Examples abound of online gambling being additive to land-based gaming

If You Still Think Online Gambling Is Cannibalizing Land-Based Casinos, You Haven’t Paid Attention To Nevada

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The idea that online gambling just takes away from land-based gambling is still an argument that we hear commonly in the gaming space.

And it’s sure to be an argument trotted out as various jurisdictions consider legalizing online wagering in 2018 and beyond.

But it’s a line of reasoning that’s simply not true from any kind of data or analytic-driven analysis. To rely on cannibalization as an argument against iGaming would be to totally dismiss the experience of operators in both Europe and the US.

The best example of how online gambling has been additive in terms of gaming revenue comes from the Nevada sports betting industry.

What we know from Nevada

For much of the history of Nevada, sports betting only took place at brick-and-mortar locations.

Despite the fact that the technology existed to offer wagering online, the state and its operators kept wagering only at physical sportsbooks for a long time. Sports betting grew incrementally over the years, and was even somewhat stagnant in parts of the early 2000s.

Then, starting around 2011, sportsbooks gradually started offering mobile wagering. That’s when we again started seeing growth in the total amount of money wagered in Nevada in a meaningful way.

Here are the annual handle totals since sports wagering, according to the UNLV Center for Gaming Research:

  • 2011 $2,877,935,000
  • 2012: $3,449,533,000
  • 2013: $3,622,107,000
  • 2014: $3,901,117,000
  • 2015: $4,237,422,000
  • 2016: $4,509,753,000

We’re still waiting for the final numbers from December of 2017. But total handle for the year is expected to come in just under $5 billion.

Keep arguing that online wagering hurts casinos

There’s little reason to believe that the reason for that increase in Nevada is anything but the inclusion of online wagering.

We aren’t privy to the exact breakdown of wagering that takes place at the books and online. But anecdotally, sportsbook operators in the state say that mobile wagering now makes up a sizable portion of their handle.

But clearly, if we were expecting online wagering to just take away money that would otherwise be wagered at the physical books, we wouldn’t have seen the meteoric rise that we saw since 2011. It’s simply disingenuous to imply otherwise.

In fact, online gambling helps reinforce land-based gaming, according to David Schwartz, director for the Center for Gaming Research. In addition to mobile sports betting, he noted that the height of interest in online poker also helped casinos.

“Nevada has a track record that demonstrates how online and mobile play can complement existing land-based casinos,” Schwartz told Online Poker Report. “During online poker’s greatest years of national popularity, poker revenues at Nevada casinos increased from $58 million (2002) to $168 million (2007) — a 190 percent increase.

“Similarly, since the introduction of mobile sports wagering, play via mobile devices has far outstripped what land-based sportsbooks were generating, and land-based play has increased as well. It appears that online play has not hurt ‘live’ gaming in Nevada, but that it has actually helped it.”

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Other examples, too

Nevada sports betting is simply the best example that debunks the myth that is cannibalization:

  • Online wagering and physical sportsbooks have thrived in parallel in the UK and beyond in Europe.
  • Gaming revenue in Atlantic City has recovered to levels not seen in a decade since New Jersey online casinos came into existence.
  • Gaming facilities — other than those owned by Sheldon Adelson — say almost unanimously that online gambling helps their land-based revenue.

The next time someone suggests online gambling is going to hurt land-based gambling, they should check the facts and look at the example of Nevada sports wagering, which proves the obverse is true.

Image credit: Philip Bird LRPS CPAGB / Shutterstock.com

- 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.
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