Which State Will Join the Legal US Online Casino Ranks Next?

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Which state will next add legal US online casino gambling? During the past four years, the rapid legalization and expansion of US online sports betting has been nothing but impressive. US online casinos, not so much.

While sports betting was largely illegal for the last several decades, over 30 states and the District of Columbia now allow regulated sports betting. Online sportsbooks exist in 22 jurisdictions.

However, the same can’t be said for online casino gambling (also known as iGaming). It’s been a slow rollout.

Over 157 million Americans have, or soon will have, access to legal channels to place their sports bets online. Millions more will be in proximity to a neighboring state where they can wager legally.

However, that’s just sports betting.

An Overview of Legal US Online Casino

In regards to iGaming, only seven states allow legal US online casino gaming:

In the latter half of 2013, New Jersey became the first state to legally permit online casinos. Connecticut is the latest state to legalize online casinos, doing so in October 2021.

There, online gambling operators providing casino games include:

Online casino gaming is the long-term profit center for all of these companies. You look at the revenue we’re seeing from online gambling operators like BetRivers and BetMGM, and 60% to 75% of their revenue is coming from iGaming.

Industry leaders state the average iGaming user spends about $300 per month. A sports bettor is spending about $100 per month. Ultimately, it may be the cross-selling from sports betting to iGaming that will enable operators to survive.

One reason for the states’ caution toward legal US online casino gambling is they believe it will hurt their land-based casinos.

However, revenue numbers show states shouldn’t be concerned. One example is New Jersey’s revenue numbers between 2018 and 2019.

Online casino revenue from slot machines and table games in New Jersey grew from $277.3 million in 2018 to $461.8 million in 2019 according to the New Jersey Division of Gaming Enforcement (DGE). Land-based casino revenue in New Jersey grew during that same period from $2.51 billion in 2018 to $2.69 billion in 2019, according to the DGE.

This is just one example showing that land-based casino revenue can grow at the same time that online casino revenue grows.

Which States Could Be Next?

There are several states that have made attempts at legalizing iGaming over recent years. Four states stand out as having the best chance of getting online casinos up and running with draft legislation in place.

Indiana

A pair of bills were introduced at the beginning of this year aimed at legalizing iGaming in Indiana. HB 1356 and HB 1337 set out to put an 18% tax on iGaming revenue if legalized.

Online casinos in Indiana would generate almost $500 million in extra revenue for the state over a five-year span, according to an iDEA Growth (iDevelopment and Economic Association) study. The state has already handled an estimated $8.79 billion from sports betting since 2018.

Don’t get too excited, though.

Bills attempting to legalize iGaming in Indiana were introduced last year, as well.

If you don’t succeed, try and try again, right?

This persistence puts Indiana ahead of a few other states that could legalize online casinos in the future.

New York

In February, New York Sen. Joseph P. Addabbo Jr., D-Queens, one of the driving forces behind New York’s online sports betting legalization, introduced SB 8412. It asked the New York State Legislature to legalize iGaming.

SB 8412 currently remains in the Senate finance committee, showing no signs of moving forward any time soon.

Addabbo vows to prompt floor discussions on the bill before lawmakers approve the 2023 budget. Those talks may mean the proposed legislation’s language changes. At the moment, the bill requests a 25% tax rate on online casino gaming. That differs from the New York online sports betting tax rate of 51%, which is the highest in the nation.

Online gambling operators may not be pleased with the tax rate, but they are happy to be part of New York’s nearly $11 billion in handle since launching this year. The state is in the best position to have similar success in the iGaming sector.

Addabbo told NY Sports Day he plans to work with fellow lawmakers and Gov. Kathy Hochul in 2023 to push for online casinos in New York.

Illinois

Illinois introduced an online casino bill back in 2021, but the measure didn’t pick up much steam. The state’s first real push for legalization will likely come in 2023.

Part of the debate against online casinos in Illinois deals with video game terminals (VGT). Illinois has more VGTs than any other state in the country. You find VGT gambling machines inside bars and restaurants. VGT manufacturers, and customers buying the games, have concerns that legal US online casino gambling would take away from their profits.

The bill introduced in February 2021, by Illinois Sen. Cristina Castro, SB 2064, is titled the Internet Gaming Act. The bill would authorize a casino or racetrack to offer Internet gaming or contract with a platform to offer Internet gaming, as regulated by the Illinois Gaming Board. A 15% tax would be imposed on Internet gaming to be deposited into the Illinois State Gaming Fund.

Iowa

Iowa Rep. Bobby Kaufmann, R-Cedar, introduced a bill in January that would have allowed online casinos in Iowa. It failed to receive the required votes to move forward in February. But hope remains that the effort will have success in years to come.

The bill, HSB 604, doesn’t refer to the proposed Internet gambling as legal US online casino gaming, but rather “advance deposit gambling.”

Iowa’s online casino effort ran into opposition from several church and community organizations, in addition to a few raceways and casinos. They raised concern over the possible impact on the industry’s food, beverage, and hospitality business.

Wes Ehrecke, president and CEO of the Iowa Gaming Association, told PlayIA that 13 Iowa casinos support online casino legalization and six oppose it.

Legal US Online Casino in Every State

As stated earlier, the average online casino gambler spends more money per month than sports bettors do. That viewpoint would even be visible in total revenue outcomes if every state had legal iGaming and sports betting.

If every state were to legalize online casinos, the market would generate $20 billion in revenue, based on state-level projections from Eilers & Krejcik Gaming (EKG)‘s United States Online Casino Tracker.

Similarly, if every state were to legalize online sports betting, EKG believes the US online sportsbook market would generate approximately $15 billion in revenue.

So slow rollout or not, legal US online casino may win in the end.

About the Author

Keith Stein

Keith Stein is a Virginia-based freelance journalist for Bonus.com. He has a combined 27 years of experience in freelance writing, full-time journalism and supporting monthly and weekly news publications. He has also worked as a contributing writer with United Press International.

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