Horizons Fall/Winter 2020

Internet Gaming Trends (In Millions)

State

2013 Revenues

2019 Revenues

Total % Change Annualized Change

DELAWARE

$432.31

$436.45

1.0%

0.2%

NEW JERSEY

$2,928.36

$3,292.82

12.4%

2.0%

NEVADA

$11,144.96

$13,030.99

8.0%

1.3%

Nevada Falls Behind Through Protectionist Policy

Shortly thereafter, both Delaware and New Jersey began offering online wagering in November of that same year. At that time, the industry saw online wagering as the new frontier and the premier opportunity for gaming expansion. While there was great optimism for the legalization of online gaming, the wager on rapid expansion quickly became a losing proposition. Facts on Market Cannibalization With COVID-19 reigniting the interest in internet gaming, the claim that online wagering will cannibalize the traditional brick-and-mortar revenues will re-emerge. When this line of reasoning is presented, it is important to look at what has happened in the markets that adopted internet gaming in 2013 as all three markets have seen a growth in overall gaming revenues amidst increasing competition from neighboring jurisdictions. When it comes to debating whether a state’s gaming revenues will be cannibalized due to internet gaming, the recent history does not suggest that internet gaming creates an immediate or significant drop in gaming revenues. If state legislatures adopt protective policies that shield their brick-and mortar operators from innovative online competition, the state’s brick-and-mortar industry will falter once a neighboring jurisdiction redefines the casino experiences.

With COVID-19 eliminating the brick-and- mortar gaming revenues from the April and May monthly gaming revenue reports, it became abundantly clear how far Nevada has fallen behind New Jersey in the race to be the leader in internet gaming. In April and May, Nevada’s gaming revenues were $3.73 million and $5.95 million, respectively. These revenue numbers represented a 99.61% and 99.39% decline in gaming activity from the 2019 revenues. Meanwhile, New Jersey generated $82.64 million in gaming revenues during April 2020, a 68.9% decline from April 2019 and $95.82 million in gaming revenue during May 2020, a 65.4% decline from May 2019. When adjusting these figures for the significant disparity in state populations, New Jersey still generated more than 6x the revenue of Nevada. Over the April and May time-frame, the revenue per resident per month was $1.57 in Nevada and $10.04 in New Jersey. While the revenue declines were historically unprecedented for both states, the revenue shortcomings with Nevada’s protectionist policies became clear when the integrated casino-resort industry went to zero. Adding additional insult to injury, the legacy gaming industry Nevada was working to protect in 2013 has underperformed the new market entrants that have grown up in the Garden State.

Fall/Winter 2020

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