3 Reasons Why Nevada Opposes Online Casinos and Why That Could Change

Nevada State Flag An Online Casino on a Laptop With A Red Crossed Circle Over It

Back in 2013, Nevada became the first state to legalize and launch online poker. Other states have followed suit by setting up full-fledged online gambling markets, complete with casino games like blackjack, baccarat, and roulette.

The Silver State, however, has opted to limit its online betting industry exclusively to online poker and sports betting—with no casino games available. That philosophy appears to be changing though, as the state’s top gaming regulators began exploratory discussions on the matter in May of 2021.

On that note, let’s take a look at three reasons why Nevada blocked online casinos for nearly a decade, along with three reasons for the recent change of heart.

3 Reasons Why Nevada Has Historically Opposed Online Casinos

1 – Corporate Casino Owners Bought Into the Myth of “Cannibalization”

Many people simply assume that Nevada’s lack of online casino games is based on a strictly written law.

In reality, when local lawmakers approved Assembly Bill 114 eight years ago, the law simply authorized “online gambling” in its totality. The Nevada Gaming Control Board (NGCB) was then granted regulatory powers over the state’s online gambling industry. But it opted to grant licenses to poker and sportsbook operators only.

One of the biggest reasons why the NGCB has yet to allow online casinos games is a concept known as market “cannibalization.” Essentially, the head honchos who run major casino corporations like MGM and Caesars believed that every dollar gambled online represented one less dollar wagered in their various in-person properties.

If you prefer a more academic explanation, here’s how researchers Verve Marianneau and Janne Nikkinen summed up the concept in a 2018 study titled Market Cannibalization Within and Between Gambling Industries: A Systematic Review:

“In economics, cannibalization refers to a process in which a new product or service partly or completely substitutes for those in existing markets.”

During the run up to online betting legalization in both Nevada and New Jersey, industry stakeholders widely believed that their existing business interests would be directly threatened by the new competition.

After all, if players can fire up a blackjack table from the comfort of their couch, why would they ever need to visit a casino in person?

Online Casino

Given the gravity of that question at the time, it’s easy to see why Las Vegas’ top gambling operators have boxed out online casino competition. The city recently lost its monopoly on the American sports betting market. So, adding unaffiliated online rivals like DraftKings and FanDuel to the mix was largely viewed as a nonstarter.

As you’ll learn more down below, the cannibalization argument was soon disproven when New Jersey’s thriving online betting market was actually shown to boost revenue for Atlantic City’s land-based operators.

2 – Las Vegas’ Economy Relies on Land-Based Gamblers Spending Extra Cash

Leaving aside the fallacy of gambling revenue cannibalization, casinos in Las Vegas practically print money thanks to a whole host of non-gambling attractions and amenities.

Restaurants, sports bars, spas, gift shops, and even roller coasters combine to make the Strip a full-fledged entertainment destination. Indeed, millions of visitors flock to Las Vegas each and every year without ever placing a bet.

While the casino provides a unique backdrop, these guests arrive with the intention of pampering themselves. They treat their family to a fun vacation, seeing the sights and sounds that only Sin City can offer to visitors.

And folks who do like to gamble aren’t immune to the city’s charms either. Between sessions at the blackjack table, they might hit the buffet or see a show.

When they’re done spinning the slots, it’s time to check out the hot new nightclub upstairs. And after cashing in a few winners at the sportsbook, there’s no better place to celebrate than a glitzy steakhouse.

When you add it all up, land-based casino resorts depend on all of that non-gambling money that flows in daily.

From a bottom line perspective, whenever a guest decides to stay home and play online, the casino loses out on any supplementary spending they might’ve done at the resort.

3 – Sheldon Adelson Waged War on the Entire Online Gambling Industry

It’s never nice to speak ill about the dead. But during his lifetime running the Las Vegas Sands Corp., the late Sheldon Adelson earned the ire of the online gambling community.

A billionaire many times over thanks to the success of his Venetian and Palazzo casinos, Adelson was infamous for his hatred of any online alternative. In the aforementioned study on cannibalization, the authors make direct mention of Adelson’s vehement opposition to iGaming in America:

“Some land-based gambling providers, such as the Las Vegas Sands Corporation and its founder and chairman, have been opposed to all online gambling and have feared that it would directly compete with established offline venues.”

