US igaming set to generate US$300m gross win in 2014

4 February 2014

The newly-regulated US igaming market is set to generate US$300m in gross win in 2014 and remains a good bet for operators despite its recent tentative start, data specialist H2 Gambling Capital has revealed, adding that much of its growth resides in its untapped potential of its most populated states on the east and west coasts.

Publishing the first of a series of exclusive data-led articles for iGaming Business, Joel Keeble, special projects director at H2, said that although the pace of regulation may not be as quick as at first envisaged, individual states will continue the gradual process of regulating online gaming, although key populous states such as California, New York and Florida will need to join the regulatory bandwagon to create the momentum and volume the industry would hope for.

Keeble explained: “Despite the slower than expected start in all three (regulated state) markets H2 remains confident that 2014 will be much stronger with the total onshore igaming gross win across the three states now expected to be just short of US$300m growing to in the region of US$351m in 2015.”

He added that H2 did not anticipate much regulatory activity in other states until 2016 and that by 2018, there would be an additional nine states with onshore regulated schemes up and running.

“This would bring the total number of states to 12 with the combined gross win expected to be circa US$4.8bn in gross win/net win (excluding bonuses) just under US$4bn. This compares to an optimal onshore market in the very unlikely case that all states legalise all forms of igaming of just over US$11.2bn in gross win/US$9.1bn for net win by 2018,” Keeble added.

The revised forecast to 2018 (down c. US$2bn) comes as a smaller number of states are expected to regulate igaming and recently is due to factors such as payment processing issues, late promotional campaigns from New Jersey operators and a focus on online poker rather than casino to build up liquidity early on, all played a part.    

But in order for the US igaming market to realise anything like its potential, “it is essential that a number of key states, including the likes of California, New York and Florida, move to legalise the sector”, Keeble said. “In fact, we now believe that given the state-by-state model of regulation, 58% of the potential value of the onshore-regulated US igaming market is concentrated in just 10 states.”

Although the political and commercial realities for igaming in the US have brought the sector somewhat down to earth in recent months, H2 Gambling Capital points out that under its outlined scenario, “regulated igaming would still only represent 4.9% of total onshore US gaming (the rate is expected to be 5.8% across all gambling), which would compare to an average of 8.4% globally and 17.7% across the EU”. Thus the scope for growth and further progress in the US is very much present and should not be overlooked. 

H2 Gambling Capital’s article on the US igaming market is the first in a series of data-led articles the company has produced for its exclusive media partner iGaming Business. Further special datasets will come online and will cover the Japanese land-based casino market and a detailed look at the key dynamics of the European Union market, which now accounts for nearly 45% of the global interactive gambling market.

The full US igaming article is available here:

H2 Gambling Capital also provides iGB with its monthly iGaming Dashboard where readers can follow the evolution of the global gambling sector in data and numbers: iGaming Dashboard – January 2014December 2013, November 2013