RubinBrown Gaming Stats 2019

iGAMING

GAMING REVENUES BY OPERATOR †

The U.S. iGaming industry segment completed its fifth full year of operations in 2018. Overall, iGaming produced strong revenue growth in 2018 due to the 21.6% increase in New Jersey revenues; however, the industry continues to represent less than 0.5% of total U.S. Gaming industry. At the end of 2018, the industry was anticipating 2019 to provide a significant boost to its revenues and availability. The optimism was predicated on several Pennsylvania operators going live with online gaming platforms looking to capitalize on the State’s 2017 gaming expansion law. The addition of Pennsylvania would double the industry’s market potential, as Pennsylvania's population of 12.8 million people is equal to the existing populations of Nevada, Delaware, and New Jersey combined. Beyond Pennsylvania, the iGaming industry had additional optimism as the industry saw the desire to legalize sports wagering as a vehicle that could also be leveraged into the legalization of online wagering. While the industry started 2019 with optimism, the industry is now looking to take a step back on its future expansion plans. In early 2019, the Department of Justice (DOJ) released a new opinion on The Interstate Wire Act of 1961 (Wire Act) that put the existing and future iGaming industry into question. The new opinion essentially was a reversal of the 2011 DOJ opinion. Under the most recent position, the DOJ states that the Wire Act applies to any form of gambling that crosses lines, including sports wagering, online gaming and online lottery sales. The impact of the new opinion has not been fully understood, as the industry has until June 2019 to comply with the new position. However, compliance with the position will challenge the status quo, as the three existing iGaming markets all operate with an interstate compact that permits people to place wagers across the respective state jurisdictions. Within Pennsylvania, the optimism has waned as the State’s regulator has asked potential operators to explain how they will abide by the most recent Wire Act interpretation. This additional step has caused a delay to the industry’s expansion. Beyond iGaming, the new Wire Act interpretation is also creating confusion in the lottery markets. Based on the DOJ’s opinion, one could argue that the existing interstate lottery games, such as the highly popular and profitable Mega Millions and Power Ball games, are deemed illegal.

$45.31M $5.12M $2.76M $41.06M $2.60M $0.51M $1.19M $54.09M $45.56M $104.79M

Borgata (NJ)

Caesars (NJ)

Golden Nugget (NJ)

Hard Rock Atlantic City (NJ)

Ocean Resort (NJ)

Resorts Digital Gaming (NJ)

Tropicana (NJ)

Delaware Park (DE)

Dover Downs (DE)

Harrington (DE)

GAMING REVENUES BY STATE ( excluding nv )

$298.70M

$4.29M

2018

$245.61M

$2.39M

2017

$196.71M

$3.02M

2016

$148.88M

$1.81M

2015

$2.09M

$122.88M

2014

Delaware

New Jersey

The potential for this type of interpretation has resulted in the New Hampshire Lottery filing a lawsuit against the DOJ in attempt to stop the DOJ’s enforcement of their new interpretation on a law that has been around for 58 years.

Looking forward, the DOJ’s change in position has created uncertainty within the iGaming market, as the prospect of additional state expansion under the current DOJ’s position is unlikely. Furthermore, the preservation of the current iGaming markets will likely lead to a protracted legal battle over the new position. Many anticipate the legal battle playing out in a similar manner to the Murphy v. National Collegiate Athletic Association lawsuit that ultimately led to PASPA being overturned on the basis of states' rights.

iGaming

13

† see statistical note on page 25