How Online Gambling Really Impacts Land-Based Casino Revenues
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The Impact Of Regulated Online Gambling On Land-Based Casino Revenue: Setting The Record Straight

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In a recent piece on PennLive (“State’s horse-racing industry being threatened by potential for Internet gaming“), Tim Shea, president, Pennsylvania Horsemen’s Benevolent and Protective Association Inc., asserted that regulating Internet gaming would have a “devastating impact” on Pennsylvania’s commercial casino industry.

Relevant academic research and the experiences of states that have regulated online gambling both definitively rebut Mr. Shea’s assertion (which has been echoed by opponents of regulation in other states).

Argument mischaracterizes research

Mr. Shea bases his argument wholly on a 2011 study from UNLV’s Gaming Research and Review Journal (“The Effect of Online Gaming on Commercial Casino Revenue“).

The problem: the author of that study – Kahlil Philander – categorically rejects Shea’s reading of the research.

Philander’s position was echoed by 2015 research he co-authored for International Gambling Studies (“Consumer Spending in the Gaming Industry“) that concluded land-based casino revenue would be “enhanced by the addition of online gambling.”

Land-based operators winning at online

The rollout of regulated online gambling in New Jersey and Nevada bolsters that conclusion.

In Nevada, the Caesars-owned World Series of Poker is leveraging regulated online poker to welcome new players and re-engage existing customers through innovations such as this summer’s first-ever online WSOP bracelet event and technology that allows players at live poker tables to simultaneously play poker online.

In New Jersey, executives from the Golden Nugget, Borgata and Caesars have all reported that the vast majority of Internet gambling customers are new customers to the casino.

Caesars executives have stated that some 90% of online signups are players that were not in the company’s Total Rewards database, and that a double-digit percentage of those new online customers ended up visiting a land-based property in Atlantic City after playing online.

And the bottom-line success of the Golden Nugget’s online operations is becoming increasingly difficult to ignore.

The upshot: in just over a year, regulated online gambling has created tens of thousands of new customers (customers that skew toward a younger adult demographic that casinos have had a difficult time attracting) for Atlantic City’s casinos.

Mr. Shea is right that the conversation about the impact of regulating Internet gambling on land-based revenue is an important one.

But his selective reading of the available evidence does that conversation a critical disservice.

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Chris Grove
- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.