Ohio expanded its gambling options at the start of the year, with a thriving retail and online sports betting market already competing for a top-three spot in the U.S.
With legal sports betting operational, online casinos in Ohio could be the next domino to fall. However, only six states offer legal online casinos, compared to more than 30 with sports betting.
Some people have concerns about the safety and legitimacy of online gambling. Others worry about their ability to coexist with retail casinos found in nearly every state nationwide.
However, many reasons exist why online casinos will not hurt retail casinos in Ohio. Furthermore, one may even help the other.
Differences between retail and online casinos
Online casinos are a much newer development than the brick-and-mortar venues most Americans are familiar with today. If and when they become legal in the Buckeye State, you’ll want to know the pros and cons of each.
Online casino pros
- Often offer a wider range of games.
- Offer a greater number of casinos to choose from.
- Lower betting limits.
- Can still play live dealer games.
Retail casino pros
- Offer an unparalleled experience, especially with some games like immersive slot machines.
- Have a social and personal component.
- Many casinos have additional amenities, such as a hotel, spa, event center and more.
- Games may have larger jackpots to win.
Online casino cons
- No social element — you are alone while playing (unless another person is present with you and playing on a separate device).
- Not as much of a casino “experience” as the retail version.
- The faster pace of play may make up for lower betting limits.
Retail casino cons
- Games often have higher betting limits.
- Requires travel time and other expenses (food, gas money, hotel).
- Desired games may be unavailable or occupied.
Online casino opponents may look to add to the “cons” list, raising questions about its legitimacy. This is why a regulated market is so essential: All licensed casinos work with state governments to create a secure environment with:
- Proper player verification processes to prevent underage gambling and other illegal activities such as anonymous money laundering.
- Accurate geolocation technology to ensure all players are within state lines.
- Promoting responsible gambling, including providing resources and literature for at-risk gamblers and their loved ones.
Cannibalization concerns are backward
One of the most common arguments against online casinos is that they will cannibalize business from retail casinos. Others say those concerns are unfounded and that both can function with separate player pools.
We’re actually seeing online casinos serving as a bridge. New players are signing up online, familiarizing themselves with games and taking trips to retail casinos that otherwise never would have happened.
“We are getting over $200 million of incremental brick-and-mortar casino play out of customers that were sourced in digital,” said Caesars CEO Tom Reeg during an earnings call at the end of 2022. “That number continues to grow.”
Younger demographics are also an increasing part of the equation for retail casinos. In the last five years, PENN Entertainment has seen customers aged 21-44 go from making up 10% of its revenue to nearly 20%.
These players are the primary target for online casinos and sportsbooks’ marketing efforts. They’re making an impact for U.S. retail casinos, too.
Online casinos in other states have not hurt retail
Michigan’s online casinos opened in January 2021 and have brought in more than $800 million in state taxes. Brick-and-mortar casinos are flourishing alongside their online counterparts, thanks again to an increased presence from younger players.
- Michigan tribal casino revenue has grown beyond pre-pandemic numbers from 2019.
- Detroit’s three retail casinos posted their strongest revenue in Q1 2023 since 2019.
A study commissioned by MGM Resorts found that retail and online casinos had different customer bases, with one complementing the other. Similar evidence exists from Ontario, Canada, where retail and online casinos operate together.
Online casinos are setting new records in New Jersey and Pennsylvania in 2023. New Jersey iGaming revenue totaled $158.9 million in April, and Pennsylvania topped that with $167.3 million. Both states have generated over $1 billion in lifetime iGaming taxes.
On the retail side, NJ’s casinos are concentrated in Atlantic City, making them less convenient for many New Jerseyans from elsewhere in the state. Still, revenue grew by 9% last year, though it has not fully rebounded from pre-pandemic numbers.
Pennsylvania has retail casinos throughout the state. Retail slots are the state’s top revenue producer each month, generating more than $200 million every month in 2023.
Ohio could add online casinos … down the line
So, online casinos are proving to be valuable contributors to gambling economies where they are legal. They also exist in harmony with retail casinos and demonstrate a roadmap for other states looking to add to their tax revenue streams.
Unfortunately, Ohio is not one of the six states where online casinos operate, which seems unlikely to change anytime soon.
After all, it took until 2023 for sports betting to become legal. Neighboring states like Michigan, Indiana and West Virginia raked in millions from Ohioans for years due to the lag. We can expect more of the same when online casino discussions become more prevalent.
In the meantime, the iGaming discussion is only starting to warm up in Ohio. Chances are, we don’t see any actual progress begin until next year. Even then, the momentum won’t be enough until 2025, if not 2026.
Best case scenario, online casinos are three years away from launching. Even if other nearby states like Indiana and Illinois pass legislation, history dictates Ohio’s lawmakers will move forward at their own pace.
