EKG Study Concludes That iGaming Does Not Cannibalize Land-based Revenue

Eilers and Krejcik Gaming (EKG) is a research and consulting firm. It delivers consistent and reliable research for the gaming industry. A recent study examined land-based and online casino growth rates across the six U.S. states where online gaming is legal.

The EKG study was commissioned by the iDevelopment and Economic Association (iDEA). It analyzed data from state governments, regulators, and casinos over 16 years. iDEA commissioned the study because it believed previous studies were ‘flawed.’

An analysis of compound quarterly growth rate (CQGR)

In the U.S., iGaming is now available in Michigan, New Jersey, Pennsylvania, Connecticut, West Virginia, and Delaware. The EKG study analyzed compound quarterly growth rates in the six states. It was found that land-based casinos reported a 2.44% quarterly revenue increase after the legalization of online casinos.

Michigan, New Jersey, and Delaware land-based casinos experienced a 4.89%, 1.28%, and 1.94% CAGR respectively after the legalization of online casinos.

The most positive change came in West Virginia. The CQGR before the legalization of online casinos was -3.0%, and afterward, it was 3.02%.

In Connecticut, there was a year-on-year decline in the land-based casino market. After the launch of online casinos, it saw a 0.14% rise in land-based CQGR.

Pennsylvania saw a 0.14% rise in land-based GGR after legalizing online gaming.

Survey of casino operators

As part of its research, EKG surveyed casino operators. The response of land-based casino operators was unanimous. They didn’t notice any cannibalization effects. Most of the respondents said that their revenue had remained the same. Others said it had increased slightly following the regulation of iGaming.

Different player bases

Fear of revenue cannibalization impacts the passing of iGaming legislation in some states. This is especially the case where existing land-based interests form a strong lobbying force. From this study, it seems that fears of cannibalization are unfounded.

The report argued that the reason for a lack of cannibalization was that the consumer base at online casinos was different from that at land-based casinos. The consumer base at online casinos appears to be predominantly made up of young males. Online betting in other countries has a similar consumer base.

Online casinos also offer players a different experience from their land-based counterparts. The time investment differs, as online sessions may be measured in minutes, whereas a land-based casino visit can take hours. Online stake levels are broader than at land-based casinos.

Flattening the decline in mature land-based casino markets

Managing director of EKG, Matt Kaufman, said that most states with mature casino markets have seen a decline in land-based casino revenue. Introducing online casinos is flattening the decline in some states. There has even been growth compared with states that only have land-based casinos.

When looking at the casino industry’s size, the total revenue of casinos in the U.S. is increasing yearly. Recently, Rhode Island became the seventh state to legalize iGaming. Maryland and New York have tabled bills that their respective legislatures will consider.