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Are Online Casinos and Land-Based Gambling Venues in Competition?
By Shane Addinall Apr 01, 2024 OpinionOnline casino regulation is a dream to some and a threat to others - with debates constantly considering the impact of iGaming on land-based casinos. Does iGaming pose a threat to the existence of land-based casinos?One of the biggest debates in the gambling industry surrounds the impact of online casinos on land-based casinos.
The most recent discussion focuses on whether online casinos cannibalise land-based casinos in any way. Is there any truth in this statement, or is it another baseless argument that holds no value?
The Cannibalisation of Land-based Casinos
The main argument is that online casinos have the potential to cannibalise land-based gaming. The analysis and debate focus mainly on the impact on the total addressable market (TAM) and the tax base, which may be considered a rather narrow focus.
The most recent online-offline casino cannibalisation debate by Deutsche Bank and Eilers & Krejcik (EKG) illustrated how important this topic of discussion is in terms of online casino regulation.
EKG’s report on behalf of the US online gambling trade body iDEA Growth focused on how the legalisation of online casino gambling affects land-based casinos within the US. And the survey found that online players are much younger than land-based players. Other than that, operators in both avenues have not seen any cannibalisation.
According to the report, the growth rate of land-based casinos before and after the introduction of online casinos was positively impacted by the addition of casinos to the online space.
Casinos Around the World
In France, the gambling regulator Autorité Nationale des Jeux (ANJ) has revealed that land-based casinos could see a 30% decrease in revenue should online gambling be regulated.
In Belgium, there have been differences in how land-based casinos perform since online casino regulation was implemented. According to Philippe Bon, the CEO of Casinos de France (a trade body for the land-based sector in France), when they first regulated online gaming, the GGR of land-based casinos fell. However, they also recovered some of their growth by implementing clever marketing strategies that attracted players to their establishments.
The US benefits from terms that require online casino operators to partner with land-based casinos in New Jersey, Michigan, and Pennsylvania. The same system is implemented in Belgium and Switzerland.
According to Bon, boosting land-based casinos with online casinos can only work well if there’s a strong link between them. France regulating online gaming without tying it to land-based venues could lead to different results.
Online Casino Impact on Land-based Locations
According to Deutsche Bank (DB), the data speaks for itself, and it shows that iGaming does impact land-based casinos. According to DB, land-based casinos have been performing below average in New Jersey, Philadelphia, and Michigan. However, these states are important as they generate over 90% of iCasino GGR.
According to the data, states with land-based casinos where iGaming is regulated have a performance of +0.6%, whereas states with land-based casinos only have a performance of +11.7%. Another thing to consider is whether poorly drafted regulations are pushing players towards illegal operators.
One thing that is almost certain is that the market share will shift. But that being said, Elers & Krejcik Gaming’s study suggests that iGaming enhances land-based casino revenue rather than replacing it.
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