In 2018, The US Supreme Court ruled that the New Jersey government were within their rights to legalize sports betting at certain locations in the state. The ruling was a watershed moment for the industry and opened up the possibility of other states joining New Jersey and Nevada in embracing legalized sports betting. Since then, several states have passed their own legislation and we’ve seen signs that a boom in sports betting could certainly be on the way.
But what about iGaming? Could the passing of betting legislation invigorate the online poker and casino industry in the US? Better yet, could an iGaming boom present savvy investors with a few golden opportunities to take a slice of the pie?
The current state of affairs
Even though the legislation had yet to be pushed through, several of the online poker industry’s biggest global brands had the foresight to establish themselves within the US prior to the Supreme Court’s ruling. As far back as 2013, there were six online poker providers in New Jersey and although two have since ceased their operations, the remaining four have been hugely successful. One of those four brands, 888poker, already comprised 31.73% of the state’s cash game market share by the end of 2017. And once the Supreme Court ruled in favor of New Jersey, the online poker giant was one of the driving forces behind the tri-state gaming compact that now sees weekly tournaments with prize pools that can range from $100,000 right up to $400,000.
Since then, 888 has been at the forefront of industry developments and is now considered by many to be the leader in US-based iGaming. Their success in bringing online poker and casino operations to New Jersey alongside their sportsbook offerings was closely watched by several other states. And by November of 2018, Pennsylvania had moved quickly to legalize sports betting while also taking its first steps into the world of iGaming.
While most states in the US have either passed sport betting legislation or are currently reviewing the situation, there are only four states where it is currently legal to play online poker and casino games. Those states are New Jersey, Pennsylvania, Nevada, and Delaware. As of July 2020, both Michigan and West Virginia have passed their own legislation allowing online poker platforms. However, no providers have yet to offer services in either state.
Incredibly, such is the popularity of iGaming in both New Jersey and Pennsylvania that they rank in the top five regulated online casino markets throughout the world. For the first three months of 2020, New Jersey posted record revenue gains and was behind only the UK and Italy. And this is despite only having a population of 9 million people while both Italy and the UK have a combined population of over 60 million.
The second online poker boom
The first online poker boom came about after Chris Moneymaker won the World Series of Poker in 2003. The aptly named Moneymaker qualified for the event through an online poker tournament and was an unknown quantity going into the main event. His subsequent and unexpected win led to millions of online poker enthusiasts signing up for platforms across the globe and the poker boom began.
Unfortunately for US citizens, this didn’t last too long as legislators shut down the online poker industry stateside. This time around, however, legislators seem to be on the poker players’ side.
It certainly looks like iGaming is set for another boom, but with only four states currently allowing online casino activities and two more to follow, it may not happen just yet. As we mentioned earlier, those states are generating record revenues from their iGaming industries and it would appear to be only a matter of time before other states follow suit. The potential for millions in tax dollars each and every quarter is a carrot that they simply cannot ignore for too long.
Add to that the success of the introduction of sport betting across the US and within the next two years, it would seem likely that those states with current sports betting legislation will amend their bills to include iGaming operations.
The potential for investment
The great thing about this potential boom is that service providers and software developers have the opportunity to test the waters in the existing markets before investing on a national scale. The four states with iGaming industries are warmed up and should give a clear indication if there will be a future demand for a service or product related to the niche.
This also presents a golden opportunity for investors. The industry will need B2B products and services and it’s likely that we’ll see numerous industry-specific startups appear over the coming months and years. But it’s at this early stage that investors will have the best opportunity to get in at the ground floor before startups make the step from go to grow.
Another factor to consider is the general public’s growing reliance on services within the digital space. In 2020 there are currently 5.19 billion unique mobile phone users and 4.54 billion internet users. That’s a global penetration of 59% for internet users with the average person spending more than 100 days a year online. That’s an eye-opening statistic and while it’s also a little scary, it tells us a lot about the potential for growth within any online industry.
The fact is that even if only half of the 23 states that have legalized sports betting amend their bills to include iGaming activities, we will still have an industry with a potential target market counting in the tens of millions.
Of course, we’re not offering investment advice here. However, what we are saying is that there is such a massive potential for growth within iGaming in the US that it’s highly likely that we will see another boom. And when there’s a boom, there are always plenty of opportunities for savvy investors to make a lot of money.
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