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The fear that online casinos would cannibalize retail casinos’ revenue is one of the biggest talking points for lawmakers discussing the legalization of online casinos in Ohio. It is also one of the biggest hurdles in the push to legalize online casinos. Ohio has four casinos and seven racinos, which lawmakers are worried would fade into the background as online casinos take over.
The risk of cannibalization
Online casinos cannibalize retail casinos by capturing most of the consumer attention and capital. They have several advantages over land-based casinos. Most notably, they are easily accessible 24/7 from any location – in contrast, retail casinos require travel time, parking fees, accommodation costs, and other inconveniences. That alone is one of the biggest reasons why players opt for online casinos when given the choice.
Online casinos also offer many other conveniences. For example, their table minimums are usually a fraction of the minimums at retail casinos. Moreover, they have unlimited virtual floor space, allowing them to host more players.
Notably, Ohio has witnessed the cannibalization of its retail sportsbook industry following the legalization of online sports betting. Online betting operators came in and swept up most of the players. To this end, while bettors in the state wager billions online, land-based sportsbooks’ revenues have been shrinking all the while.
State Rep. Brian Stewart explained this, saying, “FanDuel and DraftKings came in, and they have a national reach and a lot more money. And what we saw was FanDuel and DraftKings gobbled up a lot of the sports betting [promotional] market, and the locals didn’t have much.”
Protecting retail casinos against cannibalization
Ohio lawmakers are working on a solution to the cannibalization threat. Rep. Stewart says that it is important to ensure that all gaming interests are addressed. “If I introduce a bill and it immediately becomes this turf fight amongst all of the different gaming interests, it’s dead on day one. Because even if you guys all agree, I have to drag a lot of legislators along with the idea to begin with,” Rep. Stewart explained.
Rep. Stewart’s bill, HB 298, addresses concerns of cannibalization through two solutions. First, it requires that any online casino operators seeking to enter the market partner with the existing retail casinos and racinos for licensing.
Notably, online casino operators would be required to pay substantial access fees and share a portion of their gaming revenues with their retail casino partners, thus compensating them for any potential loss of business and ensuring that they grow with the industry. Indeed, Rep. Stewart has always emphasized the importance of bringing land-based casinos and racinos into the discussion early, long before he introduced his bill in May 2025.
Second, HB 298 ties online casino promotions to retail casinos, requiring players to visit the establishments to claim their bonuses. “So instead of saying do iGaming with BetMGM and get $500 in online bonus bets, it would be bet with BetMGM, and you get a free dinner at the Cleveland casino or free play in credits at the Cincinnati racino,” Stewart explained. Notably, this is a unique solution that has garnered a lot of attention and elicited strong debate.
Learning from other markets
Rep. Stewart presented the solutions in his bill during a panel at iDEA Growth’s Power Lunch Summit webinar titled “State Lawmakers on the Front Lines of the iGaming Debate,” held on September 18. Virginia State Sen. Jeremy McPike and Massachusetts State Rep. David Muradian were also in attendance. The panel was moderated by iDEA state advocacy director John Pappas.
Notably, Virginia and Massachusetts are also discussing legalizing online casinos and grappling with the issue of retail casino cannibalization. The legalization of online casinos in Virginia came very close to passing earlier this year, but the legislative session adjourned before the House and Senate could agree on a single unified bill. However, a new retail casino popped up in the state in January. Interestingly, the new casino, Live! Casino Virginia, is operated by Cordish Cos., the company behind the National Association Against iGaming.
However, Sen. McPike noted that while legislators his age or younger aren’t opposed to online gambling, older legislators are a “much harder sell.” Sen. McPike explained, “How do you connect the dots around those conversations? It deals with raising the bar around protections, raising the bar around limits, raising the bar around what are you going to bring to the table that says we’re doing these other things that go way above and beyond.”
Interestingly, Ohio and other states could learn from what New Jersey is doing. Online casinos in New Jersey were legalized in 2013, while retail casinos have been around for much longer. Over time, both sectors have grown, albeit at different paces. “Here, we have a very clear example of a market where the land-based industry and the online industry are growing together,” Pappas said.
Retail casinos in Atlantic City reported combined revenues of $249.9 million in August alone. Since the start of the year, the casinos have reported about $2.01 billion in revenues, an increase of about 1.8% compared to the same period last year.
Notably, while online sports betting is legal in 39 states plus Washington, D.C., online casinos are legal in only seven states. For many states like Ohio, the fear of cannibalization of their retail casino sectors is a major hurdle on the road to iGaming legalization.
