Study: Washington State Online Gambling Will Have Positive Impact On Land-Based Providers

Washington Gambling Industry Poised For Growth Through 2020; Online Gambling Could Generate $100mm

Washington State Gambling Growth
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A new study presented to the Washington State Gambling Commission shows that gross gaming revenue in the state will increase by over a third in the coming years.

It also took a look at the potential impact of online gambling legalization.

The top-level look at Washington state gambling revenue

The Spectrum Gaming Group conducted a study for the WSGC forecasting that revenue for the gambling industry will increase 37 percent by 2020 to $3.5 billion.

Here is a look at Spectrum’s projections for revenue, which is led by growth for Class III Indian casinos:

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Why the growth? Several factors are at play beyond just inflation:

  • Washington state population is expected to grow by a significant margin, 5.3 percent, over the next five years.
  • A greater percentage of the population is projected to be “within a reasonable one-hour drive of a Washington Class III casino.”
  • Casinos can harness emergent technologies to attract the sought-after Millennial crowd.

But the biggest factor is increased access to gaming. Two new hotel casinos — Legends Casino in Yakima County and The Point Casino in Kitsap County — will open next year.  The growth in available casino games will increase from 31,505 gaming positions (slot machines and table games) in 2016 to 35,081 next year.

From the report:

However, with the addition of two new casinos in 2017, along with population and inflationary growth, we project 28 Class III casinos will generate $2.75 billion in 2017, which would be 18.4 percent growth from 2015. Extending our projections through 2020 (i.e., a five-year projection period), we project total GGR for 28 Class III casinos in Washington to surpass $3.3 billion, which equates to 42.3 percent growth from 2015.

Washington eyes future of gambling (online)

The report also looked at forms of gambling that are presently not offered in Washington state, including two forms that are currently illegal.

Online poker and casino games could create significant gaming revenue, according to Spectrum. Online poker legislation has cropped up in recent years but has not gained serious traction. Currently only New Jersey, Nevada and Delaware have legal online gambling in the US.

From the report:

In our opinion, Washington has similar demographic factors to New Jersey, such as household income and population over 21 years old. As such, with a reasonable tax rate (15 percent or less) and an offering that includes slot machines, table games and poker, Spectrum estimates the potential for Washington iGaming GGR to be approximately $100 million.

However, that figure may actually sell the potential of the Washington online gambling industry decidedly short. New Jersey online gambling revenue is projected to come in just under $200 million for 2016. Adjusting for Washington State’s slightly smaller population reveals that a mature online gambling industry could topple $150 million.

The report dismissed the idea online gambling would merely “cannibalize” land-based gaming, based on the experience in New Jersey, which has seen no evidence of such an effect. The experience in New Jersey, the report notes, is that online gambling has activated new or relapsed customers.

iGaming revenue should, in our opinion, be predominantly incremental to overall GGR for land-based casino operators if the regulations require iGaming operations to be provided by licensed Washington Indian casinos or cardrooms.

Daily fantasy sports is also illegal in the state, currently. Legalizing it could have an impact of about $10 million in revenue for operators, should they be able to offer it. Again, efforts to legalize DFS have met resistance.

Also of note in Washington gambling facilities

Washington has more casinos of some type (80) than all but three states, according to Spectrum, trailing only Nevada (271), California (149) and Oklahoma (124).

The report also found that Washington has a higher participation rate in gaming activities than in many other states, leading to higher gross revenue than the state might expect otherwise.

Non-gaming revenue is expected to grow at a steady clip, as well:

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But it’s not all great news in Washington. While the state’s Indian casino industry continues to grow, the cardroom industry continues to suffer, according to the report.

While cardrooms account for just $220 million in revenue — a sliver of overall revenue from gaming in the state — the industry has been on the decline. The number of cardrooms has been halved since 2001, with more contraction likely.

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Dustin Gouker
- Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner. He has played poker recreationally for his entire adult life and has written about poker since 2008.