Can Internet Gambling Boost Land-Based Casino Profits?

There’s been a lot of movement with regard to the legalization of Internet gambling in the U.S states. As more U.S states begin to embrace it many experts are of the opinion that if properly regulated, local economies could benefit from it.

In this article I’m going to briefly discuss how land-based casinos can boost their revenue by incorporating internet gambling. The question many folk are asking now, is online poker really dead in the United States? To illustrate my point I used two authority sites as references.

Land-Based Casinos Incorporate Internet Gambling

The U.S Federal government said that it’s up to the states to regulate internet gambling. States that regulated it to date are Delaware, New Jersey and Nevada. Initially the revenue gained from it has not been earth shattering and left some egg on Governor Christie’s face since he said that the expected revenue from it would run in the billions of dollars per year. However, I must point out that the year-over-year income generated from online gambling is looking rosier by the day.

Sheldon Adelson, also known as the ‘king of gambling’ made no secret about it that he opposes cyber gambling in all its formats. Many of the U.S land-based kingpins support Adelson’s notion since they fear that internet gambling might have an adverse impact on the revenue of brick-and-mortar casinos. This could not be further from the truth. I’d like to quote an extract from this article: http://www.onlinepokerreport.com/17450/research-online-gambling-complements-land-based-casinos/

”The authors advise that “US operators should recognize the positive value that online gambling can have with relation to their online operations,” suggesting that operators are best served integrating online gambling as part of their overall offering, as opposed to “resisting change.”

The way I see it, many land-based casino owners are still very naive when it comes to internet gambling and simply don’t understand its revenue potential. The net result is they fear a cannibalistic effect although this statement holds very little water. However, this is changing, David Satz senior vice president of government relations and development, Caesars Entertainment Corporation had the following to say:

“91% of the players that we have derived in our New Jersey experience are customers who we did not know, that were not part of our 40 million person database.” Of the 10% that we did know, we’ve actually seen increased play and increased visitation to our sites.Caesars customers boosted their land-based play by 11% after signing up online.”

Is There A Difference Between Land Casino And Online Gamblers?

According to Online Poker Report, yes.

• Online players are better educated, more affluent and they are young and up and coming.
• This is in stark contrast to players found at land casinos. More often than not they are female, uneducated, not as affluent and from the bottom rung of society. However, I can’t say that it’s the general consensus but this is the observation.

Can Internet Gambling Supplement The Income of Land Casinos?

The United Kingdom is the world’s biggest regulator of internet gambling sites.  As such it’s the ideal market to ascertain whether or not there exists a symbiotic relationship between gamblers playing online and those that play offline. Although the U.S and UK markets are polarized the distinct difference between these two markets is that U.S ”integrated resorts.”

Key Take Aways

• There’s a positive relationship between online and offline casino, slot and bingo playing frequency.
• The strongest relationship was found between slot machine players. One model indicated that a small increase in online slot playing frequency correlates to a change in offline slot playing frequency from ”once a month” to ”once a week”.
• The study indicated that there’s no evidence of a cannibalistic relationship among the gambling modes.

If one takes the above into account it’s pretty obvious that land-based casinos can benefit from online gambling. Although the state of Pennsylvania’s land casinos yield approximately $3 billion per year ($3.05 billion fiscal report 2013, 2014), its state budget is $2.5 billion. It’s pretty evident that if Pennsylvania’s brick-and-mortar casinos decide to embrace internet gambling, not only will it help alleviate its meager state budget but yield additional revenue as well.

Is Online Poker Dying In The U.S?

Internet gambling’s revenue in the state of Nevada is going from strength to strength, unfortunately the same could not be said for internet poker.

“While some inaccurately characterize New Jersey’s online casinos as a financial disappointment, nothing about 28 percent growth year-over-year is disappointing,” PlayNJ.com Spokesperson John Darr said. “Lawmakers can’t be disappointed in the almost $30 million in new tax revenue online casinos have generated for the state.” 

Darr stated the reason as to why there’s been a significant drop in poker is because of the recent casino growth. Revenue from internet poker is 15 percent lower in May 2015 than it was in May 2014. All is not doom and gloom, the first casino/hotel inside Atlantic City launched their first online casino in February. Since the launch revenue gained for the Resorts increased by 50 percent.

When it comes to online gambling Borgata still leads the pack. It generates a monthly revenue of $3.9 million and yielded a total revenue of $67.7 million to date. New Jersey online casinos have found the proverbial pot of gold at the end of the rainbow or so it seems. So far licensed operators paid a total of $28 million in tax and generated $9 million for the month of May.

Conclusion

The U.S Online Poker Gaming Commission, a federal agency that regulates online poker nationwide, ensures that online poker companies act in a fair and safe manner. If internet poker is to flourish in the U.S again both the federal government and American poker players need to find a compromise. The proposal would allow players to freely and legally apply their craft against the best players in the nation, at the same time enabling the government to retain all revenue from license fees and taxes. By doing this it will give American gambling companies a competitive edge in the global market.