When the U.S. Department of Justice (DOJ) ruled in 2011 that the federal Wire Act only prohibited online sports betting, with poker and casino games exempt, Adelson spared no expense to change their mind. Spending millions of dollars, Adelson created a lobbying group called the Coalition to Stop Internet Gambling (CSIG) to hound lawmakers in Washington.

Red Dice On a Laptop With Casino Chips In the Background

His efforts even led to a bill known as the Restoration of America’s Wire Act (RAWA) being taken up by Congress.

Given his political clout and local influence—Adelson purchased the Las Vegas Review-Journal newspaper in 2015—online gambling’s current blockage in Nevada was part of the land-based casino mogul’s plan.

3 Reasons Why That Resistance Could End

1 – Cannibalization Has Been Debunked in States Like NJ and PA

One of the main reasons why the NGCB is discussing online betting expansion occurred in New Jersey seven years ago.

At that time, with the Garden State’s online casino gamble beginning to pay off, the Borgata casino posted increased revenue numbers. As the state’s market leader, parent company Boyd Gaming and its CEO Keith Smith made it clear that online integration provided the engine for that growth:

“Our market-leading performance is testament to the quality of our online product and the power of the Borgata brand.

These results also once again demonstrate online gaming’s potential to expand our business. About 85 percent of our online players have not had rated play at Borgata in at least two years, showing there is little overlap with our land-based business.

Online gaming is growing our database, creating a long-term opportunity to market Borgata to an entirely new group of customers.”

As Smith explained, the Borgata Hotel Casino & Spa maintained its existing land-based customer base while adding a lucrative source of new revenue. Folks who enjoy coming to the casino still do, but those who don’t now had an alternative which still allowed them to play.

This experience echoes the conclusions of Marianneau and Nikkinen too. In their study, they observed iGaming to be “complementary” rather than cannibalistic, bringing a new demographic group aboard who would’ve otherwise declined to gamble altogether.

2 – People Will Still Visit the Strip and Spend Top Dollar for the Experience

Despite the disruption caused by the 2020 pandemic, Las Vegas’ casino resort industry has rebounded rather admirably.

That’s because the allure of visiting the Strip for rest, relaxation, and entertainment will always endure. You really can’t find anywhere else like this strange city of ours, so demand remains high even in times of economic downturn.

Las Vegas Strip View

In fact, tourism rates for the city aren’t just holding steady, they’re climbing on an annual basis. Leaving aside 2020 for obvious reasons, check out how Las Vegas’ continues to grow its tourism base year by year over the last decade:

YEAR Annual Visitors to Las Vegas
2009 36,351,469
2010 37,335,436
2011 38,928,708
2012 39,727,022
2013 39,668,221
2014 41,126,512
2015 42,312,216
2016 42,936,100
2017 42,214,200
2018 42,116,800
2019 42,523,700

As you can see, those 40 million or so visitors have shown up consistently. Knowing this, why would anyone believe that live dealer online baccarat suddenly going live will hurt one of the steadiest visitation rates on the planet?

3 – Adelson’s Death and Sands’ Departure Cleared the Last Logistical Hurdle

Again, the departed deserve their respect, so we’ll leave this last reason short and sweet.

When he passed away at the age of 87 earlier this year, Adelson’s stranglehold over local politics came to an end. The Las Vegas Sands Corp. quickly pivoted by selling off The Venetian & The Palazzo, choosing instead to focus on their casinos in Macau.

Just like that, the last chess piece on the board standing in online gambling’s way was removed from the equation.

And as a result, agencies like the NGCB are now free to pursue online casino games without Adelson meddling in their work.

Keep an Eye on the Changes Coming Soon

Whether online casino games eventually arrive in Nevada remains an open question, but the NGCB’s public hearings in May were a great first step. With online poker and sportsbooks already here, it’s safe to say the old fears about cannibalization can be put to rest.

Those markets continue to thrive in Las Vegas land-based casinos, so simply adding a third vertical to Nevada’s online betting market won’t be disruptive. Indeed, as Smith has seen with his experience at the Borgata, local casinos will likely learn to love the ability to draw new gamblers to the virtual tables.