In the race to implement Online Gaming, the state of Delaware jettisoned to the forefront. USA Today reported on June 28, 2012, that Delaware became the first state to legalize Internet gaming within state borders.
The passage of this bill, which permits a full range of online gaming options including blackjack, poker and slot games, Delaware sets the trend for other states to follow. This move is aggressive, and some may believe it is a risky proposition.
Nonetheless, “Online Casino Gaming is Going Online!”
Delaware’s legislative action followed on the heels of a Justice Department decision made in December, 2011. That decision allows states to legally conduct Internet gaming within state boundaries. That decision was a reversal of the department’s previous interpretation of the federal Wire Act, originally passed in 1961.
Democratic Governor Jack Markell signed the bill into law, and the state anticipates online gaming will commence in 2013. Delaware projects revenues to exceed $7.75M in the first fiscal year of operation.
The debate over online gaming has gone on for years, as proponents have cited multiple justifications about why online gaming should be legal, and opponents have countered with the customary anti-gaming rhetoric based upon social and moral issues they believe may arise from any type of gaming. Financial experts also express concern as more and more states look to solve, at least to some extent, their budget deficits with legalized gaming tax revenues.
In reviewing the implications of the Internet gaming question, one question that seems to be left out of the mix is about what happens to “Bricks-and-Mortar” gaming facilities as the Internet becomes the “new” wagering venue. That question is fair.
With the demand for Internet gaming on the increase, including horse racing, gamers are becoming more accustomed to placing wagers online. Estimates show that hundreds of individuals already gamble online illegally. Prohibition only encourages this risky behavior; but, sanctioning online gambling could benefit entire states with revenue that now sinks into the unknown. But, will current casino customers who decide to use the Internet result in declining visits to casinos? The decline in visits could also hurt non-gaming options such as tourism, retail, and food and beverage sales. We’re painting a gloomy picture, right?
Not so fast.
Allow me to dispel any concern for the traditional bricks-and-mortar gaming option. Remember when the entertainment industry predicted the demise of a “night out at the movies” as cable channels, VCR’s, DVD Players, and movie rentals added to movie options? Well, the last time I checked, the film industry continues to rock and roll, despite the weak economy. One look at the initial numbers for The Amazing Spiderman shows that movie raked in $24 million worldwide since its opening during the first weekend in July.
In another example, when Native American and Riverboat gaming became the focus of industry experts, many pundits predicted Las Vegas’ decline as these new venues trended. The “experts” were wrong again.
Those examples illustrate the challenge of predicting human behavior. What may seem logical often breaks from conventional wisdom. To dispel this concern about casino failures, a recent survey asked participants about their preferences between online and bricks-and-mortar casinos. The results showed that only 20-25% of those respondents indicated they would prefer to play on the Internet…which leaves 75% who preferred the social and entertainment value (and possibly the vacation experience) of a “real” casino.
In that same survey, data seemed to indicate that the respondents’ income brackets influenced their preferred playing option. Lower-income respondents favored the Internet, and those individuals in upper-income brackets preferred the live table games. Separating the wheat from the chaff, the lower-bracket customer seldom spends discretionary income on non-gaming merchandise when visiting a casino.
Finally, the most ardent supporter of Internet Gaming is the U.S. Gaming industry. Other than a few outliers, the industry appears to be in lockstep and working with states that are considering online gaming legislation. In Delaware, for example, all Internet wagers must be made through the websites of one of three existing legalized casinos. You might expect this model to be replicated elsewhere.
Logically, it appears unlikely that – with the incredible amount of investment in bricks-and-mortar gaming establishments over the last twenty years – this group would support their own potential decline.
Bottom line: the Internet clearly can become a viable option for casino gaming. This battle was tested in Europe, and the result is a generation of substantial revenues over the years. Based on the European model, the United States gaming industry may soon produce similar revenues.
From this writer’s perspective, bricks-and-mortar gaming establishments are here to stay. Gaming industry owners, operators, suppliers, designers, and other individuals and businesses affected by this change may face considerable pressure as they are challenged by the new demand for Internet wagering. Those challenges may result in changes to the size, perspective, and look of physical properties, which can result in new and exciting adventures for their guests.
In my opinion, this is a win-win situation for all.