion. States have been reluctant to expand igaming out of concerns in part raised by the study.
The group said its specific findings show land-based casino revenue drops by 16% on average after igaming is introduced. That leads to substantial job losses, hundreds of millions of dollars in lost economic output, and reduced tax contributions that fund public services.
Projected U.S. gambling losses from igaming are expected to surpass $1 trillion by 2028, straining local economies and public-health resources, the study said.
NAAiG leaders include executives from the Cordish Companies, Red Rock Resorts, Monarch Casino & Resort, Churchill Downs Incorporated, Jack Entertainment, Accel Entertainment distributive gaming, and Foundation Gaming in Mississippi.
The organization’s leaders are urging other local businesses, employee unions, and local groups to mobilize in their effort to protect communities. The group is emphasizing that responsible, in-person gaming supports local economies while preventing the consequences of widespread online gambling.
“It reveals a stark reality: widespread job losses, billions in economic decline and increased social costs tied to problem gambling in several states,” the group said in a press release.
The report is expected to get pushback from other members of the gaming industry that have been pushing for the expansion of igaming.
Gene Johnson, executive vice president of Victor Strategies, a casino industry analyst and igaming advocate, said that while the industry is starting to see the effects of cannibalization, he’s skeptical of the findings of the report. He added that igaming’s producing billions of dollars in revenue in the larger markets of New Jersey, Pennsylvania, and Michigan is generating increased debate about the impact of cannibalization.
“The report was commissioned by a well-funded group whose purpose is to oppose igaming expansion. So consider the source,” Johnson said in an interview. “Innovation is a well-established consultancy, but they’re making a number of assumptions that it reduces land-based revenue, leads to job losses, and increases problem gambling. Many of these are unsupported by the analysis in the report.
“This type of research will be used to oppose igaming expansion,” Johnson said. “The most critical piece is job loss, which killed the debate in New York last year. It’s a complicated issue, and it’s not completely igaming that’s causing those losses because it’s happening in non-igaming states as well. Casinos operate more efficiently.”
Johnson said the opposition will be another obstacle for igaming expansion, since the report will be presented to lawmakers considering legislation to legalize it across the country. Cordish Companies as a gaming operator has long opposed igaming expansion and opposition overall is growing.
Some of the key findings in the study project nearly 5,000 job cuts in various states, including New York and Illinois by 2029 if they legalize igaming. The introduction of igaming reduces in-person casino employment with an estimated 2,818 jobs lost in Ohio, 2,642 in Louisiana, and 1,906 in Mississippi, the study said. All states analyzed would see massive GDP reductions, including Ohio ($602 million), Indiana ($428 million), Maryland ($372 million), and Colorado ($313 million).
States’ net tax gains from igaming are limited, even before accounting for the increased social costs associated with its high rates of problem gambling and related social ills, the study said. For instance, Louisiana, Maryland, and Mississippi could all see negative net tax revenue due to displaced in-person gaming dollars and related impacts on state and local economies.
Brick-and-mortar casinos in every state would face significant revenue losses due to igaming cannibalization. Projections reach up to $983.7 million in New York, $545.3 million in Illinois, $522.6 million in Ohio, and $342.6 million in Maryland by 2029.
The job losses caused by igaming would result in massive reductions each year in employee wages and related taxes for states. Annual labor income losses would reach nearly $110 million in Colorado and Maryland, $204 million in Ohio, nearly $300 million in Illinois, and nearly $450 million in New York, according to the Innovation Group.
States with igaming experience an 8.3% decline in distributed gaming revenue, impacting taverns and small gaming establishments.
Direct social costs to governments from problem gambling and social ills tied to online gambling could well exceed $100 million annually, plus additional downstream economic losses from a four to five times loss in productivity.
As for harm to individuals, the study said 81% of gambling addicts engage in online gaming, making addiction harder to control. Online gamblers are eight times more likely to report compulsive gambling. In areas with legalized igaming, household investments have declined by 14%. Underage gambling increases with online gambling, with 26.4% of adolescents that engage in igaming developing gambling disorders, according to the study.
“These statistics underscore the urgent need for action,” said Mark Stewart, executive vice president and general counsel of The Cordish Companies and NAAiG board member. The Cordish Companies developed numerous casinos in five states. “Igaming’s unchecked access to gambling on cell phones is bad public policy that threatens local jobs and businesses and will cost states. When increased social costs caused by igaming higher rates of underage and problem gambling are considered, the net tax revenue results are uniformly negative for every state.”
“Beyond the lack of any real upside for states, igaming puts vulnerable individuals at greater risk of problem gambling and financial instability,” said NAAiG board member Jason Gumer, executive vice president and general counsel at Monarch Casino & Resort, Inc. “NAAiG is uniting stakeholders to push back and stop the spread of these harmful trends and advocate for responsible gaming policies.”
