The Actual Revenue Potential of US Regulated Online Gambling May Surprise You

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A new report from Eilers Research offers what I’d argue is the most sober and accurate projection to date for regulated iGaming revenues in the United States.

The report, titled “The U.S. iGaming (Real) Opportunity” and authored by Eilers’ Adam Krejcik, provides a comprehensive survey of the state of US regulated online gambling and predicts the likely trajectory of the American iGaming industry through 2020.

Some key takeaways from the report follow. For more, follow Eilers and Krejcik on Twitter.

Current projections vastly overstate US iGaming potential

The base case of Krejcik’s projections point to a total market size for US regulated online gambling of just under $2 billion by 2020:

That projection represents a dramatic departure from other mainstream projections, including Morgan Stanley ($9 billion by 2020) and H2 Gambling Capital ($7.4 billion by 2017).

What accounts for that gap?

  • Krejcik recognizes that many states – most critically California – are likely to launch with poker only, not poker and a full lineup of casino games.
  • He also (correctly) notes that federal action on Internet gambling is highly unlikely, and that state-by-state adoption of regulated online gambling is inherently a time-intensive process.
  • Finally, Krejcik argues that the ramp up period for online gambling will be longer than other projections assume.

Online gambling will not cannibalize land-based revenue

The argument that online gambling revenue will come at the expense of land-based casino revenue is a popular one among opponents of regulation.

But the Eilers report puts that canard to rest, asserting that:

[W]e are staunch proponents that iGaming will not cannibalize existing land-based casino operations, and in fact may drive an increase in land-based gaming revenues over the long-run as casino operators are able to tap into a younger customer demographic, improve player loyalty programs, and enhance their marketing campaigns.

Official New Jersey revenue estimates are completely divorced from reality

I’ve been arguing for quite some time that New Jersey’s official predictions for regulated online gambling revenue are more or less a work of fiction.

Krejcik’s report adds to the chorus of voices critical of those predictions.

He estimates $226mm in online gambling revenue once the market is “mature” – a state Krejcik puts as two or three years out from now.

Official New Jersey budget predictions for the first 7 months of regulated online gambling call for roughly five times the amount Krejcik predicts for Year 3.

Visit Eilers Research and follow Eilers and Krejcik on Twitter.

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