New report confirms iGaming is driving revenue for brick-and-mortar casinos

The report shows that online casinos tend to appeal to a slightly younger demographic compared to land-based casinos.

February 16, 2024 • 7:38 pm ET
• 4 min reading

iDEA commissioned a study from Eilers & Krejcik Gaming (EKG) to conduct the most comprehensive analysis to date of how online gambling affects the performance of land-based casinos.

The report shows that online casinos have a positive impact on gross gaming revenue at land-based locations, with a projected 1.7% annual increase in a state’s land-based revenue following the introduction of iGaming.

EKG compared the quarterly growth rates of the six states that have legalized iGaming to a selection of land-based casino states. They found an average quarterly revenue increase of +2.44% after the introduction of online casinos.

The study also found that five of the six states with both legal iGaming and brick-and-mortar casinos outperformed the land-based casino-only group in changing direction over the same period.

Attract different customers

The data in the report clearly shows that online casinos attract moderately younger customers than land-based casinos. The online and land-based products are fundamentally different and the study suggests that only 7% of customers play both online and in retail casinos.

“We consider this minimal overlap between the two customer groups to be one of the main reasons why cannibalization was not observed,” the ECG team said in the report.

Penn CEO Jay Snowden was quoted in the report confirming the statistics that suggest iGaming is helping land-based casinos attract a diverse audience:

“…about 66% of [our online casino] player [are] New to our ecosystem or reconnected former patrons. The average age of these players is much younger than that of our core land-based player, highlighting iCasino’s lack of cannibalization of our brick-and-mortar business.”

Great bosses are optimistic

The report cited quotes from several notable casino executives, all of whom operate both land-based and online casino businesses.

“In terms of cannibalization, we have not seen anything to date regarding cannibalization of the brick-and-mortar business,” affirmed Tom Reeg, CEO of Caesars.

Meanwhile, Boyd Gaming CEO Keith Smith claimed: “We strongly believe that [online and land-based] Companies complement each other and together they create a much stronger product overall.”

MGM Resorts CEO Bill Hornbuckle also explained, “The idea of ​​using omnichannel.” [casino] “The fact that it can and will work – and not cannibalize – is something I’m very excited about.”

Analysis of previous research results

As part of its research, EKG analyzed previous efforts by Deutsche Bank and Innovation Group to model possible cannibalization in the gambling industry.

The EKG team concluded that “both the Innovation Group and Deutsche Bank studies cited by online casino critics fail to take a variety of factors into account in their respective analyses.”

EKG even calls the previous studies an “apples-to-oranges comparison” that did not lead to comprehensive conclusions.

The Innovation Group report was prepared for the Maryland Lottery and released in November 2023. EKG noted that this report arbitrarily compares the performance of all states, regardless of when they launched online casinos, and that four states included in the study did not launch online casinos until after the start of the comparison period.

EKG also claims that the Innovation Group study incorrectly double-counts population growth, which inflates its results, and includes minors as part of the potential gambling population.

“Although we believe that each approach has certain limitations in accurately modeling potential cannibalization, we believe our own methodology and supporting evidence are significantly more robust.”

Google News
Stay up to date with the latest tips, odds and news! Tap on the star Add us to your Google News favorites so you don’t miss a story.

Pages on this topic

Source link