Evidence Says Illinois Online Casinos Will Not Hurt Retail Gambling
Online casino gambling hasn’t yet made it to Illinois. But when they are introduced, will they cannibalize the retail casino market?
It’s a fair question to ask.
On the surface, it’s easy to assume that when there are Illinois online casinos, people will no longer feel the need to play in-person casino games. It’s far more convenient to play casino games from the comfort of your own home. So why would bettors make the trek to retail casinos once online casino gaming comes to the Land of Lincoln?
In reality, there’s some overarching evidence that proves online casinos and retail casinos can successfully coexist in the Illinois market.
Illinois online casinos would complement, not cannibalize retail
Earlier this year, a major US gaming study was conducted to examine the impact online casino gaming has on in-person casinos. The study was funded by MGM Resorts, which has both brick and mortar and online casinos. GP Consulting conducted the analysis.
The lead author of the study was Dr. Kahlil Philander, and he found each type of casino attracts very different types of people. Philander had this to say in regards to his findings:
“From a sociological level, people who are regular casino goers often find some sort of sense of community within those environments. So, the idea that [online] is a direct or even a partial substitute for the online experience that’s typically at home, it’s not obvious that that’s the case.”
“It just didn’t seem like there was any material impact from online gaming legalization on retail gaming, in all the markets that we studied.”
Benjie Levy is president and chief operating officer of theScore Bet sportsbook. He said online gambling has been complementary to the retail casinos he oversees. theScore Bet is active in Colorado, Indiana, New Jersey, Iowa and Ontario.
In a Toronto Star article, Levy said this about the competition between online casinos vs. retail casinos in the four U.S. states theScore is active in:
“We’re not seeing job losses, and we’re seeing the market in totality grow.”
Online poker helped grow the popularity of the in-person game
Statistics also show the number of retail poker rooms in casinos increased exponentially during the boom period for online poker between 2004 and 2011.
Also, the number of entrants to the in-person World Series of Poker Main Event increased by more than 8,000 people after online poker became popular. That shows that online poker did not cannibalize retail poker, it was key in growing the in-person game and driving traffic to casinos.
What they have found in Michigan
Neighboring Michigan legalized both online casinos and sportsbooks in December of 2019. Nearly three years later, officials have seen gambling grow as a whole. The online casinos and sports betting operators appear not to have had a hugely negative impact on the state’s retail casinos, but it’s a bit complicated.
Andrew Winchell, the director of governmental affairs at FanDuel told PlayMichigan:
“I think that the states understand that (online casinos are) a boost for the land-based properties and a boost for the state and tax revenue, and it doesn’t cannibalize the retail market. It just helps grow the market and also grow the sports betting market at the same time. The two do have a synergy for customers to go back and forth between the two sides.”
It should be noted that is difficult to compare retail and online numbers in Michigan. Online gambling came in at the cusp of the COVID-19 pandemic, which had a severe impact on in-person gambling. Still, looking at Detroit’s three casinos comparing 2019 revenue with projections for 2022 PlayMichigan found that:
- MGM Grand Detroit is on pace to finish 2022 about where it did in 2019.
- MotorCity Casino is on track for about an 18% drop in retail revenue in 2022 compared to 2019.
- Hollywood Casino at Greektown is projected to be down 20% from its 2019 mark. But, Greektown has been trending down in revenue since its peak in 2011, long before online gambling came into play.
Retail casinos often warn of cannibalization without evidence
In April, Ontario became the first Canadian province to launch online casinos and sportsbooks. Prior to the market opening the Great Canadian Entertainment released a report warning of the dire consequences of online casinos. It asked the government to delay the launch.
GCE operates 14 bricks-and-mortar casinos in Ontario. It predicted online gaming would lead to mass job losses in the retail space and declining revenue. Yet, the casino company’s report offered no measurable proof that online casinos dilute land-based profits.
Nearly six months into the online launch in Ontario, there is no indication, yet, of mass job losses at the province’s casinos.
According to one industry insider that spoke to PlayCanada on the condition of anonymity, iGaming does not cannibalize the land-based market. Market data, they said, has clearly set a precedent indicating the opposite:
“(GCE’s) whole proposal was an attempt to stall a new market they weren’t ready for.”
In-person casinos offer an atmosphere unmatched by online casinos
Besides, while the convenience of betting on the go with online casinos may be second to none, in-person casinos still offer a fun atmosphere. Some gamblers view a night out to the casino as a fun way to socialize with friends. That isn’t available with online casino gaming.
Retail casinos also offer regulars some great benefits. Frequent guests can be offered things such as:
- Free nights at the casino hotel.
- Tickets to live entertainment
- Free tickets for food buffets.
If you’re also looking to bet on the University of Illinois or Northwestern’s football teams, you can’t do so online. Wagering on Illinois colleges is only allowed at retail casinos.