Posted on: March 10, 2024, 03:00h.
Last updated on: March 10, 2024, 12:29h.
The debate pertaining to online casinos potentially damaging their land-based counterparts is, to this point, “reductive,” wrote Wynn Resorts (NASDAQ: WYNN) CEO Craig Billings in a Saturday post on LinkedIn.
Billings said he’s “neutral” on the matter owing to the facts that the Wynn has all but exited the iGaming and online sports wagering industries and that the operator doesn’t have an extensive portfolio of regional casinos. Its lone venue that’s classified as a regional casino is Encore Boston Harbor, which is one of the highest-grossing properties of that type.
The Wynn chief executive officer acknowledged that while online casinos’ impact on the total addressable market (TAM) for brick-and-mortar equivalents is pertinent, there’s more to the story.
With the introduction of online casino, you are allowing the entry of many new and capable competitors, often times into states that have had a very stable competitive dynamic for many years,” wrote Billings. “So, no matter which side of the ‘cannibalization vs. no cannibalization’ debate you are on, assuming that the (positive or negative) impact will be uniformly shared by all regional casinos is pretty naïve.”
Billings, who’s been with Wynn for almost eight years and around the gaming industry for more than two decades, added that the focus on TAM and tax bases in the iGaming argument is myopic.
iGaming Dwarfed by Traditional Casinos
While online casinos are viewed as significant long-term growth frontier for gaming companies, the fact remains that as of today, that form of gaming is allowed in just seven states Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia.
Conversely, as noted by Billings, there are approximately 1,000 commercial and tribal casinos in the US, but perhaps just 10% to 15% tout an omni-channel strategy that includes land-based and online casinos and sports wagering.
“The properties that might actually be able to compete with the digital native online gaming providers are those that are owned by the large national gaming operators,” opined Billings. “What about everyone else? Market share will shift. In land-based gaming, there will be market share winners and losers. No doubt in my mind. As an operator, the TAM doesn’t pay my bills, my share of it does…”
In iGaming Debate, Labor Matters
Critics might not like to admit, but land-based casinos are jobs creators, but online equivalents are less labor-intensive, underscoring why in some states, some gaming-related unions aren’t fans of internet wagering.
A large-scale iGaming outfit might employ one or two people per $1 million in sales generated, but a brick-and-mortar casinos could employ as many as five workers for each $1 million in revenue it notches, according to Billings.
“So, don’t expect the unions, particularly in blue states, to just sit back and let online casino happen. They will take a position, because that’s their job,” concludes Billings. “They’re not going to pore over analyst reports on cannibalization to form an opinion on the topic. They’re going to act preemptively. And, like it or not, in many states legislators listen to unions. After all, their membership votes, early and often….”
Of the states that currently permit iGaming, four are considered “deep blue” and it might be generous to call Michigan and Pennsylvania “purple.” West Virginia is the only of the group that’s red. Illinois and New York, both of which are heavily blue states, could consider iGaming legislation over the near- to medium-term.
