EKG projects sports betting GGR of $16.7B across 44 states by 2026 vs. $6.1B across 14 states for iGaming

Online Casino Will Continue Its Slow Growth Into 2026, According To EKG

Online casino gross gaming revenue (GGR) won’t even double during the next five years, while retail and online sports betting GGR will more than triple, predicts research firm Eilers & Krejcik Gaming (EKG).

This is EKG’s finding even as Connecticut’s soft launch this week makes it five states with full private sector iGaming. The limited markets of Nevada and Delaware add up to seven. Even so, EKG only foresees a total of 14 states offering online casino or poker by 2026.

Conversely, the Irvine, Calif.-based firm estimates that by then, 44 states will have legalized sports betting in some form, with 34 of those having an online option. Currently, 21 states plus the District of Columbia have legal US online sportsbooks.

Meanwhile, although sports betting is expanding faster than US online casinos, the latter are individually more profitable. EKG expects there to be more than three times as many retail and online sports betting states as iGaming states. Even so, it predicts they will only yield $16.7 billion in GGR. For the estimated 14 states with some form of iGaming, EKG projects a combined $6.1 billion GGR.

EKG presented these findings during the first day of the American Gaming Association’s (AGA) Global Gaming Expo (G2E) in Las Vegas. On Oct. 4, the firm outlined online casino’s future as part of its EKG Market Update & Outlook.

The outlook concludes with this statement:

“In 2026, we project that sports betting (retail + online) and online casino and poker will generate combined GGR of $22.8 [billion].”

Why online casino is a laggard in legalization

Online casino legalization is slower in general because states are more leery of allowing what EKG partner Chris Grove calls “gambling with an uppercase G.”

Whether it’s rational or not, lawmakers view sports betting as less scary, says Grove, who oversees the firm’s sports betting practice. (Grove is also the original founder of both this site and Legal Sports Report, prior to their addition to the Catena Media network.)

That observation, made in March, continues to be true as Illinois has become the latest state to stall in its effort to legalize online casinos. One lawmaker there expressed his concern about the possibility of online casinos cannibalizing the income of retail casinos. His comments in April preceded the Illinois General Assembly‘s adjournment, sans online gambling approval.

The EKG study addresses this phenomenon:

“Politically, online casino and poker has been — and remains — a far tougher political sell than sports betting. Our state-adoption cadence for online casino and poker (14 states by 2026 vs. 44 states for sports betting) reflects a world in which that far-tougher sell dynamic persists.”

Once Connecticut exits its soft launch phase, that will make it seven states to have launched some form of regulated iGaming in eight years. New Jersey, Nevada and Delaware were the first wave, all coming online in 2013.

In terms of those cannibalization worries, EKG finds there’s little reason to fret.

“COVID has significantly boosted the productivity of the mature-ish NJ market, and massively accelerated the growth of the less mature PA and MI markets. Gains have persisted since land-based casino operations began to ‘normalize’ in [Q2 2021].”

OPR also found in March that US online gamblers are largely bifurcated from retail players. This separation is especially apparent among Asian-American gamblers.

Why states may further slow online casino legalization

The pandemic threat to state coffers may be ebbing. Gamblers are returning to retail casinos.

The fear of retail casino revenue drying up for good was a sword of Damocles hanging over state lawmakers. With that fear now abating, online casino legislation may be less appealing.

The EKG research reads:

“State budgetary pressures stemming from COVID did not result in any online casino expansion. [Going forward,] few expansionary catalysts [are] on the near-term horizon.”

State leaders are watching what operators are doing in states with legal markets. They don’t like what they’re seeing, opines EKG. The approach to advertising in particular is rubbing them the wrong way.

States with legal online gambling may need to crack down. Irresponsible marketing brings risks for the industry, the firm said in its G2E presentation.

The ” increasingly national nature” of the legal online gambling market “could invite federal scrutiny,” EKG adds.

The latter mainly relates to how the Big Three BetMGM, DraftKings and FanDuel – are dominating the US online betting market. While there are other operators, their market share could get absorbed by mergers and acquisitions, EKG says.

EKG says in its sportsbook forecast:

“We assume most states ramp up relatively rapidly, reflecting an aggressive macro-competitive environment in which a broad array of stakeholders (e.g., DFS brands, casino brands, sports brands, media companies) are willing to loss lead. Our projections assume that two of the big four states (i.e., FL, NY) will be live with online sports betting by 2026.”

The big fish remain in deep waters

All of this could change if one of the largest states – California, Florida, New York or Texas – makes a move towards iGaming. Unfortunately, EKG predicts that none of them will do so by 2026. Even online sports betting is proving challenging for them.

Meanwhile in 2021, US online casinos generated $3.3 billion and US retail and online sportsbooks brought in $5.1 billion in GGR, according to EKG.

EKG’s projections show that gap extending and expanding in the next half-decade.

- Heather Fletcher is the lead writer with OnlinePokerReport. She's a career journalist, with bylines in The New York Times, Adweek and other publications. Reach her at [email protected]
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