Size Does Matter in Online Gambling

by Jim Hall

Delaware CasinosWhen it comes to online gambling in the United States, size does matter. States with a larger population have a better shot at being successful due to create larger pools of regular players.

When it comes to online gambling, size definitely matters. In the United States, individual states have the opportunity to pass legislation and create regulations in which online gambling will be provided for residents and visitors within the state’s borders. Only Delaware, Nevada and New Jersey have passed legislation so far. Other states have watched the operations in the three states to see how successful they could be based on a number of factors, including size.

Delaware Losses Out Due to Size

In the US, the top online gambling state would be New Jersey. The state has done well with online casino as well as online poker gaming. The population is vast and the state has agreed to use top operators such as 888 Holdings, WSOP and PokerStars which draws in players online. Delaware is the only other state operating that offers casino and poker gaming alongside New Jersey. The population in the state is much lower, at less than 1 million people. This had led to much lower earnings in the state.

The size of the market in Delaware has hurt the state in being able to earn huge revenue numbers. Of course the state has hit the six figure mark but New Jersey is consistently in the millions range. Delaware has tried everything to bring in player numbers including partnering with Nevada, a state the only offers poker gaming online, to share player liquidity in the hopes of bringing in more traffic.

No Competition

In Delaware, another issue that is present is the lack of competition. In the two other states, casinos have partnered with online operators which has created consistent competition. In Delaware, the state has only three racinos and these gaming operators all offer online gaming on one platform which is a combined effort of Scientific Games and 888 Holdings.

Due to the shared platform, all three gaming operators, Delaware Park, Dover Downs and Harrington Raceway, share liquidity when it comes to online gaming. The same software is used for each brand as well as the same games. Players can get bored of the same look and lack of competition have led players to just choose wherever to enjoy their online gaming in the state.

Tax Issues

Because Delaware was the first to pass online gambling legislation, they kind of messed up. Revenue predictions were high so tax rates were set at high amounts as well. The state felt that over $5 million would be earned in 2014, with even more to be earned as the market matured. With this target set, the law stated that the first $3.75 million generated in revenues would go to the state. Any revenues above this amount would be split between the state, the casinos operating and the horse racing industry.

Online slot revenues would be split with the state earning 43.5% while the horse racing earned 10%. Casinos would be given 46.5%. With table game revenues, 29.4% would go to the state while casinos earned the bulk at 66.1% and horse racing took in 4.5%.

In 2014, the state was only able to earn $1.4 million. $1.8 million was earned the next fiscal year. This amount is far below the amount that was estimated and the state has received 100% of the money with the casinos earning nothing. Revenues are coming in steadily though so eventually the state will reach the threshold and operators will begin to see earnings coming in.

For now, the issue with population and taxes paid, the state will continue to struggle when offering online casino and poker gaming.