Does Online Poker Cannibalize Land Based Casinos? 

The answer to the question as to whether online poker cannibalizes land-based casinos could be a straightforward yes, but opinions are mixed. In 2012, a couple of years before it withdrew its support for online gambling legalization in the US, the American Gaming Association (AGA) stated that online gambling actually increases player participation at land-based casinos, leading to increase in revenue.

Frank Fahrenkopf, then CEO and president of the AGA, said that online gambling is actually complementary to land-based gambling because it attracts younger players who are more comfortable with computers.

Peter Brooks, the COO and president of Genting UK stated at the World Gaming Executive Summit held recently that online gambling does not cannibalize land-based gambling because online gambling is something totally different from land-based gambling. While online gambling is a solitary experience, land-based gambling is a social experience.

However these views are not shared by Sheldon Adelson, the world’s 11th richest man and owner, chairman, and founder of Las Vegas Sands Corporation, which owns several land-based casino properties worldwide. Adelson has been the biggest opponent for the online gambling industry in the U.S and has stated that he is willing to spend any amount of money in his fight against the legalization of online gambling. Adelson supports the ‘Coalition To Stop Internet Gambling’ and has hired senior lobbyists to sway political sentiment in his favor.

But here are some reasons why it is impossible for online gambling to cannibalize the land-based gambling industry, at least at present:

Online Poker is Legal Only in Three US States 

Although Americans are free to play poker in land-based poker rooms all over their country, only three US states have actually legalized online poker. These three states are Delaware, New Jersey and Nevada and all of them legalized online poker for the extra revenue it promised to generate.

However the online poker market hasn’t performed the way gaming analysts had earlier predicted atleast in Nevada and Delaware. The two states have entered into an intra-state shared liquidity agreement and things are slowly turning around. New Jersey had a sluggish start but things have improved ever since PokerStars, the biggest online poker website in the world launched in the garden state.

More US States Planning to Legalize Online Poker

Meanwhile, at least ten other US states are weighing the pros and cons of legalizing online poker chiefly because they feel that online poker will complement the existing land-based gambling industry. Washington, for example, has over seventy land-based casino properties, but playing online poker is still illegal. Although the state has expressed interest in legalizing online poker, several years may pass before it actually does so.

California could have passed an online poker bill, but is unable to do so because of conflicting interests on the part various stakeholders in the industry. Indiana may have a better chance of passing an online poker bill if it gets a governor who supports online gambling.

Since Connecticut, Rhode Island, and Massachusetts are competing fiercely against each other and also against New Jersey, Pennsylvania, and New York, they may legalize online gambling to keep players within their borders and generate revenue.

Coalition to Stop Internet Gambling

Online gambling in the US has a number of opponents and the most powerful of these enemies is Sheldon Adelson and his Coalition to Stop Internet Gambling. Adelson has fed a lot of money into this coalition and has won the support of influential people, powerful organizations, religious groups, churches, police associations, businesses, and mayors’ councils. Adelson is also the biggest financial donor to the Republican Party.

The coalition is continuously working to educate the public and lawmakers about the negative impact of online gambling. They have a highly effective action plan that is on the verge of succeeding. They have created media messages that appeal to public apprehensions about morality, family safety, national security, and public welfare. They have launched an official website, create videos, and interact with people at social networking sites.

Politicians generally tend to be in favor of those who can fund their campaigns. So far, very few elected representatives of the Republic Party have spoken in favor of online gambling. Even Senator Harry Reid, who once used to support online gambling, is now expressing support for the Coalition against Internet Gambling.

The Poker Players Association and PokerStars are two of the biggest supporters of legalizing online gambling in the United States while the AGA has announced that it is neither for nor against the legalization of online gambling.

Land Based Poker Rooms in Vegas Are Closing

Another disturbing development in the poker gaming world is the closure of several land-based poker rooms across Las Vegas. The big poker rooms continue to operate, but smaller casinos have shut down their poker rooms and a few have removed some poker tables and replaced them with slot machine games.

It is easy to blame online poker for this development, but the truth is that casinos in Las Vegas are continuing to rake in revenue in billions. Casinos could be shutting down their poker rooms because customers prefer playing baccarat and slots to poker. Wealthy gamblers from Asia, in particular are known to spend large amounts of money on baccarat.

No Cannibalization in New Jersey 

Five of the land-based casino properties in Atlantic City offer online gambling services, and all of them report that online gambling has improved their land-based businesses. They report that they have not only received a new source of revenue, but have also obtained brand new players. In addition, they have succeeded in re-capturing the interest of inactive players. They have found that land-based gambling revenue doesn’t fall because of increase in number of active users at online gambling sites.

Mitch Garber of Caesars Interactive told CNBC in 2013 that it has already been proved in Australia and UK that online gambling does not cannibalize land-based casinos. At a hearing in 2017, Golden Nugget testified that 89% of the people who signed up at online gambling sites were not its existing customers.

A spokesperson for Resorts told OnlinePokerReport.com that 75% of the players who signed up for its online gambling services were new players who had never played at any of its land-based casinos. Shortly after launching, the executives at Borgata said that 85% of its online players were either new or had been inactive at its land-based casino for two years.



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