“Igaming is eroding our communities,” added Shannon McCracken, senior director of government relations at Churchill Downs Incorporated and NAAIG board member. “This isn’t just about responsible gaming – it’s about protecting local family-sustaining jobs and preventing financial harm. In Maryland alone, igaming could cost $372 million in economic output, $342.6 million in lost casino revenue and nearly $110 million in annual wages. We must act now to protect our state and local economies nationwide.”
Victor Strategies’s Gene Johnson raised a lot of questions about the analysis in the report, saying igaming provides an omnichannel capability to the gaming industry and about every industry in the U.S. has adopted internet commerce. That helps when land-based visitation declines during harsh winters.
“To oppose igaming is really fighting the future, because people are increasingly online,” Johnson said. “People still come to the casinos. Early on in New Jersey, they were tapping into a new market by getting people who had never been to casinos to visit, because they’d become engaged through igaming. Is there cannibalization going on? Of course. Substitution behavior occurs in every industry. As long as land-based revenues have continued to grow, cannibalization has not been a problem.”
Johnson said the Innovation study is predicated on the revenue loss based on a comparison of igaming to non-igaming states. Some of the non-igaming states that over the five-year period experienced casino expansion include New York, Louisiana, Colorado and Indiana, he noted.
“If you’re expanding base and your igaming states are not, that artificially inflates the increase in land-based revenue,” Johnson said. “It’s not completely an apples-to-apples comparison. The five-year-period starts in 2019, which includes the pandemic years when igaming remained open in states, while casinos were shut down for three months.”
As for job losses, Johnson said land-based casinos have learned to operate more efficiently since the pandemic and that’s true for casinos in igaming and non-igaming states. Other igaming states, such as Connecticut, have been impacted by casino expansion in Massachusetts.
Johnson said not enough is spent on responsible gambling, but no difference is found on the problem between land-based and igaming.
“In almost every study, the incidence of problem gambling remains the same despite the channel,” Johnson said. “It’s more available online, but most research shows it doesn’t lead to a huge expansion of problem gambling.”
In an interview with CDC Gaming, Stewart said the National Association Against iGaming started in mid-2024, starting with a nucleus of in-person gaming operators that have become more concerned about the negative effects of igaming on the industry, communities, and small businesses they support. The group commissioned the study by the Innovation Group “to pierce through the gaudy revenue projections that folks looking to promote igaming like to throw around and actually drill down to the net impact for these states after you consider cannibalization and how that reverberates throughout the economy.”
Stewart said Cordish has consistently opposed igaming in every state where it operates, but engages in it in Pennsylvania where the law was enacted before the properties opened.
“The effects have been substantial and consistent with what you see from folks who have analyzed from a revenue and employee perspective,” Stewart said. “We opened after igaming launched, so we’re not part of the before and after story, but if you analyze the Pennsylvania Gaming Control Board data, you can see about 3,700 job losses for the casinos open in 2019 and in 2023.”
Johnson called it a “conundrum” that a company that participates in igaming is opposing it.
Stewart said they’re fighting the spread of igaming by educating the public policy makers and in turn promoting in-person gaming. They’re not focused on undoing igaming in states where it’s legal.
“We would welcome it, but that’s not our focus,” Stewart said. “Our focus is to oppose expansion.”
More studies are coming out on the subject and Harvard held a forum on gambling expansion, Stewart noted.
Online gambling is more intense and more significant than traditional forms, he said.
“As the states and policy makers hear about that and come to understand the net revenue impact is not going to be as great as they’re being told, we think it’s resonating,” Stewart said.
In the absence of igaming, Johnson said, “Nature abhors a vacuum.” In states without igaming are increasing incidences of new verticals, such as sweepstakes, providing real-money gambling that aren’t regulated and taxed.
“To ban igaming is a mistake, like banning alcohol was a mistake during Prohibition,” Johnson said. “It needs to be regulated, taxed, and controlled, but it’s the future and to ignore it is counterproductive.”
As for the critics, Stewart said the Innovation Group is highly respected and used by the industry and state governments to provide analysis.
“People would be very hard pressed to paint the Innovation Group as anti-gaming,” Stewart said. “It’s a fair study and it exposes things like the cannibalization rate of 16%. Neutral third parties like Deutsche Bank have said it’s so obvious that there’s cannibalization that they stopped engaging in the debate. I’m sure critics will point to holes in it, but we believe in it. The data speaks for itself and it’s very strong. You can’t look at the top-line revenue projections of the pro-igaming crowd that wants to profit off it. You have to deduct from that cannibalization and all of the losses that non-gaming taxes that states will experience as businesses throughout the economy suffer from the cannibalization, people lose their jobs, and states lose payroll tax benefits off of hundreds of millions of dollars of lost labor income. You also have to look at the increased social cost and only after you consider all of those dynamics that you see the net impact of igaming. We contend that the juice isn’t worth the squeeze.”
