Analyzing the Dual Impact of iGaming: Economic Gains vs. Societal Costs

by Mariusz CzarneckiMariusz Czarnecki
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An alliance recently established, bringing together diverse participants from the land-based casino industry, has issued a cautionary statement highlighting the social and economic challenges associated with the iGaming sector.

iGaming and Its Impact on Society and Economy: A Double-Edged Sword

The National Association Against iGaming (NAAiG) has raised concerns about the well-documented economic and social risks linked to the expansion of online casinos. Consequently, the organization plans to rally local communities and legislators to resist such initiatives.

To underscore the importance and urgency of this issue, a fresh study by The Innovation Group, commissioned by the association, delves into the perceived advantages of expanding iGaming.

Although iGaming indeed leads to a higher turnover and, consequently, a significant tax boost for states that have legalized it, the NAAiG warns that the long-term societal and economic costs could be far more detrimental than the immediate financial gains suggest.

The association has outlined several critical impacts of legalizing iGaming:

  • The land-based casino industry typically experiences a 16% reduction in revenue following iGaming legalization, resulting in job losses and significant economic output decline.
  • The association predicts that by 2029, approximately 4,921 jobs will be lost in New York and 4,733 in Illinois due to iGaming legalization.
  • Negative impacts on state gross domestic products are anticipated.
  • Net tax benefits might be minimal at best, with a notable rise in problem gambling cases.
  • Employees at brick-and-mortar casinos will likely experience slower wage growth.

Established Risks of Online Gambling: A Reminder from Past Studies

In summary, the main message of the new study aligns with previous research, which warns that iGaming legalization can lead to increased gambling addiction rates, reduced economic output, and further contractions in the job market.

The study is worth exploring in full to grasp the extent of the highlighted issues. The association also warns that iGaming leads to a rise in underage gambling, with 26.4% of adolescents who engage in online gambling developing gambling disorders.

Commenting on these findings, The Cordish Companies EVP & General Counsel, Mark Stewart, remarked:

‘The unrestricted access to gambling via smartphones due to iGaming is poor public policy. It jeopardizes local employment and businesses and will have financial repercussions for states. When considering the heightened social costs from iGaming, such as increased rates of underage and problem gambling, the net tax revenue outcomes are consistently negative for every state.’

He was supported by his colleague, Monarch Casino & Resort, Inc Executive VP and General Counsel Jason Gumer, who emphasized that iGaming exposes vulnerable individuals to greater financial instability.

Currently, only a few states offer online casinos, while most have regulated online sports betting.