FROM THE TOP: COMMERCIAL GAMING IN 2023

Gaming America takes a deep dive into the AGA’s Commercial Revenue Tracker, which shows that, for US commercial gaming, breaking records has become a habit.

The American Gaming Association (AGA) recently issued a report that tells us a great deal about the state of US gaming, namely that it is still charted on a course for exponential growth. The $60.4bn in collective revenue for commercial operators was a record for the country and this figure does not even account for Tribal gaming, an integral part of the industry.

With Tribal revenue included, total yearly gambling revenue for the US will likely eclipse the $100bn mark for the first time. This is a demonstration of the might of an industry that is still growing; despite its patchwork frame of legality (differing drastically state-by-state), it is now akin to the US beer industry (which posted revenue of $100.2bn).

Unlike the US beer industry, though, the gambling industry is still fledgling and has many routes to continue its cumulative growth: a path that seems inevitable now. It is genuinely hard to pinpoint a market for gambling more exciting than that of North America.

Analyze This

While some may see these figures and say the balance of power between the betting verticals is shifting, one thing is for certain: land-based remains supreme. Casino slots and table games made up 79% of total gross gaming revenue (GGR), raking in $47.8bn. However, one must compare this to 2016, when land-based casinos accounted for almost 100% of total GGR and even to 2021, when it took an 85% GGR share from all verticals. Sports betting and iGaming both produced record-breaking results, receiving 12.4% and 8.3% shares in total GGR for 2022 respectively. This trend of land-based losing ground to these two verticals will be interesting to follow – especially as more states launch sports betting and iGaming. The fact that iGaming took a double-digit percentage while only being active in six states is an impressive stat and a sign of how seriously this vertical should be taken.

But the lay of the land still remains the same: with land-based casinos fuelling the industry. In 2022, 14 of the top 20 commercial casino gaming markets posted revenue growth compared to the previous year. Following a turbulent two years of (almost every) market falling and rising due to the pandemic and even post-pandemic restrictions, it seems

2022 was the year when things ‘stabilized’ for the dominant land-based gaming states.

BRICK-AND-MORTAR REFUSES TO CRUMBLE

To no one’s surprise, Nevada and New Jersey topped the rankings for the top-revenue -producing states in regard to GGR. The Las Vegas Strip alone produced $8.2bn in revenue, a 17% yearly increase that dwarfed its closest competitor – Atlantic City – by $5.5bn. Atlantic City’s return of $2.8bn still signified an impressive 8.5% annual rise.

and a reversal of a trend set during the pandemic years when (understandably) the slot and table game sectors saw declines. Comparing these two verticals’ revenues to 2019 would perhaps be a more apt way to sort through the data: they both accelerated in 2022 at an almost identical rate, with slot revenue rising by 15.7% and table game revenue increasing by 15.1%.

Sports Betting Scores Big

Of all US gaming verticals, sports betting increased at the most rapid rate, with Kansas, Maine and Massachusetts all legalizing the practice in 2022. Sportsbooks and betting fans were perhaps most excited about Massachusetts, with The Bay State being home to some of the nation’s most famous sporting teams, such as the Boston Red Sox and the Boston Celtics. It was great timing for Kansas, too, with the launch of sports betting in September 2022 coinciding with the Kansas City Chiefs' successful run in the NFL, which culminated in the team winning the Super Bowl LVII in dramatic fashion when pitted against the Philadelphia Eagles.

taking a nationwide perspective may be the wrong way to approach this data. A different picture is painted when we break the numbers down on a state level and see that the combined share of online sports betting and iGaming, in states that offer full online gaming options, was 40.7%. The legalization process of gaming in the US is tough to predict in exact terms, but one thing can be ascertained for sure – the market will only continue to open, and as it does so that 19.5% figure may climb dramatically.

IGAMING: IS ONLINE THE FUTURE?

Of the six markets to produce negative year-over-year results, Philadelphia was one of the more noticeable names in that clique. Home to Hollywood Casino at Penn National, Harrah’s Philadelphia Casino & Racetrack and Valley Forge Casino Resort, Pennsylvania is a traditionally strong market for land-based gaming. Its 1.8% annual drop meant that it retained its placement at number seven in the rankings, just below the (potentially) gargantuan market of New York City. NYC may well only remain outside the top five due to its 25% tax rate acting as an effective deterrent for all but the largest gambling operators.

Slot revenue saw a 5.1% year-over-year increase, while table revenue rose 13.9%, which may seem trifling when compared to sports betting’s meteoric 73% increase. However, it was still a defiant showing from the brick-and-mortar industry

The AGA also produced interesting stats regarding the distribution of sports betting revenue state-by-state. New York State claimed $1.3bn in GGR, with mobile sports betting having only launched on January 8, 2022, which was a demonstration of what many experts predicted; that The Empire State, with its storied sporting history and teams, would have a ravenous appetite for sports betting. New York was followed by old favorites such as New Jersey (in third place with $763m), Pennsylvania with $597m, Virginia with $481m and Illinois taking second spot with $795m. This meant New York was the only state to break the $1bn mark.

In-person sports betting remained the backbone of the vertical, although mobile sports betting jumped up to make 19.5% of the total revenue achieved, a 4.5% yearly increase. The portion of overall US gaming revenue derived from online platforms remained low in comparison to other major international markets such as the UK (65%) France (29%) and Germany (28%). However,

When taking a quick glance at the AGA’s chart graphing GGR, iGaming only truly became visible in 2021, when it took 7% of the overall market. In 2022, this rose to 8.3% and although this is hardly as eye-catching a figure as the numbers produced by traditional gaming or sports betting, it is still a defiantly solid performance. One must take into account that iGaming was only legal in six states when AGA recorded these results and that the industry itself grew by 35.2% annually. It rose an impressive 28.2% to hit $1.4bn in Q4 of 2022, with New Jersey and Pennsylvania proving to be its most popular hunting grounds.

IGaming operators have begun to take the North American market very seriously as the demand for it has been crystalized by increasingly solid results in the states where it is legal (New Jersey, West Virginia, Michigan, Delaware, Pennsylvania and Connecticut). For example, Aruze Gaming, best known as a table games provider, has turned its attention to iGaming, stating that it will be a key focus for 2023. Aruze Gaming America gained approval to offer its iGaming Cloud platform to Pennsylvania, making it the second market (after Nevada) to do so.

If iGaming is taking 8.3% of the overall market compared to sports betting’s 12.4% share, while being operational in less than one fifth of the states sports betting is live in, one could fairly surmise it has a bright future. Looking at AGA’s 2023 report entire, the same can be said for US gambling as a whole.